Advanced Corporate Valuation Workshop

Day One

09.00 - 09.15 Welcome and Introduction

Module 1: Explanation of Valuation Framework

  • Different models and methods
  • Distinction between cash and accounting models
  • Accounting value and adjusted accounting value approaches
  • Description of dividend discount models
  • Cash based approach using discounted cash flow, adjusted present value, economic profit, options approach

Module 2: Workshop Case Study

  • Case study outline and background
  • Initial accounting data from annual reports
  • Historic analysis of the data
  • Management strategy evaluation
  • Problem areas - leases, tax rates, research and development

12.00 - 13.00 Lunch

Module 3: Forecast Statements

  • Reviewing forecast statements
  • Checking inputs and outputs
  • Deriving cash flow
  • Cash flow available for debt service (CFADS) and free cash (FCF)

Module 4: Discount Rates and Terminal Value

  • Financial mathematics refresher
  • Terminal methods and alternatives
  • Capital asset pricing model - criticisms and alternatives
  • Betas and asset betas
  • Peer group and industry betas
  • Cost of capital calculations
  • Time varying WACC
  • Handling inflation
  • Deriving a final cost of capital

Day Two

09.00 - 09.15 Recap of Day One

Module 5: Initial Valuation

  • Two and three stage DCF models
  • Explanation of fade factors
  • NPV/IRR refresher
  • Initial valuation
  • Comparison to current prices
  • Sensitivity and stress testing

Module 6: Comparison to Peer Group Values

  • Deciding on peer groups
  • Comparative ratios
  • Multiples and their variants
  • Cash flow ratios
  • Developing a valuation
  • Comparison of accounting, dividend and cash flow values

12.00 - 13.00 Lunch

Module 7: Alternative Tools

  • Adjusted present value (APV) methodology
  • Advantages over traditional free cash (FCF) models
  • Worked example of an APV valuation
  • Alternative economic profit method
  • Calculation of net operating profit after tax (NOPAT) and economic capital
  • Typical accounting adjustments
  • Worked example reconciled to free cash flow values

Module 8: Real Options

  • Review of options theory
  • Binomial and Black Scholes models
  • Application of the real options method to technology, biotech and other industries
  • Issues using real options models
  • Worked real options example

Evaluation and Termination of the Seminar

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