Corporate Valuation: Techniques & Applications
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Description
A five day comprehensive training course designed to provide delegates with an understanding of the following: Different corporate valuation techniques and their applications using Excel Qualitative factors affecting valuations The impact of capital structure on valuation The impact of corporate finance transactions on valuation, including LBO's Specific valuations, e.g. high growth, cyclical and distressed companies Course Background The valuation of companies is fundamental to the operation of the capital markets. It forms the basis of share trading and corporate finance activity, including capital raising, mergers, acquisitions, demergers and disposals. The ability of market participants …Frequently asked questions
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Day 1 Introduction to Corporate Valuations Valuation fundamentals Drivers of valuation – ROIC, WACC, growth, size The FCF perpetuity valuation formula; single and double period The key value driver valuation formula Economic profit/EVA ROIC vs. WACC – computation and drawbacks Case studies: valuing companies using the above formulae Valuations based on multiples Revenues, EBIT(DA), Net income/EPS, NAV Overview of following ratios: PE, PEG, EV/EBIT(DA), PB/NAV Dividend yield valuations Cleaning up the reported results to derive underlying performance Reconciliation of multiple valuations to the key value driver formula Day 2 Valuations based on multiples contd Earnings vs. cashflow Choosing comparable companies EPS dilution/enhancement Case studies: valuing companies using multiple analysis DCF valuations and financial modelling with Excel The CAPM; unlevered and levered betas, risk premia, tax shields and WACC Explicit forecast period vs. continuing value period Assessing the terminal value (multiple or perpetuity method) Case studies: modelling in Excel to produce DCF valuations Day 3 DCF Valuations contd. Importance of final year forecasts Comparing valuations using multiples vs. DCF Advantages and drawbacks of each valuation method Calculating NPV and IRRs Advanced DCF methods Changing annual WACC 3 stage DCF Adjusted Present Value (APV) Compressed APV and recursive WACC Calculating debt and equity values directly Impact of corporate finance transactions on valuations Friendly/hostile takeover Merger Demerger/spinoff/break-up IPO/new equity offering calculations The premium payable Market conditions/sentiment/liquidity Operational and financial synergies; cost savings Shareholder concerns Day 4 The Impact of Capital Structure on Valuation Increasing equity value through use of debt Focus on shareholder value Companies suited to leverage Debt markets and credit ratings Analysing debt capacity Leveraged buyouts (LBOs) Structuring LBOs Short-cut method to see if an LBO may be financially viable Typical covenants and financial forecasting Specific valuations High growth firms Cyclical firms Distressed firms; predicting default rates Day 5 Reversing into the Terminal Growth Rate Accounting factors and financial statements GAAP revenues/earnings vs. cash revenues/earnings Accounting standards (IFRS, US GAAP) Accounting tricks to enhance profitability Analysis of historic results including ratio analysis Off balance sheet liabilities Qualitative factors SWOT analysis Sovereign risk analysis Economy, currency, credit rating, political risks Case study: assessing emerging market risks Industry risk analysis Good vs. difficult industry Porter’s 5 forces Industry life cycle (growth) Industry cyclicality (earnings quality) Leading indicators Competition (ROIC) Pricing dynamics; demand vs. supply (ROIC) Changing business environments Regulation (ROIC) Product characteristics (earnings quality) Capital intensity and cost base (ROIC) Event risk Case study: assessing companies in a changing industry environment Company specific factors Management Operating, capital and corporate finance strategies Competitive advantages and cost position Product/service offering/differentiation/pricing power Scale Diversification Customer/supplier concentration Course summary and close
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