Here's how you can creatively approach financial valuation in corporate finance.

To creatively approach financial valuation in corporate finance, you need to be expert in modelling, employ multiple valuation methods such as Discounted Cash Flow (DCF), comparable company analysis, and precedent transactions to gain a comprehensive perspective. Integrate scenario analysis and Monte Carlo simulations to assess risks and uncertainties. Utilize real options valuation to capture the value of strategic decisions and future opportunities. Additionally, incorporate qualitative factors like market trends, competitive landscape, and management quality. By combining quantitative rigor with strategic insights, you can derive a more nuanced and accurate valuation, aligning financial assessments with broader corporate objectives.

Durante mi magíster en finanzas en la Universidad de Chile, realicé una valoración de CAP utilizando el método de flujo de caja descontado. Este análisis me permitió evaluar de manera exhaustiva las proyecciones de ingresos futuros, los gastos operativos y las inversiones de capital, considerando distintos escenarios económicos. Esta experiencia no solo consolidó mi comprensión del DCF, sino que también me enseñó la importancia de adaptar el análisis a las circunstancias específicas de la empresa.

DCF is highly sensitive to the assumptions made about future cash flows, growth rates, and discount rates. Small changes in these inputs can significantly affect the valuation outcome.

Relative valuation inherently reflects the current market sentiment and perceptions about the sector or comparable assets. It can be useful in understanding how the market is currently valuing certain characteristics or attributes. Also, selecting appropriate comparable assets is subjective and can significantly impact the valuation. The choice of comparables must be justified based on similarities in risk, growth, and cash flow characteristics.

En Vivo Chile, utilicé un análisis comparativo de la industria para evaluar el nivel de posicionamiento de nuestra marca, proyectar ingresos futuros y estimar el valor de la compañía en comparación con otras en la industria de smartphones. Esta metodología nos permitió identificar nuestras fortalezas y áreas de mejora, lo que fue crucial para tomar decisiones estratégicas informadas y competitivas.

One of our clients used to ask, from all the peer firms, what is the most similar to the company you evaluate? I keep returning to that question every time I analyze stocks. Coke and Pepsi, Ford and GM, Boeing and Airbus... you do not necessarily have to compare the firm with 10 or 20 or more peers to come up with fair price. One perfect peer, or one very similar M&A is often enough.

En mi rol como Controller Financiero en una constructora, utilicé el concepto de opciones reales para evaluar proyectos futuros y mejorar el control del presupuesto junto a los plazos de ejecución. Esta metodología permitió una mejor planificación y flexibilidad, incrementando la confianza en nuestras proyecciones financieras y en la capacidad de ajustar estrategias según las circunstancias del mercado.

Creating multiple scenario analyses keeps your team prepared for the best-case and worst-case outcomes in theory. But it's important to think of scenario outcomes as a gradient between these two as opposed to a binary result. There is a ton of grey area between various scenarios when accounting for factors like economic downturns and market disruption. Take the time to perform stress tests on your scenarios to simulate how your organization's valuation would react under these conditions.

En Flow Investing Capital, realicé un análisis de escenarios para un cliente del sector energético. Creamos escenarios detallados que incluían cambios en las regulaciones ambientales y variaciones en los precios de la energía. Este enfoque no solo proporcionó una visión clara de los posibles futuros, sino que también preparó a la empresa para tomar decisiones estratégicas más informadas y resilientes frente a diferentes condiciones del mercado.

Identify and record valuation components of the acquisition that have been established over time. Often times this will involve quantifying components like customer relationships, brand quality, and intellectual property. Patents, proprietary technology, and ongoing R&D efforts are also important assets to consider when determining the overall valuation of an acquistion.

This is the area where the wisdom of general managers often beats the quantitative proficiency of financial managers. Business combinations, linkages and synergy potential are determined and realized by those who define the vision and lead. In my experience, business founders and CEO's would be the best in finding out potential synergies from the acquisitions. But there is, of course, a risk of overconfidence, so each such Idea has to be further assessed by the financial professionals.

Implementé un enfoque de valoración que integraba tanto métricas financieras tradicionales como indicadores de sostenibilidad. Evaluar el impacto ambiental y social de las decisiones financieras permitió a la empresa no solo cumplir con los objetivos financieros, sino también mejorar su reputación y sostenibilidad a largo plazo.