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Strategies & Market Trends : Due Diligence - How to Investigate a Stock
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To: John Sladek who wrote (490)5/29/1999 1:42:00 PM
From: Zeev Hed  Read Replies (1) of 752
 
John, actually, hen I used to do M&A work, I used a "subjective" scale for the rate of discounting, going all the way from the current 30 years bond rate, for outfits that had measurable revenues and profits and excellent visibility of future profits to 3 times as much (meaning of course that cash flow some 7 years down the road is worth ziltch) for companies in the "start up phase" where the uncertainty was much higher, thus the "hurdle rate" always included a "metric" of technological risk (well, I was involved with technology) as well as market risks. A similar type of metrics could and should be used when valuing ongoing outfits.

Zeev
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