Investment fraud globally is on the rise and Nigeria is not spared. In our clime, requesting funds from an investor with a promise of overnight appreciation is the norm. The investor only realises the scam after the business brand promising huge returns vanishes into thin air.
Take the American Elizabeth Holmes, for instance, the first female self-made billionaire and the founder of Theranos which became Silicon Valley’s golden child at some point, expanding rapidly, and raising over a billion dollars in funding, whose investors are now seeking for their money following its collapse.
People in the middle class desperate to increase their wealth are often the target in Nigeria by Ponzi scheme operators with the clear intention of defrauding them. Knowing how much a company is worth before committing any investment is also important as it demonstrates a clue of how investment can be recovered back in case of heavy loss or liquidation, according to Harvard Business Online. This can be detected through a thorough examination of a transparent book value method if the company has any, using information from its balance sheet or using a discounted cash flow model.