Advanced Company Analysis, Valuation & Financial Modelling

Advanced Company Analysis, Valuation & Financial Modelling

Euromoney Training
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Description

A 4-day case study based workshop exploring issues in company valuation and financial modelling. 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. 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 valu…

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Didn't find what you were looking for? See also: Financial Modelling, Corporate Finance, Risk Analysis, Teaching Skills, and Business Administration.

A 4-day case study based workshop exploring issues in company valuation and financial modelling. 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. 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 practical, hands on programme 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 delegates gaining practical, hands-on experience of the various valuation techniques. Case studies from recent deals are included, as are practical exercises involving problem areas in valuation. The seminar 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. 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: Investment Bankers Equity Analysts M&A Professionals Fund Managers Treasurers and Finance Directors Commercial Bankers Private Equity & Venture Capital Specialists Business Analysts
Day 1 Modelling Overview Why create a model. Good modelling practices. Overall structure of the model. 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 case company. Fixed assets Understanding capital intensity. Maintenance vs expansion Capex. Forecasting overall capex. Calculating depreciation. Working capital Components of cash and non-cash working capital. Working capital ratios and their interpretation. Forecasting working capital. Associates and investments Accounting for associates and investments. Forecasting associates and investment income. Impact on cash flow and B/S. Day 2 Modelling and ratio analysis 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 Leasing vs ownership Scenario analysis Developing fully flexible scenarios. Identifying the key variables. Review of completed model for case company. Choosing appropriate comparable companies How the choice of comparables impacts the final valuation. Choosing comparable companies in an emerging market context. Value drivers: understanding industry dynamics. Main factors affecting selection: size, geography, regulation, customers. Other factors affecting comparability, e.g. free-float, capital structure, corporate finance activity. Equity vs enterprise value multiples Definitions. Calculating EV: core vs non-core, assessing liabilities. Calculating “recurring” earnings Equity multiples Main multiples: P/E and P/BV. Decomposing P/Es: linking growth, Cost of equity and RoE. Pros and cons of equity multiples. EV multiples Main EV multiples. Choosing the most relevant multiples. Pros and cons of EV multiples. Implied valuation Interpreting results and deriving an implied valuation for the target company Day 3 DCF and cost of capital Cost of capital Why calculate a cost of capital The risk/reward trade off. Impact of financial leverage on Value. Market risk vs company specific risk. Accounting for market risk: asset betas. Financial leverage and betas. Equity investors Calculating Cost of Equity. Estimating the equity risk premium. Debt financing Impact of taxation: The tax shield. Calculating the cost of debt. Weighted Average Cost of Capital Market value of debt and equity. Current vs target WACC. DCF Forecasting FCF Length of the explicit forecast period. Cyclical and growth companies. Calculating FCF: recurring vs growth FCF. Appropriate FCF. Forecasting of FCF for case company. Terminal value Beyond the initial period. Estimating long term growth rates in emerging markets. When should FCF be normalised? TV using the perpetuity method. TV using the multiples method. Running sensitivities. Review of initial DCF model. Day 4 Advanced Issues 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. Alternative valuation approach: real options in emerging markets What are real options? Using real options to value fast growing companies. Using real options to value natural resources companies. Using real options to value distressed assets. Course summary and close
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