Article: ThinkSmart and AfterPay: the price is wrong

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exIFRS
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Article: ThinkSmart and AfterPay: the price is wrong

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Interesting discussion in today's FT about the vaguries of valuation. With two companies valuing the same financial item very differently. I have seen this a few times, along with inconsistencies over who really controls (or doesn't) a jointly owned subsidiary.
So that’s a gap of around £101m between the two businesses’ respective valuations for the same 10 per cent chunk of Clearpay...

One reason might be that the various inputs into the valuation are different. Afterpay chose to value the liability with a discounted cash flow model based on management forecasts, minus the cost it would take to sell the asset if it chose to (aka “fair value less costs of disposal”). ThinkSmart, meanwhile, used an independent valuation process, which it states is based on the same principles that will set the value of the asset if the transaction happens. Two different methodologies shouldn’t spit out such a gap, however.
You can access the article here but I am sorry it is behind a paywall: https://www.ft.com/content/91db3d6e-cfa ... a09e5907c0
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Marek Muc
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Re: Article: ThinkSmart and AfterPay: the price is wrong

Post by Marek Muc »

I'm not clear whether there were indeed two different methodologies or just different assumptions about cash flows? I'm not an FT subscriber so I just read this extract

PS. I moved this topic to general discussion :)
JRSB
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Re: Article: ThinkSmart and AfterPay: the price is wrong

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Demonstrates I suppose that any valuation is to some extent a finger in the air.
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