Advanced Company Analysis Valuation & Financial Modelling

5 - 9 March 2017Manama, Bahrain

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Course overviewCompany valuation is used for the purposes of investment, M&A or as part of internal measures of financial control. It is extensively applied when companies issue new shares, divest operations or acquire other companies. The rapidly growing private equity industry is also dependent on solid analysis. There are many different approaches to the analysis and valuation of companies and it is paramount to know when and how to apply what method. It is also essential to understand that company analysis is not an absolute science but also based on interpretation and judgment. This highly practical course will lead you quickly from the basics through to the more advanced valuation methodologies and modelling techniques.

This 5-day case study based workshop exploring advanced issues in company valuation and financial modelling will feature:

� Building a comprehensive financial model � Complexities in using comparative valuation measures � Absolute valuation methodologies: DCF,EVA � Developing an appropriate cost of capital � Decomposing sources of return � Building a fade model � Capitalising Intangibles � Introduction to real options � Merger and acquisition issues � Understanding LBOs � Valuing distressed assets

Who should attend?This course is aimed at those with a solid financial background who wish to explore the more advanced aspects of financial modelling and valuation methodologies, including:

� Investment bankers � Equity analysts � M&A professionals � Fund managers � Treasurers and finance directors � Commercial bankers � Private equity and venture capital specialists � Business analysts

Accreditation

Advanced Company Analysis Valuation & Financial ModellingAccelerate your career with this intensive 5-day workshop covering advanced analysis, valuation and forecasting skills.

Visit www.euromoneylearningsolutions.com/learnmore to register.

COURSE CODE: FIN076

Day 1ADVANCED MODELLING

Overview � Why create a model � Review of good modelling practices

The main structure � Historic P&L information � Restating historic information � Non-recurring items � Historic B/S information � Non-core assets � Review of initial model for target company

Forecasting the income statement

� Detailed revenue forecasts � Fixed vs variable costs: operating leverage

� Hedging policies

Taxation issues � Current vs deferred tax � Estimating the effective tax rate � Operating losses: carry-back and carry forward

Fixed Assets � Understanding capital intensity � Maintenance vs expansion Capex � Understanding asset lives � Forecasting disposals � Impairment of assets � Dealing with intangible assets

Working Capital � Components of cash and non-cash working capital

� Working capital ratios and their interpretation

� The relationship between working capital and margins

Provisions � The different types of provisions and their accounting

� Impact of provisions on valuation

Associates and investments � Accounting for associates and investments

� Forecasting associates and investment income

Day 2ADVANCED MODELLING AND MULTIPLES BASED VALUATION

Equity financing � Minority interest- impact on equity financing

� Common shareholders- forecasting dividends and retained earnings

� Share buy-backs and rights issues

Debt Financing � Linking cash flow and debt requirements

� Different types of debt financing

Scenario analysis � What are scenarios? � Developing flexible scenarios with excel

� Review of completed model for target company

Advanced ratio analysis � Equity vs Enterprise value multiples � Definitions � Calculating EV: core vs non-core

Assessing liabilities � Dealing with different kinds of provisions

� Dealing with pension liabilities � Hybrid financial instruments � Options � Off balance sheet liabilities

Equity multiples � What do equity ratios tell us? � Decomposing P/Es: linking growth, Cost of equity and RoE

� Free cash flow yield

EV multiples � What do EV multiples tell us? � Choosing the most relevant multiples � Theoretical EV ratios

Interpreting ratios � Which ratios for which companies? � Different ratios different answers?

Implied Valuation � Valuing a one business company

Agenda

� Valuing a conglomerate: sum of the parts valuation

� Valuing cyclical and fast growing companies

� Interpreting results and deriving an implied valuation for the target company

Day 3DCF AND COST OF CAPITAL

Cost of Capital � What the theory says � The elusive equity risk premium � Is Beta a reliable measure of risk? � Which cost of capital? � Whose cost of capital? � WACC in emerging markets � Valuing negative cash flows � Time Varying Cost of Capital

Forecasting FCF � Pitfalls in FCF calculation � Estimating normalised FCF � Forecasting of FCF for target company

Terminal value � TV using the perpetuity method: volatility

� Uses and misuses of the exit multiples’ approach

� Liquidation value � Why the value drivers method gives more stable and meaningful results

� Running sensitivities � Review of final dcf model

Day 4ABSOLUTE VALUATIONS: ADVANCED ISSUES

Understanding returns � Understanding ROCE � Components of Capital Employed � Decomposing ROCE � The ROCE “frontier”: trade-off between higher margins and higher asset turnover

� The link between ROCE and ROE

Distortions in calculating ROCE � The impact of changing asset lives � The invisible assets: valuing intangibles

� Historic capitalisation � Estimating the current value of intangibles

EVA as an alternative to DCF � Definition � Why use DCF and not DCF

The mathematical equivalence of EVA and DCF

� Using EVA to better understand value creation

� The potential pitfall of EVA � Building an EVA model � Valuing fast growing companies

� The concept of fades � Fading ROCE and growth � Choosing an appropriate fade period

� Impact of fades on DCF valuation

Day 5ALTERNATIVE METHODS AND M&A ISSUES

Scenarios and real options � Normal distributions and DCF � When the world is not normally distributed

� Valuing companies using binomial distribution

� Real options: myth or reality- the valuation

� Building a binomial model for a biotech company

Valuing Distressed assets � Why DCF is not appropriate � Estimating default risks � Distressed assets as options

Mergers and Acquisitions � The drivers of M&A � Horizontal and vertical integration � Price � Strategy

Valuing the target � As a standalone � Valuing synergies

� Estimating the price premium

Financing the acquisition � Using shares or cash � EPS accretion and dilution: does it reflect value added?

Modelling acquisitions � Accounting issues � New developments � Calculating Goodwill � Proforma balance sheet � Merging income statements

Course summary and close

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