Lickwar, M. (2009). Approaches to valuing uncertainty : applications in mergers & acquisitions [Master Thesis, Technische Universität Wien]. reposiTUm. http://hdl.handle.net/20.500.12708/184296
When valuing an asset using a static discounted cash flow approach the value of investor flexibility can potentially go unobserved due to uncertainty surrounding the future conditions of the asset being valued. Investment situations involving mergers and acquisitions can include a high degree of informational uncertainty and therefore in some situations warrant the use of valuation models that value the investor's ability to react. A number of approaches to valuation of uncertainty will be discussed including the proper handling of risk and exactly when a valuation of flexibility should be considered. The key components to modeling uncertainty in acquisitions will be explored using practical applications; through valuation models that support decision making with concentration on the 2008 takeover of Continental AG by Schaeffler KG