Week 13 Reading Reflection

Valuation of Entrepreneurial Ventures

1. I was pretty surprised about the level of detail on the Checklist of Analyzing a Business! But probably because I am used to thinking about things in terms of the U.S. where I'm sure everywhere here we have air conditioned facilities and adequate electric, heat, gas, water, and sanitary services...but I was still shocked to see that.
2. Reading the "Analyzing the Business" section, it says two of the main shortcoming are undercapitalization and divergent goals (between entrepreneur and investors) which seems to contradict to me because the idea of undercapitalization refers to the lack of equity investment.
3. Question 1: Why would classify the discounted earnings method a better way to value a company to sell than the adjusted tangible book value? It seems like the discounted earnings method requires more estimation. Question 2: How do you handle the control factor when in the process of buying a business?
4. In all of my accounting classes, we have never discussed the price/earnings ration as a way of valuing the business to sell, and with all of the drawback listed, I don't think it is a great way to determine a selling price.