Masterclass in Corporate Finance

Euromoney Learning Solutions

How long?

  • 5 weeks
  • online

Euromoney Learning Solutions

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Who should attend

The masterclass should be of interest to those wishing to extend their understanding of the main corporate investment banking activities at the early stage/intermediate level including:

  • Investment bankers
  • M&A analysts
  • Corporate and banking lawyers
  • Transactional accountants and managers
  • Equity analysts
  • Investment managers
  • Treasurers and CFOs
  • Credit analysts
  • Private equity executives
  • Analysts in corporate strategy divisions
  • CEOs and board members looking to upskill to support strategic financial decisions
  • MBAs

The only pre-requisite for this course is an elementary understanding of key financial terms and ratios: however, a glossary will be provided at the beginning of the course to fill in any gaps together with an exercise (including solution) in financial analysis including key valuation and credit ratios as a reminder and as a resource to access during the course as and when appropriate).

About the course

This virtual masterclass delivers in-depth exposure to all the main corporate finance disciplines including valuation, M&A and acquisition financing, LBOs, and corporate and debt restructuring.

The course is based on actual case studies and covers all the practical aspects of the major corporate finance activities including:

  • Valuation by WACC and by multiples
  • M&A structuring, synergies, due diligence and pro forma analysis
  • Highly leveraged transactions: LBOs and syndicated lending
  • IPO preparation, marketing and underwriting and rights issues
  • Restructuring in financial distress
  • Simulated arbitrage trading in M&A situations

The case studies used on this programme are all based on genuine real-life businesses, allowing participants to understand how and why the actual solutions were structured and consider what they might do differently to improve the outcomes.

Agenda

WEEK ONE INVESTMENT APPRAISAL AND VALUATION

Topic 1 – Investment Appraisal

By the end of this topic, participants will understand the key financial appraisal tools, their strengths and weaknesses and how to calculate the company’s required rate of return (or hurdle rate):

  • Introduction to financial appraisal and assumptions
  • Payback; discounted payback; net present value, internal rate of return
  • Tax; working capital; capex and the development of cash flows
  • Capital Structure Theory: Modigliani and Miller
  • Enterprise value concept
  • Impact of tax and financial distress costs
  • Using CAPM to identify the cost of equity
  • Calculating beta and the risk premium
  • Cost of debt, cost of equity
  • WACC (weighted average cost of capital)
  • The impact of gearing on the cost of equity
  • Sensitivity analysis

Topic 2 – Weighted average cost of capital (WACC)

By the end of this topic, participants will be able to value a company by discounting projected cash flows and check the terminal value calculation using a multiple:

  • Estimating enterprise value using WACC
  • Forecasting free cash flows and the growth rate
  • Using the dividend discount model to value long run cash flows
  • Terminal value calculations
  • Review of WACC as a valuation tool
  • Alternative terminal value calculations
  • Return on invested capital

Topic 3 – Valuation using multiples

By the end of this topic, participants will be able to perform the necessary analysis to produce a company valuation using multiples and will understand where certain industry ratios are needed to enhance the quality of the valuation in the absence of current profitability or where an option based approach could be more appropriate:

  • Background to the multiple-based approach
  • Requirements to achieve reliable results
  • Alternative valuation ratios for companies without current profits
  • Industry rules of thumb
  • Value drivers and valuation
  • Option approach to valuation for mining and early stage companies
  • Option value of an investment opportunity, the value of an option to defer

WEEK TWO ACQUISITION ANALYSIS

Topic 1 – M&A rationale, synergies and due diligence

By the end of this topic, participants will be aware of the key drivers of M&A activity; the impact of management; the risks involved; and the available risk mitigation strategies:

  • Strategic decision making: do companies need to grow?
  • Management as a source of agency conflict
  • Acquisition versus organic growth
  • Types of transaction
  • Types of synergies
  • Identifying the acquisition benefits
  • Quantifying the benefits
  • Types of synergy
  • Legal risks in acquisitions and risk mitigation
  • Credit risk in the event of a problem
  • Impact of the nature of the transaction (friendly/hostile) on due diligence
  • Due diligence: financial, legal and commercial
  • Deal breakers, adjusting the price
  • Managing acquisition risk

Topic 2 – Corporate restructuring events and implications

By the end of this topic, participants will appreciate the alternative restructuring strategies that are available to promote shareholder value by the separation and/or merger of different businesses:

  • Acquisitions
  • Who is the best owner?
  • JVs
  • Spin-offs, split-offs, carve-outs and targeted stock
  • Targeted stock
  • Contingent value rights
  • Disposals – the controlled auction
  • Bilateral negotiation
  • Data room
  • Vendor due diligence

Topic 3 – Pro forma acquisition analysis

By the end of this topic, participants will be able to perform an appraisal of the merits of an acquisition by analysing its impact and that of the financing on the financial statements of the acquiror:

  • Pro forma financials
  • Accretion and dilution analysis
  • Breakeven PER of cash/debt
  • Impact of capital structure on the deal
  • Considering all debt and all equity financing
  • Including synergies in the analysis
  • Contribution analysis

Topic 4 – Financing the acquisition

By the end of this topic, participants will understand the key financing options available to acquirors for company purchase including the associated timing and flexibility of each option:

  • Capital structure flexibility
  • Bridge financing
  • Issuing equity
  • Vendor placing
  • Deferred consideration: Earn-outs
  • CVRs

WEEK THREE HIGHLY LEVERAGED TRANSACTIONS: LBO

Topic 1 – Leveraged Buy-Out (LBO) types

By the end of this topic, participants will have developed an understanding of the drivers of LBO transactions and the aims and objectives of the players involved:

  • Deal types: LBO, MBO, MBI, BIMBO, SBO, LBU, P2P, etc.
  • Traditional financing structures
  • Objectives of senior lenders
  • Objectives of mezzanine lenders
  • Objectives of equity providers
  • Historical rates of returns
  • Carried interest

Topic 2 – Structuring the debt

By the end of this topic, participants will have a framework within which to analyse possible financing structures for LBOs:

  • Example capital structures
  • Establishing the amount of debt that can be used
  • Assessing the type of debt that can be used
  • Disadvantages of the high level of gearing
  • Key credit ratios

Topic 3 – Computing rates of return to investors and lenders

By the end of this topic, participants will be able to structure an LBO acquisition financing to generate the necessary required rates of return for the finance providers taking into account the need for priority among lenders:

  • Secondary buy-out case
  • Senior and junior mezzanine
  • Key ratios determining the financing structure
  • Model the mezzanine warrant participation
  • Setting the covenant structure
  • Internal approvals
  • Facility letters

Topic 4 – Satisfying the lenders and an introduction to bonds

By the end of this topic, participants will be aware of the key objectives required in the structure to achieve tax relief, priority and security for lenders:

  • Acquisition vehicle structure
  • Contractual subordination
  • Structural subordination
  • Achieving debt pushdown
  • Achieving tax relief
  • Opco/propco/holdco
  • Bonds and high yield bonds

WEEK FOUR IPO MARKETING AND UNDERWRITING

Topic 1 – Preparation

By the end of this topic, participants will be able to identify candidates that are suitable for flotation; understand the necessary early steps; and the timetable constraints:

  • Why float?
  • Exit strategies for existing shareholders
  • Strategic considerations: float or sell?
  • The objective of the due diligence exercise
  • Essential corporate restructuring steps pre-IPO
  • Senior versus junior market
  • Lock-up agreements
  • American depositary receipts (ADRs and Global DRs)
  • Timetable

Topic 2 – Marketing the IPO

By the end of this topic, participants will be able to evaluate the merits of a marketing strategy for an IPO and the most appropriate method of delivering such a strategy:

  • Book-building/placing as an issue method
  • Offers for sale as an issue method
  • The role of the analyst
  • Roadshows and company visits
  • Preparing the management

Topic 3 – IPO Underwriting

By the end of this topic, participants will be aware of the differences between hard and soft underwriting and the risks and the method of pricing the IPO in the light of feedback gleaned from the pre-marketing and the book-building:

  • Hard and soft underwriting
  • The financial risk in underwriting
  • Underwriting as an option
  • Competition issues in fees charged
  • Pilot fishing, pre-marketing and pricing
  • Underwriting in public offers

Topic 4 – Rights issues post-IPO

By the end of this topic, participants will understand the process of raising equity capital after IPO by means of a rights issue and by placing shares with third party investors:

  • Pre-emption rights
  • Theoretical ex-rights price (TERP)
  • Deeply discounted issues
  • Block trades, accelerated book building
  • Other abusive practices covered in the Global Settlement
  • Raising equity capital in the pandemic crisis by placing

WEEK FIVE RESTRUCTURING IN FINANCIAL DISTRESS

Topic 1 – The road to financial distress

By the end of this topic, participants will be able to identify the early signs of financial distress and the dangers of management denial and hence be aware of the advantages of early action:

  • Symptoms of distress
  • Causes of distress
  • The cycle of distress
  • The role of covenants as early warning devices
  • The rating agencies and missed problems
  • Distressed security prices
  • Systemic distress or ad hoc distress
  • Speed of recognition versus management denial
  • Critical assumption failure causing distress
  • Technological failure
  • Revenue assumption failure
  • Project financing failures

Topic 2 – Pre-distress restructuring actions

By the end of this topic, participants will understand the need for a plan to address the problems of financial distress which ideally is available in the time before management lose control to the banks:

  • Management led business restructuring ahead of distress
  • Cutting costs to meet a lower level of business activity
  • Financial restructuring ahead of projected or possible distress
  • The distressed debt investor’s approach to selecting distress candidates

Topic 3 – Restructuring options

By the end of this topic, participants will be able to construct a restructuring plan, assess the debt capacity of a restructured business and negotiate with competing lenders to determine a structure that meets the requirements of all parties:

  • What business levels can be projected in the future
  • Can the projections support the current debt burden?
  • Does the company need more cash to execute the new plan?
  • Legal options available
  • Approaches to insolvency (INSOL Principles)
  • Workouts
  • Prepackaged deals
  • Court led/judicial restructurings
  • Comparing international approaches

Topic 4 – Arbitrage trading in an M&A context

Participants will develop equity trading positions during the course of a takeover battle with a view to making profits on long or short positions and thereby enhance their understanding of the strategies available in a takeover battle in the public arena.

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Masterclass in Corporate Finance at Euromoney Learning Solutions

From  1995 GBP$2,686

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