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What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

In financial engineering, PE investors provide strong equity incentives to the management teams of their portfolio companies. For instance, despite the prominent role that discounted cash flow valuation methods play in academic finance courses, few PE investors use discounted cash flow or net present value techniques to evaluate investments.

CAPM 8
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How Corporate Investors Can Improve Their Odds

Harvard Business Review

Ideas with positive discounted cash flows get investment. One – possibly more promising — receives one more round of funding. Three companies end up taking 60% of all investment dollars. By contrast, for corporate innovators each idea needs to carry its own weight. Those that don’t, don’t.

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Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

Digital companies, however, consider scientists’ and software workers’ and product development teams’ time to be the company’s most valuable resource. These criteria assume a limited supply of financial capital and that prudent allocation of financial capital determines a firm’s success.

Report 8