Sex Lies and Valuation II:Bimbiliki Bilabi Maama Biscothu

"Valuation is an art" is the first hint you get that this subject is more like pricing a Van Gogh or any other antique ...

Topic:Valuation and the effects of auction model from a relative valuation perspective-An empirical analysis based on classic asset auction sell strategies under market forces (Please refer post: Sex Lies and Valuation)
The concept of relative valuation is rooted in the belief that market quotes for the same or similar security are the best indicators of the price of an asset.Since this method incorporates market eccentricity, it clearly defines the price the market will be ready to pay for an asset when the buyer wants to exit.
Step 1:
It is important to identify the right peer group whose multiples will serve as a benchmark and the right set of investors from whom to take pricing feedback.
Experiment Name:Oora Therinjukitten
Economists:Pandiarajan and Senthil
Experiment:
Pandiarajan and Senthil on the road.
Senthil: Anne ... ennane yosichindrukeenga? Intha naai pidikkara vandiya vechindu ennane panaporeenga?
Pandiarajan:Namma naatla roadla adhigama irrukarthu erumaiyum varumaiyum. Roatla irrukara pitchakaran/paithiyakaran ellarayum pidingada.Nambakitta super idea irruku.

Step 2:It is important to adjust/dress up the multiples and pricing feedback to remove any inherent bias so that the final price point is made as relevant as possible
Senthil and Pandiarajan collect all the beggars on the street and a training session is in progress:
Pandiarajan (addressing Paithiyam 1): Naan solrapadi sonnathaan teaand biscuit.Nee sollu - Aayiram.
Paithiyam 1: Solla Maaten
Pandiarajan hits him with a stick.
Paithiyam 1:Aayiram
and so on..
At the end of the session :
Paithiyam 1: Aayiram,Paithiyam 2:Rendaayiram,Paithiyam 3:Mooaayiram...

Step 3:
Due diligence
Sufficient due diligence needs to performed by the merchant bankers to check the health of the asset including contingent liabilities/outstanding litigation
The proof of the final price in IPOs is normally arrived at through a book building process.Where the actual quotes are taken and then the institutional investors are asked to cough up 90% of the amount after the price has been decided.
Location:Auction house owned by a Pehalwaan.Pandiarajan is trying to convnce him to buy his rusty old chair claiming it was once used by Queen Elizabeth and sell through his auction house
Pandiarajan and Senthil convince the Pehalwaan auctioneer that the zamindars (Arcot Jameen, Thanjavur Periya Pannai, Mayavaram Jameen to name a few - all beggars) of all the neighbouring zameen have come to bid for the antique chair that Pandiarajan wants to sell through his auction house.The beggars are all attired in rented finery.
Pehalwaan calls his secretary to check if the chair is indeed worth the value Pandiarajan has asked.When the secretary bends to check, Senthil makes a tearing noise and the secretary concerned that her tight skirt is failing her agrees that the chair is indeed of yore
Pehalwaan is now convinced and pays Pandiarajan their ask amount (since the zamindars start their well rehearsed aayiram,randaayiram monologue) and Pandiarajan and Senthil vanish.
Book Building:
Periya Zameendar: Aayiram
Arcot Zameendar:Rendaayiram
Maangaatu Zameen: Moovaayiram
....
.....
.......
.........
Maayavaram Zameen: Pathaayiram

Pehalwaan thrilled that the chair is giving him a 2x return on investment, awards the chair to the Maayavaram Zameen and asks for the payment.
Maayavaram Zameen: bimbiliki bilabi...
All beggars in unison: maama biscothu!!!!!!!!!

Of course Pandiarajan and Senthil have vanished after a successful valuation/placement exercise
Apologies to all those who do not relate to the comedy clip/people who know the clip too well to notice the minor tinkering with the script.Please check youtube.
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