Proposed Course Outline
Subject: Corporate Valuation
Faculty: Dr. Parvinder Arora
A. Course Objectives
An important goal of corporate finance analysis is to value a firm and the course therefore focuses on learning
of core valuation concepts, tools and skills with this goal as the key outcome objective.
The course covers the various methods of corporate valuation and follows a case based approach to enable
the students to put finance concepts into practical frameworks for valuing firms and businesses.
The course also familiarises students with the usage of spread sheets to build financial models for valuation
and appreciate the linkages between valuation and strategy of firms.
B. Prescribed/Recommended Text
1. Damodaran, A. (2006), Damodaran on Valuation, New Jersey: John Wiley & Sons (DOV Hereinafter)
Reference Books
1. Palepu, Healy and Bernard (2009), Business Analysis and Valuation, Thomson South Western, (PHB)
2. Copeland, Koller and Murrin (2000), Measuring and Managing the Value of Companies, John Wiley & Sons
(CKM)
3. Clyde P. Stickney, Paul Brown, and James M. Wahlen,(2006) Financial Reporting, Financial Statement
Analysis, and Valuation: A Strategic Perspective , South-Western College Pub
C. Course Category and Pre – Requisite Courses
Perquisite Courses: Corporate Finance
D. Course Pedagogy
The pre-requisite for the course is that students are familiar with the basic accounting methodology and
Corporate Finance concepts.
The most important requirements for this course are a thorough preparation and analysis of the assigned
cases and reading materials and active participation in the classroom.
The course focuses on class discussions of cases and problems. Attendance, preparation for class and class
participation are essential.
The course is built almost exclusively around the case method.
Only the assigned cases will be discussed in the class (not the assigned readings) but the readings will help
students in tackling the case.
I expect students to have already thought through and analyzed the cases when they come to class. This
way, we can devote the bulk of the class time to thinking about, and responding to, each other's analyses
of the cases and only the necessary minimum to getting the facts out.
I shall be available for consultation during ………………..on all working s.
E.
Evaluation
Assessment Type
When assessed
Weighting
Case Analysis
On Going
20%
Group Project
On Going
20%
Written Exam
End Term
60%
Quizzes may be announced in class in advance or may be surprise quizzes
F. Day Wise Plans
Day 1
Topic: Valuation: Introduction and Different Methods.
Case1- Paint Pen, Inc.
Reading:
DOV - Ch1
Luehrman, Timothy A., (1997) what’s It Worth? A General Manager’s Guide to Valuation, Harvard Business
Review, Harvard Business Publishing
Stephen R. Foerster, Dominique Fortier (2000), Note on Mergers and Acquisitions and Valuation, University of
Western Ontario. Harvard Business Publishing
Day 2&3
Topic: Issues in DCF Valuation- Estimating Discount Rates: WACC
Case -2 - Nike Inc., Cost of Capital
Reading:
DOV - Ch2
Luehrman, Timothy A. (2009), Business Valuation and the Cost of Capital, Harvard Business Publishing
Bertoneche, Marc L., Maurer, Frantz (2006), Valuation Methods and Discount Rate Issues - A Comprehensive
Note, Harvard Business Publishing
Day 4
Topic: Issues in DCF Valuation: Forecasting Cash Flows
Case 3:
Value Line Publishing
Reading:
DOV – Ch. 3&4
Greenwood, Robin and David S. Scharfstein (2010), Calculating Free Cash Flows, Harvard Business Publishing
Day 5
Topic: Issues in DCF Valuation-Estimating Terminal Values
Case -4 Rocky Mountain Advanced Genome
Readings
DOV – Ch. 4
Fruhan Jr. William E. (1998), Note on Alternative Methods for Estimating Terminal Values, Harvard Business
Publishing,
Day 6 &7
Topic: Valuing Companies: Discounted Cash Flow (DCF) and Market Multiples
Case 5– Radio One
Case 6- Health Development Corporation
Readings
DOV – Ch. 5, 7-9
Luehrman, Timothy A. (2009), Corporate Valuation and Market Multiples, Harvard Business Publishing
Eberhart, Allan C. (2001), Comparable firms and the precision of equity valuations, Journal of Banking &
Finance, Volume 25, Issue 7, Pages 1367-1400
Day 8, 9 and 10
Topic: Valuing Companies: Capital Cash Flows Method and Adjusted Present Value Method
Case 7 - Sampa Video, Inc.
Case 8 – Valuation of Air-Thread Connections
Readings
Richard S. Ruback (1995), Introduction to Cash Flow Valuation Methods, Harvard Business Publishing
Luehrman, Timothy A. (1997),
Harvard Business Publishing.
Using APV: A Better Tool for Valuing Operations, Harvard Business Review,
Ruback, Richard S. (1995), Note on Capital Cash Flows, Harvard Business Publishing
Marc L. Bertoneche and Fausto Federici, (2006) Valuation Methods and Discount Rate Issues: A
Comprehensive Example, Harvard Business Publishing
Day 11
Operating Strategies and Valuation
Case 6 – RJR Nabisco
Readings
BACKGROUND NOTE
Baldwin, Carliss Y. (2001), Technical Note on LBO Valuation (A): LBO Structure and the Target IRR Method of
Valuation, Harvard Business Publishing
Martin, John D., and Akin Sayrak (2003),Corporate diversification and shareholder value: a survey of recent
literature, Journal of Corporate Finance, Volume 9, Issue 1, Pages 37-57
Day 12,13
Students’ Presentations: The entire class will be divided into the teams of 3-4 students each. Each team will
have to work on a valuation project of a given company. The details of the project will be distributed in the
first session. The students will have to submit the project write up before the start of Day 12. The evaluation
will be based on the write up and the presentation.
Schedule
The classes will be scheduled on the following days:
Day 1
Wednesday, 3 July, 2013
9:00 AM
1:00 PM
Day 2
Thursday, 4 July, 2013
9:00 AM
1:00 PM
Day 3
Friday, 5 July, 2013
9:00 AM
1:00 PM
Day 4
Monday, 8 July, 2013
9:00 AM
1:00 PM
Day 5
Tuesday, 9 July, 2013
9:00 AM
1:00 PM
Day 6
Wednesday, 10 July, 2013
9:00 AM
1:00 PM
Day 7
Thursday, 11 July, 2013
9:00 AM
1:00 PM
Day 8
Friday, 12 July, 2013
9:00 AM
1:00 PM
Day 9
Monday, 15 July, 2013
9:00 AM
1:00 PM
Day 10
Tuesday, 16 July, 2013
9:00 AM
1:00 PM
Day 11
Wednesday, 17 July, 2013
9:00 AM
1:00 PM
Day 12
Thursday, 18 July, 2013
9:00 AM
1:00 PM
Day 13
Friday, 19 July, 2013
9:00 AM
3:30:00
PM**
Days 1-12 will comprise of 4 hours of 45 minutes each, except on day 13 when it will be 6 hours of 45 minutes
each with a lunch break of 01 hour at 1 pm.