Olusegun Oyekanmi - Valuations With No Fuss

COPYRIGHT

V ALUATIONS WITH NO Fuss Copyright Olusegun Oyekanmi 2012

All rights reserved. No part of this book shall be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the publisher. No patent liability is assumed with respect to the use of the information contained herein. Although every precaution has been taken in the preparation of this book, the publisher and author assume no responsibility for errors or omissions. Nor is any liability assumed for damages resulting from the use of the information contained herein.

August 2012

ISBN: 9781614308003

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DEDICATION

T HIS BOOK IS DEDICATED to my older brother, Dr Yomi Oyekanmi for his unflinching support. May God continue to bless you; Amen.

FROM THE AUTHOR

F OR THOSE OF YOU WHO have sat in a business studies class, valuation methodologies are very important. However, if you have not had the pleasure of having a finance background, you might find that understanding the concepts such as valuation methodologies quite challenging. Speaking from a personal experience, as simple as the concepts might be, it looked like rocket science! I also know that many a colleague struggled.

The most telling evidence for this came when it was time to select our elective courses. Most of my colleagues selected supply chain management, operations management, and project management. They did everything possible to avoid corporate finance and other financial courses. In my case, I could not avoid corporate finance, as this was something I needed to enhance my skills. On the first day of the corporate finance class, the professor noticed how sparse the class was and commented in a disparaging manner (which I will not bother to repeat).

Surprisingly, I enjoyed his class as he made it very interesting but I had a nagging question at the back of my mind how would I survive and pass this elective? Many of you might wonder why I worried about this, after all you got this far, surely, you can go the rest of the way. Besides you passed all the prerequisite courses for corporate finance, so what is the problem here? My frustration knew no bounds.

I must say that I did not get back on track until much later in the course. This came with roughly two and a half months to our final exams! The secret understand the different valuation methodologies and where to find the figures required from the different financial pages. When I finally got it, I knew that our lives could have been made easier by a little more effort.

This book is a presentation of that process. I hope you find it useful and that you will enjoy it. I also hope that if you like it so much, you will send word to everyone you know so that they can also share this experience.

Olusegun Oyekanmi (Jan 2010).

PREFACE

B EFORE ESTABLISHING Nosa Capital (http://nosacapital.com), Olusegun Oyekanmi worked in several areas of technology, which included the pharmaceutical, the medical laboratory, and the cosmetics industries. For about a decade, Olusegun worked for Coates Lorilleux International as a Chemist managing the production and quality assurance facilities for varnishes. He later moved into the IT industry in 1999 becoming the Wireless Business Manager for Gavoa Ltd, a web, WAP, and online advertising organisation.

In 2001, he became an IT consultant running his own firm and specialising in XML technologies. He immigrated to South Africa in 2004 where he joined Ixixa Investments as Regional Manager. The following year, he gained admission into the University of Pretoria where he graduated with an MBA in General Management with a research focus on the mobile phone industry. Olusegun also holds a BSc in Computing and a Higher National Diploma (HND) in Chemistry.

COVERAGE

T HIS BOOK IS DESIGNED to cover most, but not all, valuation methodologies. It is not an exhaustive coverage of the topic of valuation. Many more books cover the topic in a more comprehensive manner. In terms of background or prerequisites, there is an assumption that you, the reader, has some familiarity with basic algebra and has had some contact with some of the valuation methodologies presented. You the reader are probably a student of business studies, maybe an MBA student who does not come from a financial background and needs some assistance.