Agenda
Day 1: Valuation Course Content
Enterprise Value drivers
- Rationale behind fundamental multiples
- Reconciliation with DCF techniques
- Defining growth, return and risk
- Importance of ROCE and key drivers: margin and asset efficiency
- Defining valuation balance sheet
Fundamental multiples
- Formula’s for fundamental multiples
- Identifying key drivers of the following multiples:
o EV/EBITDA: ROCE is key
o EV/Sales: is margin important?
o PEG: misleading numbers?
o Price/Book: good or bad predictor of value?
o Price/sales: when is it useful?
o Valuation matrix - CFROI/CROCI: link between returns and capital
- Which debt do you deduct
- Discounts for liquidity, control/minority & size
Discounted Cashflow
- WACC revisited
- Estimating optimum leverage
- Characteristics of:
o Cyclical companies
o High growth/early stage companies
o Stable companies - 1, 2, 3 stage DCF models
- Defining Free cashflow using NOPAT
- Dealing with the terminus
- Impact of installed and incremental ROCE
- EVA models equivalence to DCF
- APV models explained
Day 2: Modelling Course Content
Valuation Balance sheet
- Defining growth
- Importance of ROCE and Net Investment
Defining Return: the impact of…
- Different standards/policies
- Goodwill
- Pension costs
- JV’s/Associates
- Operating leases costs
- R&D expenses
- Tax
- Private company issues
Defining Capital: the impact of…
- Consistency with return
- Cash working capital and net debt assumptions
- Goodwill: is it relevant?
- Intangible asset or expense; treatment of R&D?
- JV/Associates: cost or valuation?
- Off Balance sheet: out of the picture?
Modelling extra’s …
- Depreciation tax shield, deferred tax & capital allowances
- Tax losses
- Stock options – expenses & dilution
- JV/Associates: cost or valuation?
- Dividends
- Minorities
- Preference shares
- Provisions: pensions and restructuring: creating a level playing field?
- Adjusting for other non-operating assets and liabilities