Course dates
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.
Summary of course content
- Building a comprehensive financial model
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Complexities in using comparative valuation measures
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Absolute valuation methodologies: DCF,EVA
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Developing an appropriate cost of capital
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Decomposing sources of return
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Building a fade model
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Capitalising Intangibles
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Introduction to real options
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Merger and acquisition issues
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Understanding LBOs
- Valuing distressed assets
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 course 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.
Prerequsite
A prerequsite survey is available to ensure this course meets your requirements.
Who should attend?
- Equity Analysts
- Investment Bankers
- M&A Professionals
- Fund Managers
- Treasurers and Finance Directors
- Commercial Bankers
- Private Equity & Venture
- Capital Specialists
- Business Analysts
Supporting publication
Day One: Advanced modelling
Registration commences at 8:30 on day one
Programme runs from 9:00 - 5:00 daily
Overview
- Why create a model
- Review of good modelling practices
The main structure
- Historic P&L information
- Restating historic information
- Non-recurring items
- Historic B/S information
- Non-core assets
Case study: Review of initial model for target company
Forecasting the income statement
- Detailed revenue forecasts
- Fixed vs. variable costs: operating leverage
- Hedging policies
Taxation issues
- Current vs. deferred tax
- Estimating the effective tax rate
- Operating losses: carry-back and carry forward
Fixed assets
- Understanding capital intensity
- Maintenance vs. expansion Capex
- Understanding asset lives
- Forecasting disposals
- Impairment of assets
- Dealing with intangible assets
Working capital
- Components of cash and non-cash working capital
- Working capital ratios and their interpretation
- The relationship between working capital and margins
Provisions
- The different types of provisions and their accounting
- Impact of provisions on valuation
- Associates and investments
- Accounting for associates and investments
- Forecasting associates and investment income
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
Scenario analysis
- What are scenarios?
- Developing flexible scenarios with excel
Case study: Review of completed model for target company
Day 2: Multiples based valuation and cost of capital
Advanced ratio analysis
- Equity vs. enterprise value multiples
- Definitions
- Calculating EV: core vs. non-core
Assessing liabilities
- Dealing with different kinds of provisions
- Dealing with pension liabilities
- Hybrid financial instruments
- Options
- Off balance sheet liabilities
Equity multiples
- What do equity ratios tell us?
- Decomposing P/Es: linking growth, cost of equity and RoE
- Free cash flow yield
EV multiples
- What do EV multiples tell us?
- Choosing the most relevant multiples
- Theoretical EV ratios
Interpreting ratios
- Which ratios for which companies?
- Different ratios different answers?
Implied valuation
- Valuing a one business company
- Valuing a conglomerate: sum of the parts valuation
- Valuing cyclical and fast growing companies
- Interpreting results and deriving an implied valuation for the target company
Cost of capital
- What the theory says
- The elusive equity risk premium
- Is Beta a reliable measure of risk?
- Which cost of capital?
- Whose cost of capital?
- WACC in emerging markets
- Valuing negative cash flows
- Time Varying Cost of Capital
Day three: DCF
Forecasting FCF
- Pitfalls in FCF calculation
- Estimating normalised FCF
Case study: Forecasting of FCF for target company
Terminal value
- TV using the perpetuity method: volatility
- Uses and misuses of the exit multiples¡¦ approach
- Liquidation value
- Why the value drivers method gives more stable and meaningful results
- Running sensitivities
Case study: Review of final DCF model
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
Day Four: Absolute valuations: advanced issues
EVA as an alternative to DCF
- Definition
- Why use DCF and not DCF
- The mathematical equivalence of EVA and DCF
- Using EVA to better understand value creation
- The potential pitfall of EVA
- Building an EVA model
Valuing the tax shield: APV
- What is adjusted present value
- Why value the tax shield separately
- Appropriate discount rates
CFROI
- What is cash flow return on investment?
- Why use IRR to measure return
- IRR compared to accounting ROCE
- Using IRR to value a project
Valuing fast growing companies
- The concept of fades
- Fading ROCE and growth
- Choosing an appropriate fade period
- Impact of fades on DCF valuation
Day five: Alternative methods and M&A issues
Scenarios and real options
- Normal distributions and DCF
- When the world is not normally distributed
- Valuing companies using binomial distribution
- Real options: myth or reality- the valuation
- Building a binomial model for a biotech company
Valuing distressed assets
- Why DCF is not appropriate
- Estimating default risks
- Distressed assets as options
Mergers and acquisitions
The drivers of M&A
- Horizontal and vertical integration
- Price
- Strategy
Valuing the target
- As a standalone
- Valuing synergies
- Estimating the price premium
Financing the acquisition
- Using shares or cash
- EPS accretion and dilution: does it reflect value added?
Modelling acquisitions
- Accounting issues
- New developments
- Calculating goodwill
- Proforma balance sheet
- Merging income statements
Course summary and close
Hilton Hotel Singapore, Singapore, Singapore
This programme takes place on a non-residential basis at Hilton Hotel Singapore. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.
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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.
Course dates