Value Sweep: Mapping Growth Opportunities Across Assets [Hardcover]

Martha Amram (Author)

Book Description

ISBN-10: 1578514584 | ISBN-13: 978-1578514588 | Publication Date: June 15, 2002 | Edition: 1st

The stock market routinely values corporate growth opportunities. But inside companies, managers struggle to quantify the value of growth initiatives and to align internal valuations with those in the financial markets. "Value Sweep" is the first book to lay out a simple and transparent valuation method that works for the varied growth opportunities facing the modern corporation. Based on extensive research and years of frontline work within corporations, valuation and strategy expert Martha Amram takes readers beyond the numbers, providing a new lens and a better vocabulary for envisioning, understanding, and valuing growth across a wide sweep of assets-from mature businesses to those being reshaped by intellectual property and e-commerce. Rigorous, yet easy to use, this innovative approach allows managers to place diverse growth projects on a single "map" of value. This comparison enables them to better direct resources and attention to the most valuable projects. "Value Sweep" tackles the hard valuation issues and shows: When to use traditional valuation methods, such as Discounted Cash Flow, and when to use more innovative methods such as decision analysis or real options; how to quickly value growth opportunities and compare the result to sensible valuation benchmarks; why venture capital valuations are so sensitive to fluctuations in the stock market; why it is difficult to value intellectual property and how to use approximate valuation results in negotiations; why the simplest valuation methods work best for investments in information technology; and, how to roll up project-level valuations into a corporate growth engine. Martha Amram is an independent consultant and adviser to Fortune 500 companies and start-ups, and the author of "Real Options" (ISBN 0875848451, HBS Press, 1998). She lives in Palo Alto, California.

Editorial Reviews

From the Back Cover

"Martha Amram has done the hard work of making it easy for nonspecialists to understand and use powerful modern techniques for valuing growth opportunities. This book should be read and used by anyone concerned with making sound investment decisions in complex situations."

-Richard Schmalensee, John C Head III Dean, MIT Sloan School of Management

"Value Sweep will benefit both individual decision makers and collaborative teams as they struggle to identify high-potential growth opportunities, set priorities, and allocate resources effectively. Like a breath of fresh business air, Amram's emphasis on practical results-oriented applications shows a real appreciation of the challenges of corporate planning and decision making."

-Ted Dintersmith, General Partner, Charles River Ventures

"Amram draws on academic advances in real options but puts her counsel into decision-ready format. A useful book for executives charged with evaluating exciting-but uncertain-high-growth investment proposals."

-James Lawrence, Executive Vice President and CFO, General Mills, Inc.

"Finally there is a book that makes clear the crucial interplay between internal corporate valuation procedures and real-time financial market valuations. Value Sweep provides a unified and practical framework for the valuation of corporate growth opportunities. Aimed at the practitioner, Value Sweep facilitates the successful implementation of some very modern financial models, using realistic examples and commonsense economic intuition."

-Steve Grenadier, Associate Professor of Finance, Graduate School of Business, Stanford University

About the Author

Martha Amram is an independent consultant and adviser to Fortune 500 companies and startups and the author of Real Options (HBS Press, 1998). She lives in Palo Alto, California.

Product Details

• Hardcover: 288 pages
• Publisher: Harvard Business Press; 1st edition (June 15, 2002)
• Language: English
• ISBN-10: 1578514584
• ISBN-13: 978-1578514588
• Product Dimensions: 9.3 x 6.2 x 1.2 inches
• Shipping Weight: 1.2 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #2,188,110 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

13 of 14 people found the following review helpful:

5.0 out of 5 stars Breakthrough Thinking on the Creation of Value, September 5, 2002

By 

Robert Morris (Dallas, Texas) - See all my reviews
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This review is from: Value Sweep: Mapping Growth Opportunities Across Assets (Hardcover)

This book was written for decision-makers in organizations which are in current or imminent need of (a) benchmarking and comparing the value of their growth opportunities, (b) aligning the value of private growth opportunities with public market valuations, and (c) replacing complex calculations with simple and transparent methods. Amram re-examines and re-evaluates several of the core concepts which she and co-author Nalin Kulatilaka discussed in a previous work, Real Options: Managing Strategic Investment in an Uncertain World. However, as she explains in her Preface, she has since drawn two strong conclusions. "First, in many [but not all] applications, real options is not the right tool. I'll raise this issue through this book [Value Sweep] and show how to combine real options with other strategic perspectives. Second, decision analysis (and decision analysis coupled with real options) is quite an expansive approach; it can handle a lot of detail. Often, however, the detail overwhelms the rationale."

Here are several important questions which many organizations are now struggling to answer:

1. How can the value of growth from our new products and innovations be compared to the value of existing business?

2. Is there any rationale behind our valuations based on Internet growth expectations? Is there a way to identify and track the changing value of growth?

3. What's the value of our intellectual property? What is the value of our business models built around selling of ideas?

4. Are we prepared to tell a convincing, indeed compelling "story" about our growth opportunities that supports the value of our growth? Can we provide credible numbers with that "story"?

Amram addresses all of these and many others in 15 chapters which are organized as follows: "One Map of Value" (Chapter 1) and "The Look and Feel of Growth Opportunities" (Chapter 2), followed by three Parts and an Epilogue: Expanding the Toolkit (e.g. "Discounted Cash Flow," Chapter 3), Valuing Growth (e.g. "Growth Value Benchmarks from Venture Capital," Chapter 8), Across the Sweep of Value (e.g. "Creating the Credible Growth Engine," Chapter 13), and then her Epilogue in which she focuses on "Leading Growth" in Chapter 14 and "Marking a Spot on the Face of Value" in Chapter 15. Readers will be especially grateful for a substantial Appendix which consists of nine "Tables" for growth option lookup and estimating volatility, followed by a highly informative Glossary. I provide all this information to help the reader of this review get a more specific sense of what Amram offers in this book. Amram demonstrates exceptional writing when presenting her material.

All organizations embark on a new "journey" at the beginning of their fiscal year and must make hundreds (thousands?) of decisions with regard to the allocation of their resources. Many of those decisions have profoundly serious implications...both positive and negative. Whether or not an organization survives may perhaps depend on some of those decisions. I recommend in the strongest terms possible that Martha Amram's book be read and then re-read by every decision-maker, regardless of the size or nature of her or his organization. Obviously it cannot ensure a successful "journey" but it can certainly help to improve the odds.

Those who share my high regard for this book are urged to read Heidi Mason and Tim Rohner's The Venture Imperative.