The Little Book of Valuation

Will you be wrong sometimes? Of course, but so will everyone else. Success in investing comes not from being right but from being wrong less often than everyone else.

Value Driver #1: Scalable growth
The faster you grow, the larger you get. The larger you get, the more difficult it is to keep growing

Value Driver #3: Survival Skills
For young firms to become valuable, they have to survive. What is the likelihood that your firm will not make it

Value Driver #1: Revenue Growth
Small revenues have to become big revenues. How much growth potential does your firm have?
Value Driver #2: Target margins
You can lose money today but, to have value, you have make money in the future. How profitable will your company be, when it matures

we can then look at how the margin will evolve over time

estimating the target operating margin when the firm becomes mature, primarily by looking at more established companies in the business

estimating the operating expenses associated with delivering the projected revenues, and we would separate the estimation process into two part

The next step is to estimate the share of that market that will be captured by the firm being analyzed, both in the long term and in the time periods leading up to it

The first is revenue growth, which can be obtained by either extrapolating from the recent past or by estimating the total market for a product or service and an expected market share

forecasting future cash flows