Corporate Valuation Techniques & Modelling

3 days 20-22 Feb 2018, Dubai UAE £3,395.00 Download brochure Add to basket
3 days 1-3 May 2018, London UK £3,395.00 + VAT* Download brochure Add to basket
3 days 10-12 Oct 2018, London UK £3,395.00 + VAT* Download brochure Add to basket
3 days 14-16 Nov 2018, Hong Kong Hong Kong $4,495.00 Download brochure Add to basket

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Overview
  A 3-day case study based workshop exploring issues in corporate valuation and financial modelling.

Corporate 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.
This highly practical course will lead you quickly from the basics through to the more advanced valuation methodologies and modelling techniques.


Highlights include:

  • Building a comprehensive financial model.
  • Understanding business models.
  • Absolute valuation methods DCF, EVA and CFROI.
  • Developing an appropriate cost of capital.
  • Decomposing sources of return.
  • Using comparative valuation measures.
  • Understanding the basics of real options.
  • Dealing with intangibles.
  • Valuing fast growing companies.


Course Methodology

This hands-on programme is taught using a combined interactive approach which incorporates case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on delegates gaining practical experience of the various valuation techniques. Case studies from recent deals are included, as are practical exercises involving problem areas in valuation.
The programme 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.

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

Hong Kong
Sarah Martin

Former Executive Director of CSFB and Lehman Brothers, the Course Director 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 markets, the Asian convertible bond markets and of corporate restructurings of distressed credits. She specialised in the telecoms sector and was closely involved in the structuring, raising and/or trading of bank and public debt for telecoms companies in many countries, including Europe, South Africa, Asia and Latin America. She also has extensive experience of corporate finance transactions, including mergers, disposals, privatisations, IPOs and capital raisings. Until 2003, she was an Executive Director at Lehman Brothers in Fixed Income Research in London, having also worked for CS First Boston and Kleinwort Benson. She now works on an independent basis advising the legal and private equity professions on credit analysis and company valuation. She has a degree in economics from the London School of Economics and stock exchange qualifications from London and New York.

London
Sarah Martin

Former Executive Director of CSFB and Lehman Brothers, the Course Director 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 markets, the Asian convertible bond markets and of corporate restructurings of distressed credits. She specialised in the telecoms sector and was closely involved in the structuring, raising and/or trading of bank and public debt for telecoms companies in many countries, including Europe, South Africa, Asia and Latin America. She also has extensive experience of corporate finance transactions, including mergers, disposals, privatisations, IPOs and capital raisings. Until 2003, she was an Executive Director at Lehman Brothers in Fixed Income Research in London, having also worked for CS First Boston and Kleinwort Benson. She now works on an independent basis advising the legal and private equity professions on credit analysis and company valuation. She has a degree in economics from the London School of Economics and stock exchange qualifications from London and New York.

Dubai
Sarah Martin

Former Executive Director of CSFB and Lehman Brothers, the Course Director 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 markets, the Asian convertible bond markets and of corporate restructurings of distressed credits. She specialised in the telecoms sector and was closely involved in the structuring, raising and/or trading of bank and public debt for telecoms companies in many countries, including Europe, South Africa, Asia and Latin America. She also has extensive experience of corporate finance transactions, including mergers, disposals, privatisations, IPOs and capital raisings. Until 2003, she was an Executive Director at Lehman Brothers in Fixed Income Research in London, having also worked for CS First Boston and Kleinwort Benson. She now works on an independent basis advising the legal and private equity professions on credit analysis and company valuation. She has a degree in economics from the London School of Economics and stock exchange qualifications from London and New York.

Venue

Dubai

Dubai Hotel

This programme takes place on a non-residential basis at a central Dubai hotel. 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.

Dubai has an incredible number of hotels. Courses held here are mainly held at the J.W. Marriot hotel, Sheraton Dubai Creek and Le Meridien all in central Dubai.
 
J.W. Marriott Hotel – Abu Baker Al Siddique Road, PO Box 16590, Dubai, U.A.E
Phone +971 4 607 7811; Fax +971 4 607 7011
www.marriott.com
 
At the JW Marriott Dubai you will enjoy luxury on your terms; impeccable service and elegant surroundings allow you to relax and focus on your own agenda. With 344 luxuriously appointed rooms and suites the J.W. Marriott provides an oasis of calm in a busy city while the award-winning restaurants have the recipe for satisfying a taste for international flavour.        
 
Sheraton Dubai Creek – Baniyas Street, PO Box 4250, Dubai, U.A.E
Phone +971 4 228 1111; Fax +971 4 221 3468
www.starwoodhotels.com
 
After undergoing a complete renovation, the Sheraton Dubai Creek Hotel& Towers reopened October 10th, 2002 with a fully refurbished interior and exterior. The 255 room hotel now offers more creek-view rooms, redesigned atrium lobby, outstanding food and beverage facilities, upgraded rooms with state-of-the-art data connectivity, and Dubai's newest conference facilities. 

Le Meridien – PO Box 10001, Airport Road, Dubai, U.A.E
Phone +971 4 282 4040; Fax +971 4 282 5540
www.lemeridien-dubai.com
 
Le Meridien Dubai is a five star deluxe hotel built on two floors and surrounded by 38 acres of landscaped gardens. The hotel is elegantly furnished with a french accent that incorporates the individual character and flair of the local culture. The hotel is minutes away from the commercial districts and shopping centres and a short distance from Dubai International Airport. Facilities include a choice of 15 restaurants and bars, 24-hour room and laundry service, two fully equipped business centres and a state-of-the-art Spa and fitness club.

 
 

London

Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Hong Kong

4-5 Star Hotel in Hong Kong

All of our courses are held in 4 – 5 star hotels, chosen for their location, facilities and level of service. You can be assured of a comfortable, convenient learning environment throughout the duration of the course.

Due to the variation in delegate numbers, we will send confirmation of the venue to you approximately 2 weeks before the start of the course. 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.

Related Courses

Inhouse


 

Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. You could even save up to 50% on the cost of sending delegates to a public course.

To find out more about running this course in-house:





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. We'll guide you through the whole process, from the initial consultancy to evaluating the success of the full learning experience. Our learning specialists ensure you get the maximum return on your training investment.

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We can offer any of our public courses delivered at your office or we can devise completely tailored solutions:


Read more about our offering or complete a call back request to speak to a learning specialist.

 

Agenda

Agendas are localised, please select your preferred location.

Day 1

Advanced Modelling

Forecasting the income statement

  • Detailed revenue and earnings forecasts
  • Fixed vs variable costs: operating leverage – how to model in Excel
  • Calculating underlying EBITDA(R) and net income - adjusting earnings for exceptionals, non-recurring items, discontinued items, joint venture earnings, operating leases and other items
  • Hedging policies
  • Impact on earnings of new IFRSs – IFRS 9, IFRS 15, IFRS 16

Taxation issues

  • Current tax vs deferred tax
  • Do deferred tax liabilities change the valuation?
  • Estimating the effective tax rate
  • Operating losses: carry-back and carry forward

Non-current Assets

  • Understanding capital intensity
  • Maintenance vs expansionary capex
  • Understanding asset lives
  • Forecasting disposals – cashflow and gains or losses on disposal
  • Impairment of assets – how does this affect valuation?
  • 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 treatment
  • Impact of provisions on valuation


Joint ventures, associates and investments

  • Accounting for joint ventures, associates and investments
  • Forecasting joint venture, associates and investment income

Day 2

Advanced modelling and Multiples Based valuation

Equity financing

  • The importance or not of the book value of equity to valuation
  • The impact on valuation of share buy-backs, rights issues, convertible bond and preference share issues
  • Non-controlling interests - impact on equity financing; dividend leakage
  • Forecasting dividends

Debt Financing

  • Linking cash flow and debt requirements
  • Different types of debt financing
  • Equity kickers
  • How do sovereign and corporate credit ratings affect valuation?
  • Advantages and disadvantages of increased debt funding

Assessing liabilities

  • How to define gross debt, financial assets and net debt
  • Dealing with non-available financial assets
  • Dealing with different kinds of provisions and deferred revenues
  • Dealing with pension liabilities
  • Dealing with hybrid financial instruments and derivatives
  • Adjusting for stock based compensation and options
  • Adjusting for off balance sheet liabilities eg contingent liabilities, receivables funding, operating leases
  • Moving between equity value and enterprise value

Advanced ratio analysis

  • Calculating and interpreting ratios for the income statement, balance sheet and cashflow statement
  • Which ratios for which sectors?
  • How to adjust valuations for different ratios

Scenario analysis

  • What are scenarios?
  • Developing flexible scenarios with Excel
  • Review of completed model for target company

Equity multiples

  • What do equity ratios tell us?
  • Decomposing and interpreting P/Es: linking growth, cost of equity and RoE
  • Valuations using dividend yield
  • Valuations using net book value

EV multiples

  • When to use EV multiples
  • Calculating EV: core vs non-core
  • Adjustments required for EV multiples

Implied Valuation

  • The importance of qualitative factors (management, corporate governance, innovation, reputation, USPs etc)
  • Valuing a one business company
  • Valuing a conglomerate: sum of the parts valuation; valuing cross-holdings
  • Valuing cyclical and fast growing companies
  • Interpreting results and deriving an implied valuation for the target company

Day 3

DCF and Cost of Capital

Cost of Capital

  • Which cost of capital and whose cost of capital?
  • The elusive equity risk premium
  • Examining beta
  • Calculating the cost of debt
  • WACC in emerging markets
  • Valuing negative cash flows
  • Time Varying Cost of Capital

Forecasting unlevered FCF

  • Estimating normalised unlevered FCF
  • Pitfalls in calculating unlevered FCF
  • Forecasting of FCF for target company

Terminal value

  • TV using the perpetuity method – what terminal growth rate?
  • TV using exit multiples
  • TV using liquidation value
  • Can some firms generate excess returns in the long run?
  • Running sensitivities
  • 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

Advanced DCF methods

  • 3 stage DCF
  • Adjusted DCF
  • Compressed DCF
  • Recursive WACC
  • Cash flow return on invested capital (CFROIC)

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 fast growing companies

  • The concept of fades
  • Fading ROCE and growth
  • Choosing an appropriate fade period
  • Impact of fades on DCF valuation
  • Examination of the volatility and drivers of fast growth company valuations

 Scenarios and real options

  • Normal distributions and DCF
  • When the world is not normally distributed
  • Real options: myth or reality- the valuation

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
  • Strategy

Valuing the target

  • As a standalone
  • Valuing synergies
  • Estimating the price premium – the value of control and voting rights
  • Do public M&A deals create value for buying and selling shareholders?

Financing the acquisition

  • Using shares or cash
  • EPS accretion and dilution: does it reflect value added?

 

Day 1

Advanced Modelling

Forecasting the income statement

  • Detailed revenue and earnings forecasts
  • Fixed vs variable costs: operating leverage – how to model in Excel
  • Calculating underlying EBITDA(R) and net income - adjusting earnings for exceptionals, non-recurring items, discontinued items, joint venture earnings, operating leases and other items
  • Hedging policies
  • Impact on earnings of new IFRSs – IFRS 9, IFRS 15, IFRS 16

Taxation issues

  • Current tax vs deferred tax
  • Do deferred tax liabilities change the valuation?
  • Estimating the effective tax rate
  • Operating losses: carry-back and carry forward

Non-current Assets

  • Understanding capital intensity
  • Maintenance vs expansionary capex
  • Understanding asset lives
  • Forecasting disposals – cashflow and gains or losses on disposal
  • Impairment of assets – how does this affect valuation?
  • 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 treatment
  • Impact of provisions on valuation


Joint ventures, associates and investments

  • Accounting for joint ventures, associates and investments
  • Forecasting joint venture, associates and investment income

Day 2

Advanced modelling and Multiples Based valuation

Equity financing

  • The importance or not of the book value of equity to valuation
  • The impact on valuation of share buy-backs, rights issues, convertible bond and preference share issues
  • Non-controlling interests - impact on equity financing; dividend leakage
  • Forecasting dividends

Debt Financing

  • Linking cash flow and debt requirements
  • Different types of debt financing
  • Equity kickers
  • How do sovereign and corporate credit ratings affect valuation?
  • Advantages and disadvantages of increased debt funding

Assessing liabilities

  • How to define gross debt, financial assets and net debt
  • Dealing with non-available financial assets
  • Dealing with different kinds of provisions and deferred revenues
  • Dealing with pension liabilities
  • Dealing with hybrid financial instruments and derivatives
  • Adjusting for stock based compensation and options
  • Adjusting for off balance sheet liabilities eg contingent liabilities, receivables funding, operating leases
  • Moving between equity value and enterprise value

Advanced ratio analysis

  • Calculating and interpreting ratios for the income statement, balance sheet and cashflow statement
  • Which ratios for which sectors?
  • How to adjust valuations for different ratios

Scenario analysis

  • What are scenarios?
  • Developing flexible scenarios with Excel
  • Review of completed model for target company

Equity multiples

  • What do equity ratios tell us?
  • Decomposing and interpreting P/Es: linking growth, cost of equity and RoE
  • Valuations using dividend yield
  • Valuations using net book value

EV multiples

  • When to use EV multiples
  • Calculating EV: core vs non-core
  • Adjustments required for EV multiples

Implied Valuation

  • The importance of qualitative factors (management, corporate governance, innovation, reputation, USPs etc)
  • Valuing a one business company
  • Valuing a conglomerate: sum of the parts valuation; valuing cross-holdings
  • Valuing cyclical and fast growing companies
  • Interpreting results and deriving an implied valuation for the target company

Day 3

DCF and Cost of Capital

Cost of Capital

  • Which cost of capital and whose cost of capital?
  • The elusive equity risk premium
  • Examining beta
  • Calculating the cost of debt
  • WACC in emerging markets
  • Valuing negative cash flows
  • Time Varying Cost of Capital

Forecasting unlevered FCF

  • Estimating normalised unlevered FCF
  • Pitfalls in calculating unlevered FCF
  • Forecasting of FCF for target company

Terminal value

  • TV using the perpetuity method – what terminal growth rate?
  • TV using exit multiples
  • TV using liquidation value
  • Can some firms generate excess returns in the long run?
  • Running sensitivities
  • 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

Advanced DCF methods

  • 3 stage DCF
  • Adjusted DCF
  • Compressed DCF
  • Recursive WACC
  • Cash flow return on invested capital (CFROIC)

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 fast growing companies

  • The concept of fades
  • Fading ROCE and growth
  • Choosing an appropriate fade period
  • Impact of fades on DCF valuation
  • Examination of the volatility and drivers of fast growth company valuations

 Scenarios and real options

  • Normal distributions and DCF
  • When the world is not normally distributed
  • Real options: myth or reality- the valuation

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
  • Strategy

Valuing the target

  • As a standalone
  • Valuing synergies
  • Estimating the price premium – the value of control and voting rights
  • Do public M&A deals create value for buying and selling shareholders?

Financing the acquisition

  • Using shares or cash
  • EPS accretion and dilution: does it reflect value added?

 

Day 1: Valuation models and approaches

Introduction to financial valuation

  • The investment setting
  • Measuring risk and return

Risk and return issues

  • Relationship between risk and return
  • Asset allocation
  • The investment life cycle

Financial statement analysis and ratios

  • Cash flows to equity, firm
  • Historical growth rates
  • Expected growth and fundamentals
  • Analysing analysts' earnings forecasts

Case study: balance sheet tells a story
Participants will be given common size balance sheets for six different operating companies from FY2002. Using only this information, they will be asked to identify each operating company from a list of the six provided.

Asset pricing models

  • General principles
  • Using the Capital Asset Pricing Model (CAPM)
  • Weighted Average Cost of Capital (WACC)

Estimating cashflow

  • Cash flows to equity
  • Cash flows to the firm
  • The effect of inflation

Exercise 1: constructing cashflow models
The group will be divided into teams to estimate cash flows for various firms given leverage constraints,
working capital needs and desired discount rates.

Master case: evening assignment Participants will be divided into groups to analyse a public company considering a merger and/or acquisition of another publicly traded firm. Group members will be responsible for developing the purchase price that the acquiring company should pay for the target. This case will be referred to as the "Master case".  

Day 2: Equity valuation

Review of Master case assignment and exercise

Estimating growth rates

  • Historical growth rates
  • Analysing analyst's earnings forecasts
  • Expected growth and fundamentals

Case study: Lexmark International - using discount and growth rates
Participants will be asked to estimate the expected growth rates and calculate growth rates, discount rates and the weighted average cost of capital for an international manufacturing company

Dividend discount models

  • When to use them
  • Compare to FCFE models

Free cashflow models

  • FCFE valuation models
  • Firm valuation vs. equity valuation
  • Models for valuing the firm 

Discount Cash Flow (DCF) valuation

  • FCFE valuation
  • Explore different growth models
  • Complete a DCF for a high-growth firm

Valuing private companies

  • Explore differences in valuing public/private firms
  • Develop adjustments for private firms

Exercise: developing a DCF model for a private company
Teams will analyse a private company that is considering an IPO. Each group will construct a discounted cash flow model to develop an initial offering price.

Master case study: Day 2 assignments ¡V cashflow analysis
Groups will prepare presentations for Day 3.
Questions to be addressed include:

  • Which cash flow model did you use and why?
  • Explain the derivation of the growth rate
  • What other assumptions did you make to arrive at this cash flow valuation?

Day 3: Industry and company analysis

Review of Master case assignment and exercise

Multiples analysis

  • Relative valuation
  • Price / earnings ratios
  • Price / book value ratios
  • Price / sales analysis

Industry analysis

  • Why do "macro" industry analysis?
  • The corporate and industry life cycles

Exercise: putting together a "comp"
Teams will develop a comparable cash flow model to value various companies.

Putting it all together

  • Determination of relevant models
  • Impact of market expectations
  • Qualitative decisions

Master case preparation
Teams will incorporate multiples and industry analyses to develop their final valuations and prepare a summary analysis.

Master case presentations and discussion
Teams will present their analyses and recommendations on the issues raised in the Master case. Following the team presentations, the group will discuss the following issues:

  • Did the teams take a reasonable approach in determining their choice of valuation methodology?
  • Did the assumptions for growth and discount rates seem appropriate?
  • Was the recommendation justifiable to investors and/or other potential acquirers?

Workshop review and conclusion

  • Summary of valuation methodologies
  • Discussion of current trends in valuation
Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product