Learn Asset Based Business Valuations From Aswath Damodaran

If you are at the beginning of your journey to learn business valuation, my recommendation is to start with an expert and learn from them. Aswatch Damodaran teaches business valuation courses at the Stern School of Business at New York University.

This nineteenth session by Professor Damodaran is about asset based valuation which values a business based on the balance sheet components.

This includes the "sum-of-the-parts" valuation by acquirers or investors looking for cheap companies, liquidation valuation, you are an accountant and want to determine the "fair value" of the assets.

This may be a bit confusing at first, but the reason this not actually a separate "class" of valuation is that in reality, the components of a balance sheet are valued using either discounted cash flow valuation on operating businesses, or relative valuation of other types of assets.

The important thing is that you should be able recognize by now the need to do the first two types of valuations on a company's assets and liabilities on the balance sheet.

This is why it is so important to fully understand and be facile in Discounted Cash Flow valuations and Relative Valuations. You will primarily be using those two types of valuations and in fact, I suggest that you will not need to know the options type of valuation if you are focusing on good or great businesses.

About the Author

Jeremy Scott Bailey is an investor, author, entrepreneur and host of the "What Works In Investing?" podcast now available on iTunes. He is founder and Chief Investment Officer of Burgeón Group, Inc. an investment advisory firm that provides portfolio management services to families and individuals.

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