Real options theory is based on the Nobel prize winning work on financial options, and has captured the interest of executives, managers and investors who need to understand the future profitability of an asset. The text "Real Options Solution" presents a practical approach to applying real options analysis based on one core insight - all business plans are options. This perspective helps managers and investors minimize the risk of committing to all types of initiatives, and the framework is flexible enough to apply to companies in bellwether and emerging industries.
Table of Contents
Introduction. PART ONE: A NEW PERSPECTIVE ON VALUE. The Crisis in Valuation. Economic Value: The DCF "Gold Standard" and its Limitations. The Total Value Model. Enter the Options Dragon. Why Plans are Options. PART TWO: THE SOURCE OF WEALTH: MASTERING RISK, INNOVATION, AND THE LAW OF DIMINISHING RETURNS. Diminishing Returns: The Dusty Road to Devolution. Five Millennia of Value Destruction. Does Risk Deserve its Bad Name? Taming the Risk Bogeyman. The Enigma of Intellectual Capital. Innovation: The Fountain of Prosperity. Can Government Manage Risk and Value? Epilogue. Endnotes. Index.
F. PETER BOER is President and CEO of Tiger Scientific, Inc., a firm specializing in science and technology consulting and investments. He is the author of The Valuation of Technology (Wiley), and is an Adjunct Professor of Business and Engineering at Yale University, where he teaches valuation and other subjects. Dr. Boer speaks and lectures frequently for the Industrial Research Institute and is actively engaged with companies that are using options-based methods to evaluate their R&D portfolios.