Corporate Valuation Bootcamp (In Excel)
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This practical two day course will deepen your understanding of valuation and will enable you to apply different valuation techniques. The programme will be built around the use of our in-house models, therefore allowing the attendees to get their “hands dirty” in the valuation work rather than just covering pure theory.
Key Learning Outcomes:
- Understand and evaluate the drivers of corporate value
- Understand the concept and estimation of enterprise value
- Derive the equity value bridge (waterfall)
- Build and use the Discounted Cash Flow model
- Develop a multiple based valuation.
- Practical assess the sanity of the inputs used to derive the valuation
The Value of the Firm
Understanding and identifying the value drivers and how to maximise the value of the firm is critical. As is answering the key questions: Which assets to invest in? How to determine buy, sell and hold calls. Analysts will learn the transition from an accounting perspective to the intrinsic valuation and fundamental view.
The firm and its value
- Firm value
- Equity value
The key drivers of value:
Overview of company valuation methodologies
- Football field summary
- Relative valuation
- Absolute valuation
- Valuation requirements
Absolute Valuation: Discounted Cash Flow
Fundamental cash flow analysis is centred primarily on the Discounted Cash Flow methodology. The concept of fundamental valuation will be explored in detail. Analysts will get insight into how and where to find the constituents of the valuation methodologies and understand how important financial forecast techniques are for the valuation range by implementing sensitivity and scenario analysis.
Case study: The analysts will develop the DCF on Diageo plc. This allows the application of Excel modelling skills together with the valuation technical skills. The analysts will be shown how to run the DCF model commercially so that they understand and appreciate the ease with which the model can be run to show a significant under or over valuation and how the cash flow drivers interact.
How does DCF fit in with other valuation techniques?
The cost of capital
Cost of new equity
- Finding and evaluating the input data – data source quality
- Risk free rates
- Equity market risk premiums
- Raw and adjusted betas
- Interpreting a Bloomberg beta
Cost of debt
Forecast horizon, visible forecast and terminal periods
The drivers of free cash flows
- Free cash flow to equity vs. free cash flow to the firm
- The key drivers of free cash flow:
- Sales growth rates
- Working capital management
- Cash taxes paid
Unlevered free cash flows
Terminal value - calculating the terminal value using
- Perpetuity growth rates
- Terminal multiple methods
Understanding the equity bridge:
- What is captured in EV?
- Bridging to equity
DCF sanity checks
- Ratio analysis
- Full analysis of historic performance and position
- Enterprise value splits
- Benchmarking key inputs against peers, consensus research and economic data
- Backing out the growth rate from multiples
- Full historic review of numbers
- CAGR review
Relative Valuation: Comparable Companies’ Analysis
What is a company worth? Valuation can be derived from market information. Analysts will learn how an investor will evaluate investing in a company by comparing it with public trading companies and precedent transactions. This comparison only makes sense if we know how to adjust the numbers and take into account the accounting knowledge covered previously.
What drives a multiple?
Why companies may trade at a premium or discount?
Considerations for selecting a comparable universe
Collecting the source data
Calculating firm value – dealing with;
- Market capitalisation – getting to right NOSH
- Diluted market capitalisation calculation
- The treasury method to anticipate option dilution
- Net debt
- Non-controlling interests
- Joint ventures and associates
- Normalising the earnings metrics
Working with historical, last twelve months (LTM) and forecast data
Case study: The bulk of the instruction this day will be built around a number of trading comparable case studies. Each case study has been designed to bring out certain learning points, such as:
- EV calculations
- The treatment of joint ventures and associates
- Cleaning multiples
- Creating equity bridges
- How would an analyst determine the appropriate multiple with which to value the target company
- How to analyse the output of a comps sheet
Relative Valuation: Comparable Transaction Analysis
- Transaction comparables – capturing the premium
- Identifying the comparable deal universe
- Available databases and tools
- Controlling stake acquisitions
- Grossing up equity values
- Premium paid analysis
- Picking a clean pre-announcement stock price
Free Course Reference Guide
The Complete Investment Banker is included as part of the programme (Normal RRP £195).
The Complete Investment Banker is designed to act as a comprehensive and practical reference guide for bankers during training and as a companion at the desk. Topics covered range from ratio analysis to accounting to DCF valuation.
Also included are The Kit and Merger Model Construction Kit.
The Kit, part of Fitch Learning's Complete Analyst system, is a compilation of snapshots of key knowledge areas designed to act as a quick reference guide for bankers during their training as well as a companion on the desk.
The Merger Model Construction Kit, also part of the Complete Analyst System, is a compilation of step-by-step snapshots of how to construct a fully flexible and robust merger model. The design and build of a merger model requires a structured approach and this kit breaks the build of the model into a series of easy to follow steps. The kit reinforces classroom learning and provides an invaluable summary of the Merger Modelling classroom course.
Written by the industry's leading trainers, The Kit and the Merger Model Construction Kit are useful aids for quick memory recall and contain the clearest explanation and application of technical content in a manner that make them relevant to bankers of all levels.
The programme also includes our Excel Short Cut that includes quick access to 40 of the most commonly used shortcuts.
Who should attend
This programme is targeted at finance professionals with limited prior experience, who are looking to develop their practical and technical skills.
The programme requires a good working knowledge of accounting. The basics of these will not be covered on the programme. It is strongly advised that the Financial Analysis Fast Track is attended prior to this programme, if your accounting and analysis skills are limited or require a tune up.
The programme will make use of in-house Fitch Learning financial models. It is therefore paramount that attendees do have some prior modelling experience or have attended our Best Practice Financial Modelling programmes.
This is an introductory to intermediate programme.