Monday, May 18, 2009


There is a very entertaining article in the WSJ this morning. Trump is suing an author and his publisher for defamation due to a 2005 book which said he was only worth $250 million. There are excerpts from Trump's deposition regarding how he values his empire. It is really a good read.

The opposing counsel tries to get Trump to admit contradictions between his testimony and actual contracts. Trump however, has an answer for every question. While it is entertaining, I suspect that Trump will do very well when it comes time to testify. The fact is that valuation is much more art than science notwithstanding a well-accepted body of knowledge on the topic. And Trump is really good at the art side.

Furthermore, Trump, a graduate of Wharton, is more technically smart than some may think. I am looking forward to the reporting on this case. I can envision The Donald weaving valuations concepts and his subjective views to easily prove that he was worth more than $250 million at the time even if he can't prove he was worth 20 times that.

It reminds of the time that I was questioned on a distressed company valuation by a Harvard Business School student. I looked up at him in a class of 100 and said, "you must have worked at an investment bank for the past few years." He indicated that he had. So, I replied, "So, you must think that using methodologies like discounted cash flows, comparable sales, public and company multiples produce the actual value of something. Well, they don't. Something is only worth what someone will pay for it, especially in distressed situations." In this case, I am siding with Trump to demonstrate he was worth well more than $250 million. Should be a fun ride.

Cheers, Mike


  1. How much more does it need to be worth for Trump to win? That's my question.