Advanced Corporate Valuation Workshop

Tuesday, June 11

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

Wednesday, June 12

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