Valuation modelling training – 2 day course
This valuation training course is an applied program where participants work in groups to use Excel in DCF modelling and multiple/ comparable company analysis.
Valuation training course day 1 – DCF (discounted cash flow) modelling
- The starting point for DCF valuation
- Forecasting from financial statements and getting to cash flow
- Modelling integrated financial statements
- What makes a good model?
- Model structure
- The benefits of integrated financial statements for valuation
- Key forecast ratios
Modelling – integrating financial statements. Under the course tutor’s guidance, participants work in teams to complete a partially-developed financial model for the case study which integrates P&L, balance sheet and cash flow, and use this to forecast cash flow for a DCF valuation
- Case study: stand alone valuation
- Absolute valuation
- Calculating free cash flow before financing
- Understanding and calculating WACC
- Conducting a DCF valuation
Modelling – valuation. Course delegates work as a group to calculate the cost of capital and complete a DCF valuation for a case business
- Discussion – calculating WACC:
- Sources for beta estimates
- Obtaining a peer group
- Obtaining interest rates
- Calculating terminal value
- Defining firm value
- How should we define firm value?
- How do we reconcile to “debt free cash free” valuation?
Modelling – firm value. Course delegates work from enterprise value and use financial statements to calculate equity value
Valuation training course day 2 – multiples/ relative/ comparable company analysis
- Introduction: valuation camps
- Comparable valuation in context
- Introduction to and discussion of common valuation techniques
- Comparison of comparable with absolute (DCF) valuation
- Pros & cons of comparable valuation
- Choosing comparable companies
- Manipulating comparable company analysis
- Issues in choosing comparable companies
- Stepping through comparable company analysis – the process
- Sources of info
- Keys to selecting comparables
- Comparable analysis: pitfalls
- Selecting multiples
- Overview of common multiples
- Which strip out variability? Which are more volatile?
- Normalising earnings and source data
- Key issues in source data: getting to harmonised and maintainable earnings, making use of data available to the market
- Cleaning the numbers
- Key adjustments
- Discontinued operations
- One off & exceptional items
- Tax effects
- Pensions and other items that look like finance costs
- The role of judgement & detective work
Case exercise – cleaning the numbers. Delegates work from a set of accounts and adjust to get to underlying profitability
- Summary: cleaning the numbers – a check list
- Defining firm value and calculating multiples
- Enterprise vs. shares value
- Routes to valuation/ applying it in practice
- Key adjustments e.g. provisions and minority interests
- Overview of common multiples
Case exercise – equity to enterprise value. Course delegates work from a set of accounts to reconcile equity and enterprise value, adjusting for debt, cash, provisions and minority interests
- Discussion – valuation multiples – which are more volatile? Which is best when?
- Applying it in practice.
Enquire about an in-house valuation training course
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