Module – 1
Valuation : Introduction to different methods
- Introduction to business valuations
- Various types of valuation methodologies
- Analysis of company and identifying appropriate methodology to be used for valuation
- Approach to Asset Value vs. Equity Value
- Key pitfalls
Module – 2
Importance of free cash flows
- Difference between Accounting profit and Cash profit
- Approach to forecasting free cash flows
- Components and calculation of detailed free cash flows
Module – 3
Cost of Capital : Equity and Debt
- Components of cost of equity and debt
- Measurement of risk-free returns
- Risk premium for debt and equity and issues in calculating the same
- How to apply beta and its implications
- CAPM and its application
- How to calculate WACC and its application
- Relation between cost of capital & growthustments
- Applying various forecasting tools, etc
Module – 4
Discounted cash flow approach
- DCF Concept: various types and their applicability
- Understanding of PV, FCFF, FCFE, UFCF, LFCF, Terminal Value
- How to run sensitivities for business valuation
- Adjustment to normalize free cash flows
- Detailed step-by-step approach and calculation
- Analysis of DCF calculation
- Sensitising valuation and understanding the impact
Module – 5
Valuation : Relative and Multiples based method
- Process of valuation from comparative multiples – Compilation, adjustments and rationalization
- How to choose comparable companies and past transactions
- Main factors affecting selection – size, geography, regulation, customers
- Other factors affecting comparability – free float, capital structure, corporate
finance activity
- Key adjustments in compilation
- How to calculate and apply key multiples for valuation – Price Earnings multiple, Price to Book multiple, Enterprise value to EBIDTA, EV/FCF, FCF/BV, EV/EBITDA, EV/Capex, EV/Subscriber, EV/EBITDAR, EV/Capacity etc
- Key issues and pitfall
Module – 6
Analysis of complex companies and transactions
- Companies having various assets and business verticals – Sum-of-the-Parts (SOTP) Valuation
- Strategic decision-making process (Mergers and Acquisitions, Leveraged Buyouts etc)- valuation and issues
- Application of control or leadership premium, synergies, cash flows, illiquidity and minority discounts, etc
- Valuation of start-up ventures and negative cash generating companies
Module – 7
Return analysis
- How to do return analysis at the time of investments and exits
- Expected return vs Final return (Equity IRR- Gross and net)
- Key adjustments and its implications
Module – 8
Key adjustments in the model
- Focus on flexibility and integrity of financial models
- Some key sheets which can be added for return analysis
- Concept of cash multiples
- Additional analysis – sensitivity, scenario, variance etc
- Additional funding requirements, dilution, returns etc
Module – 9
Detailed practical exercise to do valuation exercise from scratch to build confidence of participants
