Euromoney Audit Training

Featuring:

• Building a comprehensive financial model
• Understanding business models
• Absolute valuation methods DCF, EVA and CFROI
• Developing an appropriate cost of capital
• Decomposing sources of return
• Using comparative valuation measures
• Understanding the basics of real options
• Dealing with intangibles
• Valuing fast growing companies

Who Should Attend

This course is aimed at those with a solid financial background who wish to explore the more advanced aspects of financial modelling and valuation methodologies, including:

• Investment Bankers
• Equity Analysts
• M&A Professionals
• Fund Managers
• Treasurers and Finance Directors
• Commercial Bankers
• Private Equity & Venture Capital Specialists
• Business Analysts

Methodology

• This practical, hands on programme is taught using formal lectures combined with practical and interactive case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on delegates gaining practical, hands-on experience of the various valuation techniques.
• Case studies from recent deals are included, as are practical exercises involving problem areas in valuation.
• The seminar also includes critiques of the conventional techniques and considers suitable alternatives to be deployed in differing circumstances as well as an update on the latest valuation reporting guidelines and their interpretation.

Course Objectives

The course is aimed at participants with good accounting knowledge who wish to explore the main valuation methods used by professional investors and want to develop their own financial models. The format will be interactive throughout and participant will create their own excel-based valuation models, which will be used to value a real life company.

Course Overview

Company valuation is used for the purposes of investment, M&A or as part of internal measures of financial control. It is extensively applied when companies issue new shares, divest operations or acquire other companies.

The rapidly growing private equity industry is also dependent on solid analysis. There are many different approaches to the analysis and valuation of companies and it is paramount to know when and how to apply what method. It is also essential to understand that company analysis is not an absolute science but also based on interpretation and judgment.

This highly practical course will lead you quickly from the basics through to the more advanced valuation methodologies and modelling techniques.

Day 1

Modelling

Overview

·         Why create a model

·         Good modelling practices

·         Overall structure of the model

 

The main structure

·         Historic P&L information

·         Restating historic information

·         Non-recurring items

·         Historic B/S information

·         Non-core assets

 

Review of initial model for case company

 

Fixed assets

·         Understanding capital intensity

·         Maintenance vs expansion Capex

·         Forecasting overall capex

·         Calculating depreciation

 

Working capital

·         Components of cash and non-cash working capital

·         Working capital ratios and their interpretation

·         Forecasting working capital

 

Associates and investments

·         Accounting for associates and investments

·         Forecasting associates and investment income

·         Impact on cash flow and B/S

 

Day 2

Modelling and Ratio Analysis

Equity financing

·         Minority interest- impact on equity financing

·         Common shareholders- forecasting dividends and retained earnings

·         Share buy-backs and rights issues

 

Debt financing

·         Linking cash flow and debt requirements

·         Different types of debt financing

·         Leasing vs ownership

 

Scenario analysis

·         Developing fully flexible scenarios

·         Identifying the key variables

 

Review of completed model for case company

 

Choosing appropriate comparable companies

·         How the choice of comparables impacts the final valuation

·         Choosing comparable companies in an emerging market context

·         Value drivers: understanding industry dynamics

·         Main factors affecting selection: size, geography, regulation, customers

·         Other factors affecting comparability, e.g. free-float, capital structure, corporate finance activity

 

Equity vs enterprise value multiples

·         Definitions

·         Calculating EV: core vs non-core, assessing liabilities

 

Calculating “recurring” earnings

 

Equity multiples

·         Main multiples: P/E and P/BV

·         Decomposing P/Es: linking growth, Cost of equity and ROE

·         Pros and cons of equity multiples

 

EV multiples

·         Main EV multiples

·         Choosing the most relevant multiples

·         Pros and cons of EV multiples

 

Implied valuation

 

Interpreting results and deriving an implied valuation for the target company

 

Day 3

DCF and cost of capital

Cost of capital

·         Why calculate a cost of capital

·         The risk/reward trade off

·         Impact of financial leverage on Value

·         Market risk vs company specific risk

·         Accounting for market risk: asset betas

·         Financial leverage and betas

 

Equity investors

·         Calculating Cost of Equity

·         Estimating the equity risk premium

 

Debt financing

·         Impact of taxation: The tax shield

·         Calculating the cost of debt

 

Weighted Average Cost of Capital

·         Market value of debt and equity

·         Current vs target WACC

 

DCF

 

Forecasting FCF

·         Length of the explicit forecast period

·         Cyclical and growth companies

·         Calculating FCF: recurring vs growth FCF

·         Appropriate FCF

 

Forecasting of FCF for case company

 

Terminal value

·         Beyond the initial period

·         Estimating long term growth rates in emerging markets

·         When should FCF be normalised?

·          TV using the perpetuity method

·         TV using the multiples method

·         Running sensitivities

 

Review of initial DCF model.

 

Day 4

Advanced Issues

Understanding returns

·         Understanding ROCE

·         Components of Capital Employed

·         Decomposing ROCE

·         The ROCE “frontier”: trade-off between higher margins and higher asset turnover

 

The link between ROCE and ROE

 

Distortions in calculating ROCE

·         The impact of changing asset lives

·         The invisible assets: valuing intangibles

·         Historic capitalisation

·         Estimating the current value of intangibles

 

Alternative valuation approach: real options in emerging markets

·         What are real options?

·         Using real options to value fast growing companies

·         Using real options to value natural resources companies

·         Using real options to value distressed assets

 

Course summary and close

• Sophie Blanpain-Forder

  Sophie Blanpain-Forder was the Global Head of Equity Research at Morley Fund Management, the third largest UK asset manager and one of the largest property fund managers in Europe. Prior to that she worked as Senior Analyst for the European Investment product division at Citibank N.A. where her main responsibilities included the design of new investment products and asset allocation. She also worked for Credit Lyonnais Securities, Credit Suisse First Boston and Lehman Brothers. Sophie graduated in 1990 from Institut d’Etudes Politiques de Paris with highest honours. She studied Economics and Finance specialising on Financial Tax Systems, Accounting and Financial Mathematics. She is also a retained speaker for the CFA institute.

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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