OPM is terrible. Even the academics realize it (I think). This paper evaluates the analysis. There's a caveat on pg. 24. GIGO. In my opinion, it's not just a caveat. It's a killer. I'm not sure what the overarching societal value to applying OPM to private, illiquid company valuations could be.
Comments
OPM is terrible. Even the academics realize it (I think). This paper evaluates the analysis. There's a caveat on pg. 24. GIGO. In my opinion, it's not just a caveat. It's a killer. I'm not sure what the overarching societal value to applying OPM to private, illiquid company valuations could be.
http://repository.upenn.edu/cgi/viewcontent.cgi?article=1035...
It seems to require knowing the equity volatility and IPO price in advance. That is shaky.
But isn't it that it just needs to better than other methods?