I wonder how much a business' valuation is determined by sale potential. If you have a business that is worth a lot, and yet nobody can or will buy it, how much is it really worth?

Obviously it's still worth something, it's just that the valuation becomes really fuzzy except for the assets.

Formerly worked in Investment banking: it is a huge huge determinant of value.

Particularly for a lower-dividend, higher growth company like Nvidia, the vast majority of the present value comes from the terminal value (what someone else will pay you for it when you're done holding the investment), made even more extreme by low interest rates.

Couldn't it transform into a high-dividend company?

> Couldn't it transform into a high-dividend company?

This is cigarette-butt investing. It ignores terminal value. If the terminal value is already close to zero, it's the right move, an orderly wind-down and re-allocation of assets. If there is terminal value, it's a pillaging. Cases like these, where the terminal value starts looking more theoretical than practical, are how those incentives shift.

What happens in the situation where there isn't a "terminal" point for a company?

Coca-Cola has no reason to "terminate" itself, so why shouldn't it distribute profit excess to its operating requirements back to shareholders?

The terminal point doesn't necessarily have to apply for the company, or even the financial asset based on the company.

There is an simple model in finance [1] that collapses an infinitely growing stream of cash flows into a finite present value. So to your example of coca-cola, even if you assume they will exist and distribute growing profits forever, you can still find a terminal value.

[1]: https://corporatefinanceinstitute.com/resources/knowledge/va...