Corporate Valuation
Dates:
March 23 - 25, 2009
March 23 - 25, 2009
Location:
Prague, Mövenpick Hotel
Prague, Mövenpick Hotel
Price:
EUR 2,100
EUR 2,100
Lecturer:
Søren Plesner
Søren Plesner
- General Introduction to Corporate Valuation
- Financial Statement Analysis
- Asset-Based and Market-Based Valuation Methods
- Future Earnings and Cash Flow Valuation Methods
- EVA, MVA and SVA
- Valuation of M&A's and Restructurings
- Option-Based Valuation
The purpose of this practical three-day seminar is to give you a good understanding of state-of-the-art techniques for valuing corporations and strategic investments.
We start with a general introduction to corporate valuation where we discuss important objectives of corporate valuation, including private equity fundraising, mergers, acquisitions and new issues.
We then explain how the analysis of a company’s financial statements can serve as a good starting point for valuation. We look at how assets, liabilities and cash flows can be analyzed to gain insight in the company’s operating efficiency and financial strength. We also discuss how historic financials should be restated before they can be meaningfully used in valuation, and we explain how management can use “financial shenanigans” to flatter financial statements.
We then continue to present three alternative (or complementary) routes to corporate valuation.
In asset-based valuation we look at the company’s “hard assets”, represented by their book value or liquidation value and explain how it can be determined whether a company is over- or undervalued by the market.
We then look at market-based valuation techniques that focus on the market price for similar businesses at a given point in time. Here, we explain how to assess the relative value of corporations by comparing their P/E ratio, PEG, comparable sales, gross revenues and other variables. We also explain how to compare corporate valuations on a risk-adjusted basis.
Further, we explain how corporations can be valued using models based upon projections of earnings and cash flows. We look “dividend discount models” as well as “free cash flow” models, where future cash flows and enterprise value are modelled on more explicit assumptions about firms’ “value drivers”. We also describe and calculate alternative measures of residual earnings and discuss the use of “residual income” models.
Finally, we explain and discuss how various valuation techniques can be put to work in merger, acquisition, restructuring or divesture situations. Here, we also look at how the method of "option-based valuation" can be used to assess the value of a strategic investment, or of a company in distress.
We start with a general introduction to corporate valuation where we discuss important objectives of corporate valuation, including private equity fundraising, mergers, acquisitions and new issues.
We then explain how the analysis of a company’s financial statements can serve as a good starting point for valuation. We look at how assets, liabilities and cash flows can be analyzed to gain insight in the company’s operating efficiency and financial strength. We also discuss how historic financials should be restated before they can be meaningfully used in valuation, and we explain how management can use “financial shenanigans” to flatter financial statements.
We then continue to present three alternative (or complementary) routes to corporate valuation.
In asset-based valuation we look at the company’s “hard assets”, represented by their book value or liquidation value and explain how it can be determined whether a company is over- or undervalued by the market.
We then look at market-based valuation techniques that focus on the market price for similar businesses at a given point in time. Here, we explain how to assess the relative value of corporations by comparing their P/E ratio, PEG, comparable sales, gross revenues and other variables. We also explain how to compare corporate valuations on a risk-adjusted basis.
Further, we explain how corporations can be valued using models based upon projections of earnings and cash flows. We look “dividend discount models” as well as “free cash flow” models, where future cash flows and enterprise value are modelled on more explicit assumptions about firms’ “value drivers”. We also describe and calculate alternative measures of residual earnings and discuss the use of “residual income” models.
Finally, we explain and discuss how various valuation techniques can be put to work in merger, acquisition, restructuring or divesture situations. Here, we also look at how the method of "option-based valuation" can be used to assess the value of a strategic investment, or of a company in distress.
Market-Based Valuation
- Comparing P/E Ratios
- The Comparable Sales Method
- Rules of thumb/industry averages
- Other Comparables
- Risk-Adjusted Valuation
- CAPM and other models
- Case Study
- Exercises
12.00 - 13.00 Lunch
13.00 - 16.30 Future Earnings and Cash Flow Valuation
- Discounted Cash Flow Models
- Introduction to DDM models
- The zero growth model
- The constant growth model
- A two-stage growth model
- Multi-stage growth models
- Deriving growth rates from accounting ratios
- Estimating the discount rate
- The relationship between risk (beta) and the P/E ratio
- Sensitivity analysis
- Case study
- Exercise
Wednesday, March 25
09.00 - 09.15 Recap
09.15 - 12.00 Future Earnings and Cash Flow Valuation (Cont’d)
- Free Cash Flow Analysis
- The company’s value drivers
- Deriving the free cash flows
- Deriving the discount rate and the enterprise value
- Analysis of shareholder value creation
- Practical case study
- Small exercise
- Residual Income Valuation
- Calculating residual income
- Economic Value Added, Market Value Added and the measures
- The EVA™ Model
- Practical case study
- Small exercise
12.00 - 13.00 Lunch
13.00 - 16.30 Valuation of M&A's and Restructurings
- Sources of Value Gains from Acquisitions
- Control Premiums and Minority Discounts
- Valuation as a Tool to Discover Restructuring Opportunities
- Valuing Leveraged Buy-Outs
- Debt capacity analysis
- The “cash sweep”
- Valuation for Divestures
- The break-up valuation method
- Strategic Valuation
- The option-based valuation method
- Approaches to option-based valuation
- Caveats and limitations
Evaluation and Termination of the Seminar
