Advanced Company Analysis, Valuation & Financial Modelling

**Before registering on this course please email us directly to complete a pre course questionnaire. This is to ensure that the course fits your exact requirements** Company 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. The rapidly growing private equity industry is also dependent on solid analysis. There are many different approaches to the analysis and valuation of companies and it is paramount to know when and how to apply what method. It is also essential to understand that company analysis is not an absolute science but also based on interpretation and judgment. This highly practical course will lead you quickly from the basics through to the more advanced valuation methodologies and modelling techniques. Methodology This practical Euromoney Training course is taught using formal lectures combined with practical and interactive case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on you gaining hands-on experience of the various valuation techniques. How will this course assist you? This 5-day case study based workshop exploring advanced issues in company valuation and financial modelling will feature: Building a comprehensive financial model. Complexities in using comparative valuation measures. Absolute valuation methodologies: DCF,EVA. Developing an appropriate cost of capital. Decomposing sources of return. Building a fade model. Capitalising Intangibles. Introduction to real options. Merger and acquisition issues. Understanding LBOs. Valuing distressed assets. Who should attend? This course is aimed at those with a solid financial background who wish to explore the more advanced aspects of financial modelling and valuation methodologies including: Equity Analysts Investment Bankers M&A Professionals Fund Managers Treasurers and Finance Directors Commercial Bankers Private Equity & Venture Capital Specialists Business Analysts Supported by:
Day 1 Advanced Modelling Overview Why create a model. Review of good modelling practices. The main structure Historic P&L information. Restating historic information. Non-recurring items. Historic B/S information. Non-core assets. Review of initial model for target company. Forecasting the income statement Detailed revenue forecasts. Fixed vs variable costs: operating leverage. Hedging policies. Taxation issues Current vs deferred tax. Estimating the effective tax rate. Operating losses: carry-back and carry forward. Fixed Assets Understanding capital intensity. Maintenance vs expansion Capex. Understanding asset lives. Forecasting disposals. Impairment of assets. 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. Impact of provisions on valuation. Associates and investments Accounting for associates and investments. Forecasting associates and investment income. Equity financing Minority interest- impact on equity financing. Common shareholders- forecasting dividends and retained earnings. Share buy-backs and rights issues. Debt Financing Linking cash flow and debt requirements. Different types of debt financing. Scenario analysis What are scenarios? Developing flexible scenarios with excel. Review of completed model for target company. Day 2 Multiples Based valuation and Cost of Capital Advanced ratio analysis Equity vs Enterprise value multiples. Definitions. Calculating EV: core vs non-core. Assessing liabilities Dealing with different kinds of provisions. Dealing with pension liabilities. Hybrid financial instruments. Options. Off balance sheet liabilities. Equity multiples What do equity ratios tell us? Decomposing P/Es: linking growth, Cost of equity and RoE. Free cash flow yield. EV multiples What do EV multiples tell us? Choosing the most relevant multiples. Theoretical EV ratios. Interpreting ratios Which ratios for which companies? Different ratios different answers? Implied Valuation Valuing a one business company. Valuing a conglomerate: sum of the parts valuation. Valuing cyclical and fast growing companies. Interpreting results and deriving an implied valuation for the target company. Cost of Capital What the theory says. The elusive equity risk premium. Is Beta a reliable measure of risk? Which cost of capital? Whose cost of capital? WACC in emerging markets. Valuing negative cash flows. Time Varying Cost of Capital. Day 3 DCF Forecasting FCF Pitfalls in FCF calculation. Estimating normalised FCF. Forecasting of FCF for target company. Terminal value TV using the perpetuity method: volatility. Uses and misuses of the exit multiples’ approach. Liquidation value. Why the value drivers method gives more stable and meaningful results. 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. Day 4 Absolute valuations: Advanced issues 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 the tax shield: APV What is Adjusted Present value. Why value the tax shield separately. Appropriate discount rates. CFROI What is Cash Flow Return on Investment? Why use IRR to measure return. IRR compared to accounting ROCE. Using IRR to value a project. Valuing fast growing companies The concept of fades. Fading ROCE and growth. Choosing an appropriate fade period. Impact of fades on DCF valuation. Day 5 Alternative methods and M&A issues Scenarios and real options Normal distributions and DCF. When the world is not normally distributed. Valuing companies using binomial distribution. Real options: myth or reality- the valuation. Building a binomial model for a biotech company. 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 Price. Strategy. Valuing the target As a standalone. Valuing synergies. Estimating the price premium. Financing the acquisition Using shares or cash. EPS accretion and dilution: does it reflect value added? Modelling acquisitions Accounting issues. New developments. Calculating Goodwill. Proforma balance sheet. Merging income statements. Course summary and close