That’sexactly what you should expect to see.You should see negative cash flows up front,because that’s what you need to grow the company.And as a company matures, Nirvana shows up.Cash flows turn positive.You get the big values.But that’s OK.So here one way to think about the search for valuation.You sit down to value a company.You pull up the financials– annual report, -K, -Q.That will give you a sense all of whatthis company did last year.And if you have a mature company,that might be all you need.Because they’re so set in their path,that you can pretty much
value the company using last year’sfinancials. Tax Accountants Adelaide But if you have a company that’s in transition and market that’schanging, you have to collect informationabout how the market is evolving,who the competitors are.When you think about risk, you’regoing to look at the past.You’re going to look at the future.You’re going to be looking at every piece of information.And my only suggestion if you value new businesses–don’t do a blind Google search.You know what mean?So if you say–For instance, I have to value Uber.If I type in Uber in Google, you know what I get?
Everything ever said about Googleon the face of the Earth.When you search, you want focused searches.In other words, you first figure out what you’re looking for.And then you go looking for it.In fact, what I do is, I open up an Excel spreadsheetwith the inputs I need.And with each one, I say, this is the numberI’m looking for right now.I’m not going to get distracted, evenif I find something interesting about something else,for the moment.I’m going to stay focused on– soif I’m looking at the risk in a company, that’sall I’m looking for.Are there any clues I can get by lookingat the company, the market, and the competitors,about that risk?And at the end of the process, I’mkeeping my eyes on the prize.This is not about getting more information.It’s about taking data and converting into information.We live in a world where we have too much date.That’s the reality we face.
Our job is to take the data and compress itinto information that actually shows up in our valuations.So here’s a simple example of a valuationof a very boring company.We all know what M does, right?Incredibly sophisticated stuff like the Post-It note,but don’t laugh.It’s an incredibly profitable product.It’s a company with a long history.And this is a valuation I did of M in whatI call the days of innocence.Those are the days when they were
