Date of Award

2021

Publisher

North Dakota State University

Document Type

Thesis

Degree Awarded

Master of Science (MS)

Program

Agribusiness and Applied Economics

Department

Agribusiness and Applied Economics

College

Agriculture, Food Systems and Natural Resources

Faculty Advisor

Wilson, William

Description

For startups and young companies, there is significant uncertainty and managerial flexibility within a company’s business model, research and development (R&D) processes, and commercialization strategy. These characteristics make early stage companies difficult to value. While the predominant valuation tools used include discounted cash flow and multiples analysis, their fixed assumptions and improper risk adjustment tend to undervalue startups with managerial flexibility, uncertainty, and high growth potential. This thesis utilizes stochastic real options to assist with the valuation process for agricultural technology startups in order to better reflect uncertainty, managerial flexibility, and asymmetric growth that is existent. The stochastic real options are integrated into decision trees to account for uncertainty and the two types of risk, being private and market risk. While this application is used for two case studies of startups in agricultural technology, the method can be applied to different startups with varying scenarios and industries.

Rights

NDSU policy 190.6.2

Rights Link

https://www.ndsu.edu/fileadmin/policy/190.pdf

Handle Identifier

https://hdl.handle.net/10365/32383

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