Journey · 12 steps · 12 sources
A valuation is a set of sentences about a business turned into numbers. This path starts with the one sentence a DCF rests on, works through the inputs that carry most of the answer, the costs that are easy to leave out, and ends with valuation as a decision: whether to buy back, bid or merge.
Every cell in a DCF is a claim about future cash or about its risk; if you cannot say which, the cell should not be there.
VideoSession 3: Intrinsic and DCF Valuation — Laying the Groundwork· Aswath Damodaran (NYU Stern)
A forecast is a story written in numbers; if a row cannot be said as a sentence about the business, it should not be in the model.
BookNarrative and Numbers· Aswath Damodaran
Match the discount rate to the cash flow: a flow to all capital providers is discounted at the blended cost of all of them.
VideoWACC Explained· The Finance Storyteller
Check what share of the value is terminal and what multiple the terminal assumptions imply; those two checks catch most broken DCFs.
VideoSession 9: Terminal Value· Aswath Damodaran (NYU Stern)
Spending is only growth if the return on it exceeds the cost; estimate the return under several assumptions before admiring the spend.
LetterHayden Capital's Q2 2026 letter, on the "SaaS-pocalypse" and returns on reinvestment· Fred Liu
Treat stock compensation as a cost of doing business; either deduct it from cash flow or count the dilution, and never ignore it twice.
VideoSession 5: Accounting Inconsistencies· Aswath Damodaran (NYU Stern)
Judge an adjustment by whether an owner of the whole business would also get to ignore the cost.
DocumentaryWeWork: Or the Making and Breaking of a $47 Billion Unicorn· 2021
Decide what a business is worth before looking at the price, then act only when the price is far enough below.
BookThe Intelligent Investor· Benjamin Graham
Value each part a bidder is acquiring; what the bid leaves at zero is the argument against it.
LetterSoutheastern Asset Management's letter to the Dell board (February 2013)· Mason Hawkins and Staley Cates
A buyback creates value only with funds to spare and a price well below intrinsic value; above that price the same action destroys it.
LetterBerkshire Hathaway's 2011 letter to shareholders· Warren Buffett
A synergy is a change in cash flow, growth or risk; value it as one, and only then compare it with the premium being paid.
VideoSession 12: Acquisition Ornaments — Synergy, Control & Complexity· Aswath Damodaran (NYU Stern)
Answer accretion with arithmetic and value with evidence, and never let the first stand in for the second.
VideoSession 25: Acquisition, a Value Destroyer?· Aswath Damodaran (NYU Stern)