This 4-day course will provide delegates with a thorough understanding of:
- Theory and modelling of corporations and project finance investments
- Comparison of useful ratios in project finance and corporate finance
- Alternative risk assessment techniques in corporate and project finance
- Common valuation mistakes in valuation of stocks and projects
- Structure and creation of corporate models
- Structure and creation of project finance models
- Complexities in analysis of terminal value
- Complexities in valuation and credit assessment of project financings
The course begins by introducing key themes and concepts in valuation in corporate and project finance that will be used throughout. Measuring and managing risk as well as translating risk into valuation for decision making will be emphasised along with strategic and economic drivers of value
The course addresses valuation in project finance applications, including structured finance, debt structuring and sizing, leveraged buyouts, contract valuation, and probability of loss, loss-given-default and yield spread
Financial modelling for valuation, including modelling overview and major themes, corporate financial model structure and objectives will be covered, including the design and building of a corporate model from A to Z.
Delegates will construct a basic project finance model to become familiar with the structure of a project finance model, equity cash flow and free cash flow.
The model will be used to demonstrate how interest during construction, multiple equity sources and target debt service cover can be added to a model. It will be used in the context of simple applications involving debt capacity, contract pricing, debt structuring, break-even analysis and probability of default.
Using a number of intensive hands-on exercises and case studies, participants will learn the theory and application of a wide range of techniques to analyse corporate and project finance.
Other than the instruction in how to build, use and analyse financial models, participants in the course will receive a comprehensive suite of financial modelling software on a compact disk that includes a number of template models and excel add-ins.
The software consists of:
- corporate models that accept historic financial data and generate alternative valuation measures,
- M&A models that consolidate two companies using alternative financing assumptions and produce accretion and dilution estimates,
- project finance models that measure the effect of alternative elements in a cash flow waterfall including debt service reserves, junior debt, covenants, defaults and prepayments,
- LBO models that measure the debt capacity of a transaction; option pricing models that account for alternative structures, and
- debt valuation spreadsheets, Monte Carlo simulation models, tornado diagram and sensitivity analysis.
Added sessions on financial modelling in Excel
The course uses case studies, hands-on analysis and template models as the primary teaching tools.
However, in teaching this course in the past, we have found that some participants are interested in practical mechanics of excel (macros, combo boxes, offset and indirect functions). Added sessions will be held after 5:00pm to provide instruction on many practical excel topics.
Supported by: 
Day 1
Valuation in corporate and project finance
Overview
This part of the course introduces key themes and concepts that will be used throughout the five-day session. Measuring and managing risk as well as translating risk into valuation for decision making will be emphasised along with strategic and economic drivers of value. Valuation covers mechanical aspects of valuation, the meaning of financial ratios used in valuation, appropriate use of multiples (P/E versus EV/EBITDA), choosing among alternative techniques and assuring that the valuation techniques make sense.
Agenda
- Valuation overview
- Discounted cash flow
- Cost of capital and adjusted present value
- Sensitivity analysis and scenario analysis
- Case study of valuation and financial modelling (IPO case)
Overview of course and major themes
- Tension between judgment and quantitative analysis
- Use of free cash flow in decision making versus earnings comparisons
- Importance of models in risk assessment and decision making
- Conflict between enterprise valuation and equity valuation
- Financial ratios in corporate valuation
Overview
- Financial statement review
- Financial indicators of value
- Price earnings ratio, return on investment and value creation
- Free cash flow
- Case study
Corporate valuation overview and mechanics
Before delving into the details of valuation models, general categories of valuation models will be introduced and a foundation in valuation mechanics will be established. The discussion will focus on how value is created by a company.
- Alternative valuation techniques
- Discounting in practice
- Valuation of risky bonds
- Derivation of P/E ratios
Corporate valuation overview and modelling
In this section participants learn the state of the art in valuation theory and practice. The discussion and case studies focus on which valuation method is most appropriate for alternative business circumstances.
- Valuation using multiples
- Valuation using discounted free cash flow
- Rationale for alternative terminal value approaches
- Valuation from earnings growth
- Case study on implementation of valuation
Cost of capital and adjusted present value
After analysing valuation techniques, application of cost of capital is discussed with emphasis on application of discount rates in real world circumstances. The final topic addresses adjusted present value where all-equity cost of capital is applied.
Survey of cost of capital techniques
- Cost of capital used in M&A
- Weighted Average cost of capital
- Data tables and valuation
- Application of CAPM
- Adjusted net present value
Day 2
Valuation of debt and equity in project finance
Valuation in project finance applications
Project finance is a unique financial product with significant financial management implications related to risk analysis, debt sizing, contract valuation and options analysis.
- Structured finance overview and terms
- Debt structuring and debt sizing in project finance and leveraged buyouts
- Contract valuation in project finance
- Probability of loss, loss, given default and yield spread
Project finance overview and terms
The discussion of project finance begins with introductory comments about the costs and benefits of project finance with an emphasis on measuring and valuing risk. A case study is used to introduce a number of subjects
- Overview of project finance terms
- Applications and contracts in project finance
- Project finance case study
Valuation and credit analysis in project finance
- Overview of project finance models
- Free cash flow and equity cash flow
- Equity and project IRR
- Debt service coverage and LLCR
- Debt sizing case study
Debt structure and waterfalls in project finance debt
Debt structure in project finance can be quite complex and affected by a number of credit enhancements including covenants, debt service reserves, waterfalls and contracts. Credit enhancements are addressed using a case study and a comprehensive project finance model template.
- Credit enhancements in project finance
- Debt service reserves
- Project finance covenants
- Senior and subordinated debt
- Liquidated damages
- Case study of debt valuation
Valuation case study in project finance
After working through project finance issues, participants work through a comprehensive case study to value a project and determine the credit quality of the debt tranches. The case includes establishing economic drivers, revenues and expenses and the financial structure of the project.
- Case review
- Working analysis
- Financial structure
- Incorporation in project finance model
- Sensitivity analysis on valuation
- Inclusion of debt service reserve and covenants
Day 3
Corporate modelling
Financial modelling for valuation
- Modelling overview and major themes
- Corporate financial model structure and objectives
- Design and building of a corporate model from a to z
Corporate model structure
Forecasting models are the centrepiece of most valuation, merger and acquisition and project finance analyses. Therefore, the course begins with by establishing a solid foundation in modelling. Some of the common errors made in valuation from corporate models will also be discussed. The errors do not address mechanical aspects of the model but rather conceptual and logic mistakes from a business perspective.
- Model objectives
- Review of actual models
- Mistakes in modelling (base case definition, ignoring financial ratios, capital expenditure consistency, growth rates, business cycles)
- Model structure for alternative transactions (corporate models, project finance models, leveraged buyout models and merger and acquisition models)
- Model layout (inputs, working analysis, debt structure, financial statements)
- Financial statement analysis for modelling
- Model complexities (depreciation, taxes, circularity, minority interest, deferred taxes)
Corporate model structure
So as to become proficient in interpreting financial statements and financial models and in order to be comfortable in using template models, participants will construct a corporate model from a to z. The model exercise includes a discussion of spreadsheet conventions such as the positive number convention, organisation of spreadsheets, use of range names and construction of “cork screw” accounts.
Day 4
Project finance modelling
Financial Modelling for Valuation
After the introductory discussion, participants construct a basic project finance model to become familiar with the structure of a project finance model, equity cash flow and free cash flow.
The model is then used to demonstrate how interest during construction, multiple equity sources and target debt service cover can be added to a model. Once the fundamental model is built, it is used in the context of simple applications involving debt capacity, contract pricing, debt structuring, break-even analysis and probability of default. Construction of a simple model involves the following:
Basic mechanics of project finance models
- Separation of construction period from operating period
- Sources and uses of funds statement during the construction period
- Cash flow, net income, equity balance, construction financing and income taxes
- Internal rate of return on the project and central concept of free cash flow
- Construction of a balance sheet and use of a balance sheet in auditing the model
Project finance model accounting and financing
- Incorporation of interest during construction
- Circularity problems
- Multiple equity tranches
Use of project finance model measurement of debt capacity
Course summary and close
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Ed Bodmer
Edward Bodmer has created innovative forward pricing, productivity measurement and investment valuation software for consulting clients throughout the United States. He has taught energy economics and finance throughout the world, and formulated significant government policy and corporate strategy in the U.S.
Mr. Bodmer's consulting clients include investment banks, commercial banks, research institutions and government agencies on a wide variety of complex valuation and advisory matters. He has constructed a unique framework for electricity price forecasting and valuation using production cost modelling techniques combined with option price theory and Monte Carlo simulation.
Mr. Bodmer is also an adjunct professor at leading University where he teaches courses in microeconomics. Along with his practical experience that covers a multitude of major advisory projects, he has taught specialised courses in financial modelling, electricity pricing, option valuation, mergers and acquisitions and contracting to investment banks, commercial banks, industrial corporations and electric utility companies.
Mr. Bodmer was formerly Vice President at the First National Bank of Chicago where he directed analysis of energy loans and also created financial modelling techniques used in advisory projects. He has used the models in providing expert testimony on subjects ranging from capital structure to investments in multi-billion dollar nuclear plants to complex valuation of new investments.
Mr. Bodmer received an MBA degree specialising in econometrics (with honours) from the University of Chicago and a BS degree in finance from the University of Illinois (with highest university honours). He has written many articles and is in the process of completing a textbook on valuation of electricity assets.
Courses run by this instructor
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.
26-28 Sep 2012 (Paris, France)
Delegates will leave this intensive three-day financial modelling in Excel training course with the ability to effectively apply modelling techniques in a wide range of practical scenarios. Featuring: Design & structure different models and translate them into Excel; Calculate free cash-flow; Use Monte-Carlo simulations; Identify decisions tree - problems & solutions; Develop models incorporating risk, sensitivity, optimisation and forecasting using solver.
26-30 Nov 2012 (Paris, France)
This practical international project finance training course is meant to increase participants' understanding of the process which leads to the creation of suitable financial structures for cross-border projects. It includes a 1-day cash flow modelling workshop.
13-15 Jun 2012 (Amsterdam, Netherlands)
A 3-day course designed to enable participants to create, use and analyse a project finance model.
28-30 May 2012 (Amsterdam, Netherlands)
15-17 Oct 2012 (Amsterdam, Netherlands)
This 3-day interactive workshop offers a practical study of the techniques of valuing and financing acquisitions.
24-27 Sep 2012 (Paris, France)
This comprehensive, 4-day training course allows delegates to analyse and practice a range of corporate valuation techniques, their appropriate application and their advantages and disadvantages.
18-20 Jun 2012 (Paris, France)
19-21 Nov 2012 (Paris, France)
A 3–day training course dedicated to the valuation, structuring, financing and negotiating of merger and acquisition transactions.
3-6 Dec 2012 (Prague, Czech Republic)
Excellent 4-day course teaching you how to build a successful corporate banking strategy and how to raise the performance of your institution. The course will teach you how to use the planning process to set goals, control costs and to increase the profitability of clients and sales channels.
24-27 Nov 2012 (Prague, Czech Republic)
Bank Valuation is a comprehensive, 4-day valuation course for banking experts.
10-13 Dec 2012 (Istanbul, Turkey)
A 4-day, intermediate-level course for people with several years experience in finance who want to reinforce and diversify their knowledge of the underlying frameworks and approaches in different areas of financial management.
18-22 Jun 2012 (Paris, France)
10-14 Dec 2012 (Paris, France)
A 5-day, case-study based workshop exploring more advanced issues in company valuation and financial modelling.
24-27 Sep 2012 (Prague, Czech Republic)
A 4 day financial training course, Financial Modelling for Mergers and Acquisitions is an intensive hands-on course in which you receive comprehensive instruction on modelling economic, financial and strategic issues associated with mergers and acquisitions. This course will take place in Prague, Czech Republic.
17-20 Sep 2012 (Prague, Czech Republic)
This 4-day course provides a comprehensive look at the most important recent trends and developments in bank reporting. It will improve your analysis skills, giving you the toolkit for better decision making, helping safeguard your organisation.
4-6 Jun 2012 (Paris, France)
3-5 Dec 2012 (Paris, France)
A 3-day course designed to provide a complete overview of the venture capital industry and its workings. Participants will gain a thorough understanding of the role and operations of a venture capital fund, and the complex financial engineering methods it uses.
24-27 Sep 2012 (Prague, Czech Republic)
A 4 day intensive, practical training programme combining a review of the latest valuation theory with real life case studies and team negotiation role plays. Advanced Private Equity & Valuation Workshop will take place in Moscow, Russia.
3-6 Sep 2012 (Munich, Germany)
A 4-day, intermediate-level project finance for public private partnerships training course.
24-26 Oct 2012 (Berlin, Germany)
This 3-day program will discuss approaches to financing renewable projects in many parts of the world; focusing on how these transactions differ from more conventional thermal-based deals.
4-6 Sep 2012 (Oslo, Norway)
This 3–day course will provide delegates with all the necessary practical skills to model and value oil and gas companies, from the perspective of an investor, an equity analyst or a participant in a corporate transaction, whether a corporate or an advisor.
15-18 Oct 2012 (Prague, Czech Republic)
This 4-day workshop takes a hands on approach to a comprehensive set of financial modelling and valuation techniques with computer based case studies.
25-27 Jun 2012 (Oslo, Norway)
An intensive, 3-day, computer-based, practical training course with case studies and worked examples.
15-17 Oct 2012 (Prague, Czech Republic)
This 3-day course is designed to give delegates a comprehensive overview of the latest techniques and methodologies to successfully manage a corporate banking and SME network.
16-25 Jul 2012 (Prague, Czech Republic)
An 8-day financial training course based on case studies and model building.
The course is designed to provide an in-depth overview of the main areas in finance, including recent controversies and regulatory issues.
The course delivers exposure to all the main corporate finance disciplines including the main company funding areas such as debt and equity issuance, valuation, M&A, leveraged buy-outs and restructuring as well as the associated model-building.
27-29 Aug 2012 (Vienna, Austria)
Upon completing this 3-day workshop, delegates will understand how to build a flexible analysis model to restructure existing debt.
3-7 Sep 2012 (Prague, Czech Republic)
Project finance mechanics combines lectures, case studies and hands-on exercises in explaining the valuation, risk analysis and financial structuring of project finance transactions.
10-13 Sep 2012 (Barcelona, Spain)
Plan, evaluate and monitor all financial aspects of the restructuring process.
24-26 Sep 2012 (Belgrade, Serbia and Montenegro)
This 3 day programme focuses upon how the toolkit of managerial accounting can be linked sequentially and logically with the principles of financial economics. It will provide critical insight into how the tools and techniques of management accounting can be adapted and used to be consistent with achieving value growth.
This course has now expired please email us to find out when the course will next be running.