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