Principles of Corporate Valuation: Developing a 360˚ Perspective
Getting the Price Right
Course Overview
What price will it take to get a deal done? This seminar’s primary objective is to learn how practitioners in the financial services
industry apply various valuation techniques in the context of an eminent transaction. Heavy emphasis will be placed on
demystifying the theory behind the analytics and ultimately gaining an understanding of their impact on a transaction. After
gaining a working knowledge of the “scientific” analytics, participants will gain a new appreciation for the “art” of valuation through
an in-class simulation.
Course Content and Organization
This two day course will use several different teaching methods: theoretical presentations to confirm the base line understanding;
hands-on examples and Excel financial models to reinforce the theory; practical review of past M&A deals to provide real-world
examples; a course-pack to support content and finally mock presentations used to demonstrate the impact of valuation
techniques in a “live-deal” scenario. Participants will negotiate the best deal for their shareholders using buy-side and sell-side
guidance they developed themselves.
The course content will broadly include common valuation techniques and topics such as:
• Intrinsic valuation: stand alone financial analysis and discounted cash flow analysis registration for all individuals is done at
one time and for the same course on the same date
• Relative valuation: public comparable analysis and acquisition comparable analysis
• Deal structuring techniques: synergy roll-outs, shareholder value math, merger consequences analysis, debt capacity and
affordability analysis
• Sell-side and buy-side process
Objectives
By the end of this session, course participants will be able to:
• Understand the valuation framework commonly used by finance professionals
• Use live date and create a public market valuation: public comparable analysis, acquisition comparable analysis and discounted
cash flow analysis
• Leverage sell-side and independent research to reach an informed view of the case study company and its
sector/industry
• Learn how different structuring techniques effect valuation
CPE Credits: 15
CFA CE Credits: 12.5
Prerequisite
Basic knowledge of Excel, finance and an understanding of basic valuation techniques are recommended to maximize the benefits
of this program.
COURSE SCHEDULE: DAY 1
8:15am - 9:00am
Breakfast and Registration Check-in
8:50am - 9:15am
Course Objectives and Participant Introduction
9:15am - 10:30am
Session 1: Introduction to Valuation Methodologies and Key Terms
The course content will broadly include common valuation techniques and topics such as:
• Overview of valuation methodologies; uses of valuation; equity vs. enterprise value; EBIT and EBITDA
• Using relative value and trading comps
− Choosing a peer group; gathering information (sources and SEC documents); interpreting conference call transcripts and research reports
− Value drivers by industry sector
Exercise: Course Objectives and Participant Introduction
10:30am – 10:45am
Coffee Break
10:45am – 12:30pm
Session 2: Core Comparable Company Analysis
• Deciding which financial metrics and multiple to use
• Pros and cons of different relative value ratios
• Practical skills and application of relative value multiples
Exercise: Interpreting comparable company analysis for the case study company
12:30pm – 1:30pm
Lunch
1:30pm – 3:00pm
Session 3: Intrinsic Value and Discounted Cash Flow Analysis
• Core components of a discounted cash flow analysis
− Cost of capital analysis (WACC); forecasting unlevered free cash flows; estimating terminal values
• Intrinsic value meets relative value
Exercise: Sensitivity and scenarios analysis in a discounted cash flow model
3:00pm – 3:15pm
Coffee Break
3:15pm – 5:00pm
Session 4: Acquisition Comparables, Synergies and Control Premiums
• Understanding acquisition comparables
− Choosing a deal list; gathering information (sources and merger documents); offer vs. transaction value
• Introduction to premiums paid, valuing synergies and fairness opinions
• Analyzing the results; deriving an implied valuation range
Exercise: Determining a reasonable premium for the case study company and estimate baseline synergies
Welcome Reception to Follow.
Principles of Corporate Valuation: Developing a 360˚ Perspective
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COURSE SCHEDULE: DAY 2
8:15am - 9:00am
Breakfast
9:00am - 10:30am
Session 5: Deal Structuring –Merger Consequences Analysis
• Understand the concepts of affordability analysis and accretion/dilution
• Purchase accounting
− Concepts of goodwill and write-ups
• Deal sources and uses of funds; opening balance sheet adjustments; pro forma income statement; accretion / dilution
analysis; pre-tax synergies to breakeven; credit rating considerations
Exercise: Calculating accretion/dilution and breakeven synergies on case study company
10:30am - 10:45am
Coffee Break
10:45am – 11:15am
Session 5: Merger Consequences Analysis continued
Exercise: Relative PEs cross checks
11:15am – 12:30pm
Session 6: Let’s Make A Deal (Part 1)
• Begin Mock negotiations in “Let’s Make A Deal” Pros and cons of different relative value ratios
− What is fair value?
“Let’s Make A Deal”
Participants will be put into teams representing either buy-side or sell-side advisors. By utilizing skills learned in the class, teams
will determine valuation ranges, creating “bid/ask” ranges in a mock negotiation of a hypothetical transaction.
12:30pm – 1:30pm
Lunch
1:30 pm – 3:00 pm
Session 7: Let’s Make A Deal (Part 2)
• Identify the strategic rationale for the merger and determine how much the acquirer can afford to pay.
− What are the synergies worth?
3:00 pm – 3:15 pm
Coffee Break
(CONTINUED ON NEXT PAGE)
Principles of Corporate Valuation: Developing a 360˚ Perspective
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COURSE SCHEDULE: DAY 2 (cont’d)
3:15pm – 3:45pm
Session 8: Tax Issue with Business Combinations
• Step-ups and tax deductibility of goodwill
• Asset vs. stock purchase
• Section 338 election
3:45pm – 4:30pm
Session 9: Let’s Make a Deal (Part 3)
• Finalize mock negotiations and deal structuring
• Summarizing Valuation Ranges
4:30pm– 5:00pm
Session 10: Deal Protection Techniques
• Overview of common methods
− Breakup fee / termination fee
− No shop and go shop clauses
− Fixed exchange ratio
− Fixed price
− Collars
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