Valuation of Companies in Emerging Markets

In this thesis the distinctive features and challenges of the company valuation in emerging markets are presented. The valuation approach considered as superior in comparison to other methodologies, the triangulating method, is applied to a company from the emerging market of Brazil, the aircraft manufacturer Embraer. The triangulation valuation approach comprises one primary method, the scenario discounted cash flow valuation, and two secondary approaches, the valuation based on multiples and the valuation with a country-risk built into the cost of capital. At the beginning, the valuation methods prevalent in developed markets are presented. Afterwards, for the emerging markets, the applicability of these approaches from the developed world is assessed. In addition, potentially useful modifications are identified. In advance of the detailed valuation of Embraer, the Brazilian macroeconomic situation and its main financial market, the Bolsa de Valores, Mercadorias & Futuros de Sao Paulo (BOVESPA), will be analyzed.