Dear Harby

Dear Harby

Harby, Satirical Advice Columnist

Dear Harby,

My discussion group mate and I are having an intense disagreement, and I think your FIN1 and BGIE expertise could help us a lot here.

He doesn’t think becoming a billionaire is worth it, because “you can’t buy anything with a billion dollars.” I said he could buy a small country with a billion dollars.

He disagreed, pointing out that even small countries have GDPs much more than $1 billion.

I don’t think GDP is the right measure of free cash flows to use here.

Long story short: how would you value a small island nation for a buyout?

Greedy in the Grille


Dear Greedy,

If there is one thing that HBS’s style of teaching FIN without allowing actual Excel models in the classroom should have taught you, it’s that valuation is less about the fundamentals and more about how confidently you can make a comment peppered with appropriate FIN jargon (read: value drivers). FIN and BGIE can only provide you with tools for macroeconomic valuation, while the real value lies in what a tool you can be. Nevertheless, let me try to bridge the gap between your classes and practical exercises in a way that HBS never did, and review some potentially useful methods for valuation:

  1. Intrinsic valuation: Clearly, your overly nerdy classmate places too much emphasis on pointless numbers that describe the fundamental sources of revenue and expenses an economy has to deal with, which one could hypothetically go look up if one actually learnt to read the Balance of Payments and budget. However, in true business school student style, I would argue what matters is more the potential for additional value. For instance, how much revenue can Montenegro add because one group of jet-setting HBSers somehow decided to spend a week on yachts over there? How much growth potential awaits Germany as it continues to ramp up its Oktoberfest circuit even as its manufacturing base faces competition? Thinking through these questions is what will truly enable you to identify value drivers at the fundamentals level.
  2. Multiples: Any good investor will scoff at your carefully conducted valuation analysis by pulling a multiple number out of their ass relevant industry experience. As we have noted in FIN, perfect comparables may be hard to find. Perhaps waiting to see whether the President manages to buy Greenland may be prudent, before deciding on your own offer bid.
  3. Precedent transaction: No method provides an easier way to justify your own expenses than looking at how much someone else was willing to pay. HBS debt, trips to Mexico, and Canada Gooses are all cases in point. On this topic, there are fewer cases of transaction, but I can think of some. The sale of Texas by Mexico or lease on Hong Kong might provide some helpful numbers. Please refer to the non-existent helpful appendices from your EGC class to get those numbers.

Of course, in the midst of all this, you might want to stop and think of what on earth you could use a small island for. The case on Fyre Festival currently being written could have helpful strategic insights.

Your best Baker Scholar friend,

Harby is a Pulitzer Prize-nominated MBA advice columnist and the author of such bestsellers as Teaching Your Dog How to DCF and The Seven People You Meet at the Boston Doubletree. She is on Instagram @dearharby. Want some advice from Harby? Email your question to

December 5, 2019
Want to Sponsor The Harbus?

You can sponsor the Harbus website to reach the Harvard Community. Learn more.


We are addicted to WordPress development and provide Easy to using & Shine Looking themes selling on ThemeForest.

Tel : (000) 456-7890
Email :