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The Octopus: Valuing Multi-Business, Multi-National Companies

42 Pages Posted: 17 May 2010  

Aswath Damodaran

New York University - Stern School of Business

Date Written: November 17, 2009

Abstract

As both investors and firms globalize, it should come as no surprise that valuing these firms brings special challenges. In this paper, we look at firms that not only operate in many countries but also in diverse businesses. The different risk, growth and cash flow profiles of the cash flow streams generated by these firms requires us to reconsider how we estimate discount rates and approach valuation. We consider how best to value these firms as consolidated entities and contrast these valuations with an alternative, where we value each part of the firm separately and use the sum of the parts to value the businesses.

Keywords: Multinational, Valuation, Sum of the Parts

JEL Classification: G12, G31

Suggested Citation

Damodaran, Aswath, The Octopus: Valuing Multi-Business, Multi-National Companies (November 17, 2009). Available at SSRN: https://ssrn.com/abstract=1609795 or http://dx.doi.org/10.2139/ssrn.1609795

Aswath Damodaran (Contact Author)

New York University - Stern School of Business ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0340 (Phone)
212-995-4233 (Fax)

HOME PAGE: http://www.damodaran.com

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