Comprehensive course analysis
Who should attend
- Investment bankers
- Credit analysts
- Fund managers
- Equity analysts and strategists
- Compliance officers
- Equity sales and traders
- Corporate finance lawyers
About the course
Learn to model complex valuations with our 3 day course
Corporate valuation - Techniques and Application is a 3-day course that can be booked individually or as part of the 5-day Corporate Financial Analysis and Valuation School
To find out more, please contact firstname.lastname@example.org
The valuation of corporates is a fundamental skill required of a wide range of finance professionals including equity analysts, strategists, corporate finance executives, fund managers, PE/VC executives and general bankers. The recent volatility of corporate valuations, combined with the emergence of new sectors, makes understanding the theory and practice of valuation essential.
This practical course is taught using an inter-active classroom format that comprises lectures followed by short, practical and inter-active case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on delegates gaining hands on experience of the various valuation techniques. Module 2 gives a detailed theoretical background to a range of valuation methodologies, followed by plenty of case studies to apply these theories to real life situations.
After completing this Module, delegates will learn:
- valuation fundamentals
- equity and EV multiple valuations
- DCF valuations
- how to apply different valuation techniques
- forecasting techniques, using Excel, to establish valuation ranges
- the impact of capital structure on valuation
- the impact of corporate finance transactions on valuation
- how qualitative factors influence valuations
*Day 1: *
Introduction to corporate valuations
Analysing recent trends in corporate valuations
Enterprise value versus equity value
- Calculating equity value including NCI
- Calculating gross debt and net debt
- Adjusting for provisions, quasi-debt, equity linked instruments, equity kickers, options, capital commitments etc
- Adjusting for off balance sheet liabilities
Case study: moving between EV and equity value
Background to corporate valuations
- Valuation fundamentals
- Drivers of valuation – ROIC, WACC, growth, size
- The FCF perpetuity valuation formula
- The key value driver valuation formula
- ROIC vs. WACC – computation and drawbacks
Case study: valuing companies using the above formulae
- Equity multiple valuations based on net income, EPS, dividends and NAV
- PE ratios, PB ratios and dividend yields
- EV multiple valuations based on revenues, EBIT, EBITDA
- Adjustments to group EV to derive operating EV
- Adjustments to EV multiples to derive the correct underlying multiple
- Choosing comparable firms and creating a peer group
- Reconciliation of multiple valuations to the key value driver formula
- Examining how using different multiples gives different valuations
- Earnings versus cashflow
Case studies: valuing companies using multiple analysis
*Day 2: *
- Background to DCF valuations
- Calculating OPAT and unlevered free cashflow
- Explicit forecast period and terminal value
- Calculating the terminal value: perpetuity method, multiple method, liquidation method
- Importance of final year forecasts – fading the forecasts
Case studies: calculating OPAT, unlevered FCF and TVs
DCF valuations continued
- Calculating the WACC
- Calculating the cost of debt; different types of debt and multi-currency debt
- Working out the value of the tax shield
- The CAPM
- Calculating the risk-free rate
- Calculating the equity risk premium
- Betas – levered and unlevered
Case studies: modelling DCF valuations in Excel; comparing valuations using multiples vs. DCF
*Day 3: *
The impact of corporate finance transactions and capital structure on valuation
The impact of corporate finance transactions on valuation
- Friendly/hostile takeover
- IPO of subsidiary or affiliate business
Case study: review and comment on recent corporate finance transactions and the valuation impact
The impact of capital structure on valuation
- Increasing equity value through the use of debt
- Focus on shareholder value – dividend policy and share buybacks
- Companies suited to leverage
- Debt markets and credit ratings
- Analysing debt capacity
Case study: working out a firm’s debt capacity
The impact of qualitative factors on valuation
What are the key business risks faced by the firm and are there any mitigating factors?
Analysis of the sovereign and macro-economic conditions
- What are the levels of and trends in sovereign credit ratings where the firm has its main areas of activity?
- What are the macro-economic influences?
- Currencies, inflation, interest rates, growth rates, political risks
Analysis of the industry and market
- Is the business environment changing?
- What are the main threats and opportunities facing the industry?
- Technological, demographic, political, ESG, climate change, new entrants, disruption, consolidation
- What is the competitive landscape - Porter’s five forces?
- What is the growth outlook? - industry life cycle and cyclicality
- What is the capital intensity and cost base profile of the sector?
- What is the earnings quality?
- What are the leading indicators?
- What are the pricing dynamics?
- Is regulation a threat or a support?
Analysis of the company’s specific characteristics
- What are the firm’s strategies?
- Commercial, treasury, capital and corporate finance
- What are the firm’s market positions, competitive advantages and cost position – does the firm create value?
- How does the firm compare to the peer group?
- What is the product/service offering?
- Is it differentiated, is there any pricing power?
- Does the firm suffer from buyer power or supplier power?
- Does the firm benefit from geographical and revenue diversification?
- Does the firm benefit from vertical integration?
- Does the firm have currency or commodity exposures?
- Management, the Board and corporate governance
Case study: assess the main risks and mitigating factors for a chosen group Course recap and final valuation exercise Delegates are introduced to a financial forecasting model with embedded scenarios
Final case study: Delegates undertake valuations of a firm relative to a peer group and on a DCF basis, using a financial forecasting model and taking account of qualitative factors; they vary the valuation using the scenario functions.
Former Executive Director of CSFB and Lehman Brothers, Sarah Martin has spent seventeen years working as an investment banker in Europe and the US. She has principally worked in the credit markets and has experience of the US and European high grade and high yield markets, the European new issue ...
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