Perspectives

Enabling better decisions

Deloitte Economics, Valuation and Modelling practice

In an era of unprecedented change, many market participants are grappling with strategic business and valuation based decisions arising as a result of; increased innovation and greater market controversy, uncertainty and volatility.

Deloitte’s Economics, Valuation and Modelling practice brings together industry specialists who understand the markets in which our clients operate, current and future direction of regulation, drivers and opportunities of value creation and leading edge modelling and analytics capabilities. It draws on the depth and breadth of wider parts of Deloitte and is focussed on enabling its clients make better decisions in these times of unprecedented innovation and disruption.

In this report we share our thoughts on a number of topics relevant to businesses, now more than ever, in our innovative, uncertain and volatile times.

  • Uncertainty is the new normal shows how using our understanding of economics and analytical skills are being used as a guide for better decision‑making in an increasingly uncertain environment.
  • Valuing innovation explains how to consider the value of innovative businesses, drawing on the challenges for many of the world’s largest investment funds and leading tech firms.
  • In Modelling for effective decision‑making we highlight the enduring relevance of C. Northcote Parkinson, the writer behind Parkinson’s Law of Triviality, and use his findings to explain why many models that we see are destined to prevent quick and effective decision‑making. We then explain how to use cutting‑edge data tools to craft models that achieve the opposite: enabling quick and effective decisions.
  • Unicorns: magical valuations highlights the superficial thinking which means that $1 billion‑plus start‑up companies are systematically overvalued even if market sentiment pervades.
  • The “average” company: traps for the unwary considers the dangers, when valuing businesses, of picking and relying on averages too much or, of picking an inappropriate average.

Professor Damodaran was invited to present to 150 guests and clients of Deloitte in London on 8 March 2018. Please watch the series of short videos where the Professor explains how do price and value fit together. Aswath Damodaran is Professor of Finance at the Stern School of Business, New York University. He is widely published on valuation, corporate finance and investment. Watch his views on ‘the valuation story’.

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