Advanced Valuation Modeling - Fundamental & Relative Valuation

How can you tell if a company is undervalued or overvalued? Is the current stock price the only measure of value? Why would one company command a higher or lower premium than its direct competitor? This course takes a practical, tangible, and non-theoretical approach to examining how corporations are valued and the major analytical tools that are used. Go beyond the academic theory of financial ratios and apply fundamental analysis and real-world methods of evaluating a company’s intrinsic value. Gain insight into relative valuation methodologies (trading comps, deal comps) to fundamental valuation (discounted cash flow analysis, break-up / sum of the parts valuation).

Coverage goes beyond the academic theory of financial ratios to the practical application of fundamental analysis, offering alternative, real-world methods of evaluating a company's intrinsic value. The Course includes a crucial primer to Corporate Finance and its non-theoretical application; apply learning objectives and goals immediately by building real case study. Plow through countless 10K filings to properly and thoroughly analyze companies and reported financials.

No sessions currently available. Contact client services to get the next available date.
CPE CREDITS
14.0
Investment bankers, mergers & acquisitions, leveraged finance and credit professionals. Private equity, buyout and venture capital professionals. Internal M&A and business development. CFO, VP Finance, Financial Analysts, & related functions. New hires and those being groomed for management.
No advance preparation required.
Students will be able to:
  • How to value a company (trading comps, deal comps, DCF, LBO, break-up and asset valuation)
  • Importance of Enterprise Value, EBITDA, capital structure, leverage and WACC
  • Analyze valuation multiples and ratios; why are PE ratios sub-optimal as a valuation metric?
  • Practical, non-theoretical application of introduction to corporate finance
  • Create a top-down income statement projection model
  • Construct a basic discounted cash flow analysis utilizing multiples and perpetuity growth model
  • Build analysis of current market trading statistics and analysis at various prices
  • Analyze current market data (trading comps) and historical acquisitions (deal comps)
  • Learn the nuances of “spreading” comps and how to avoid common mistakes
  • Normalizing financials for extraordinary items, non-recurring and restructuring charges
  • Calculating transaction value (purchase price), premiums and multiples in past deals
  • Best practices on inputting and checking data, “Do’s and Don’ts” tips
Proficiency in: Accounting & Financial Statements, basic Corporate Finance and valuation topics. Basic, general knowledge or interest in leveraged buyouts. Solid proficiency in Excel. Note: To maximize the value & productivity of this course, participants must be proficient and comfortable with Excel - a lack of Excel skills will hamper the ability to properly follow along and acquire the best practices and efficiencies that are presented. Financial calculator required.
Computer:
EACH PARTICIPANT MUST BRING HIS/HER OWN LAPTOP TO CLASS
Day 1: Corporate Valuation Methodologies and Corporate Finance
Introduction to Valuation and Corporate Finance
  • How much is a company worth? Why is the current stock price not an accurate indication of value?
  • How do you tell if a company is under-valued or over-valued?
  • Why would one company command a higher or lower premium than its direct competitor?
  • What is the importance between enterprise value and equity value?
  • Why do we include minority interest and exclude capital leases?
  • What is the relevance of capital structure and leverage on a company’s value?
  • Why and how is corporate finance so critical to managing a firm’s profitability?
Introduction to Valuation and Corporate Finance

Ratios and Multiples Discussion

  • What exactly does a multiple tell us? Learn the correct way to use P/E ratios and other multiples
  • Why are P/E ratios misunderstood and what other profitability-related ratios are more important?
  • What is EBITDA and why is it so important?
  • Utilizing the correct numerator for multiples analysis and calculating implied value based on multiples
Ratios and Multiples Discussion

Detailed Valuation Analysis

  • Analysis of “football field” and reference ranges
  • Detailed discussion of the major valuation methodologies, their nuances and application in the real-world
  • Analyzing, comparing and contrasting trading comps, deal comps and premiums paid
  • Incorporate the concepts learned by immediately working on Excel-based, hands-on exercises
  • Perform valuation modeling techniques including: quick & dirty trading comps, reference range analysis, football field construction and WACC calculation
  • Input historical results and analyst projections for comparable companies, calculate current standalone market valuation multiples and calculate implied valuation of target company
Detailed Valuation Analysis

Build 5-Year Income Statement Projection Model

  • Input historical financial results and recast as necessary
  • Calculate historical growth rates and margins which serve as the basis for your projection assumptions
  • Calculate your projected profitability from revenue down to EPS
  • How do you forecast depreciation and amortization expense?
  • Learn the correct way to calculate diluted shares outstanding
  • Learn the correct way to calculate shares outstanding using the treasury diluted method
Build 5-Year Income Statement Projection Model

Discounted Cash Flow (DCF) Valuation Modeling

  • How is a discounted cash flow analysis actually constructed?
  • Estimate unlevered free cash flow (free cash flow to firm)
  • Why is amortization non-tax-deductible from a tax perspective and what are the implications on value?
  • What are different proxy methods for calculating working capital?
  • Terminal Value estimation: what are the differences between the EBITDA multiple and perpetuity growth approaches and what are the implications on value?
  • Learn subtle nuances including the proper figure for “cash flow” in perpetuity growth models
  • Calculate from enterprise value down to equity value and ultimately down to stock price per share
Discounted Cash Flow (DCF) Valuation Modeling

Day 2
Complex Trading & Deal Comps Analysis
  • Learn the steps required to construct a trading and deal comps analyses
  • Learn how to filter straight through to the relevant information
  • Best practices on inputting and checking data, “Do’s and Don’ts” tips
  • Calculate LTM (last twelve months)
  • Treasury Method of calculating diluted shares outstanding
  • Normalizing financials for extraordinary items, non-recurring and restructuring charges
  • Specific Income Statement and Balance Sheet reminders
  • Hands-on creation of trading and deal comps analyses
  • Handling projections for comparability
  • Weighted average cost of capital analysis
  • Calculating transaction value (purchase price), premiums and multiples in past deals
  • Incorporate trading and deal comps with core financial model and DCF valuation to build reference range and football field to summarize overall valuation ranges
Complex Trading & Deal Comps Analysis

Complex Comps Adjustments

  • When and when not to adjust for asset impairments and write-downs
  • How to adjust for zero-coupon convertible securities that are simultaneously in-the-money and out-of-the-money
  • The effects of a LIFO / FIFO change in accounting recognition
  • How to adjust for changes in accounting principle and discontinued operations
  • The difference between below-the-line and above-the-line adjustments and evaluate when an item affects both, one or the other or neither
  • How to properly account for difference fiscal year ends
  • Proper treatment of capital leases
  • When to use reported GAAP Income Statement figures and when to use Pro Forma figures
Complex Comps Adjustments

Clients who register for this course will receive a complimentary 4-month subscription to FT.com. The Financial Times is the world's most respected financial newspaper, providing a broad assessment on finance, business and the industrial sector. The move to the electronic version follows an ongoing review of our environmental responsibilities as a global business and as part of the Pearson group. FT.com also has features that are not available in hard copy, such as: Special Reports, Alphaville, editor blogs, education sections and much more! Subscriptions will start within 6-8 weeks of the start of class and are limited to one subscription per client. (Please note: as of May 1, 2011, the electronic subscription replaces the hard-copy 3-month Financial Times subscription.)

Lunch is included for all students taking day classes.