Valuation (PDF)

The market approach aims to establish the value of a company
based on how similar firms are priced on the stock exchange or
through company transactions. Using the market approach,
price-related indicators such as price to earnings, sales and book
values are utilised. An ever-present problem however, is that
different valuation multiples and valuation methodologies tend to
provide the analyst with contradictory outputs. The solution to
this problem so far has been to claim that the market approach is
more art than science, thus providing the analyst with the freedom
to alter the multiples at their own discretion to reach a uniform
value or range.

Valuation: The Market Approach puts an end to this
problem, providing the reader with a rational scientific-based
understanding and the necessary tools to perform a sound market
approach valuation, or if reviewing such valuations, provide the
tools to challenge the work of the arts-based senior experts.

The book begins with an in-depth review of the basics; which is
then applied in a detailed worked example. Step-by-step, the
reader's expertise is built towards a complete understanding
and implementation of the market approach, not only on a standalone
basis but also in relation to the DCF methodology.

The book is aimed at the seasoned professional, but will also be
invaluable to students as they apply their academic knowledge to
the real world of valuation and M&A.

About the author:

SETH BERNSTROM is a Director at the Valuations practice of PwC.
He has 15 years of experience as a valuation expert with a special
focus on private equity, with long-running engagements in Valuation
for some of the leading Nordic private equity houses. Additionally,
he provides valuation support and valuation-related advisory
services to large and medium-sized Nordic and (Nordic-based) global
companies. In addition to his regular work at PwC, he also acts as
Visiting Lecturer on valuation at KTH Royal Institute of Technology
in Stockholm. Furthermore, he often gives lectures and seminars on
valuation at other leading Nordic universities, investment banks,
companies, and organizations. He holds a Master of Science in
Business Administration and Economics from the Stockholm University
School of Business.