Valuation modelling training

This valuation training course is an applied program where participants work in groups to use Excel in DCF modelling and multiple/ comparable company analysis.

The review covers topics including obtaining raw data for valuation, “cleaning” source numbers, defining and calculating firm value (enterprise vs. equity value), calculating reference multiples, and applying multiples to target company valuation.

Valuation training course day 1 of 2 – DCF (discounted cash flow) modelling

Discounted cash flow valuation

  • 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

Applying comparables/ multiples in valuation

  • 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.

Download the online outline for the valuation course

Here you can download the online valuation course outline.