It’s not every day that a company with a market cap of more than US$ 70 billion (almost same as India’s largest company by market cap), and one that is favoured by a lot of savvy investors, loses 80% in nine months (65% in just last one month). But that’s what has happened with investors in the Canada-based Valeant Pharmaceuticals, where a spate of scams has been discovered over the past few months – from bad M&A accounting, to wrongful income reporting, and now the company is facing a potential default.
Valeant is a typical case of a high-growth business where people think nothing could go wrong and overpay ignoring the complexities and fuzziness, and which ultimately presents itself as a classic case on what not to do in business and investing.
Like I wrote about the Volkswagen scandal a few months back, there are several lessons one can learn from the fall from grace of Valeant. Here are just six of them.