Dealmaking: Using Real Options and Monte Carlo Analysis
John Wiley & Sons, 2004 M04 16 - 312 pages
Applying practical tools to the volatile process of negotiating
Prognosticators apply Monte Carlo Analysis (MCA) to determine the likelihood and significance of a complete range of future outcomes; Real Options Analysis (ROA) can then be employed to develop pricing structures, or options, for such outcomes. Richard Razgaitis' Dealmaking shows readers how to apply these powerful valuation tools to a variety of business processes, such as pricing, negotiating, or living with a "deal," be it a technology license, and R&D partnership, or an outright sales agreement. Dealmaking distinguishes itself from other negotiating guides not only by treating negotiations as an increasingly common situation, but also by presenting a tool-based approach that creates flexible, practical valuation models. This forward-thinking guide includes a variety of checklists, case studies, and a CD-ROM with the appropriate software.
Richard Razgaitis (Bloomsbury, NJ) is a Managing Director at InteCap, Inc. He has over twenty-five years of experience working with the development, commercialization, and strategic management of technology, seventeen of which have been spent in the commercialization of intellectual property.
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LibraryThing ReviewUser Review - PointedPundit - LibraryThing
A Results-Based Approach While preparing for a negotiation the objective is to identify risks and rewards. The point of the negotiation is to capture value while finding terms value-enhancing to all ... Read full review
CHAPTER 3 The Box and the Wheelbarrow What Am I Selling or Buying?
CHAPTER 4 Discounted Cash Flow Analysis and Introduction to Monte Carlo Modeling
CHAPTER 5 Monte Carlo Method
CHAPTER 6 Introduction to Real Options
CHAPTER 7 Real Options Applied to Dealmaking
CHAPTER 8 Knowledge and Unertainty
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20 percent 20th percentile agreement alternative asset assumed assumptions binomial lattice Black-Scholes Black-Scholes equation BSE1 CAGR calculation CapEx cash flow Cell certainty Chapter consider context Correlated corresponding cost ratio create Crystal Ball DCF analysis deal manager deal team dealmaking determined discount discussed distribution with parameters EBIT effect equation equity example face card factors financial model future hurdle rate investment license log-normal distribution mean value million Monte Carlo method Monte Carlo model negotiation normal distribution NPV values ofthe one’s option value outcomes parties payment perspective Plan point Single point portunity possible potential present value range rating/ranking Real Options Analysis reasonable result revenues risk risk-neutral probability royalty scenario scenario analysis seller shown in Exhibit side simply Single point Single standard strike price term sheet tion triangular distribution uncertainty underlying uniform distribution valuation value of RAHR volatility Wheelbarrow YHOO