This series teaches the fundamentals of valuing public and private companies through a case study approach. It covers the different methodologies and focuses on the Discounted Cash Flow (DCF) method as participants build a DCF analysis for an actual acquisition, using each component of the DCF model: projected free cash flows, Weighted Average Cost of Capital (WACC) and terminal value. The series concludes with an introduction to sensitivity and scenario analysis, which is used to improve the base case valuation.
Who should take this course:
Individuals in credit, investment banking, corporate finance, and sales and trading.
Prerequisites:
Financial Statement Analysis and Corporate Finance, or equivalent level of knowledge.
Training Hours/CPE Credits:
6
Modules
Introduction to Business Valuation
Module Code
:
crpf_1031
Level
:
Basic
Training Hours/ CPE Credits
:
1
Module Description:
This module will explain why business valuations are done, the role of the market in determining valuation, and the advantages of using the discounted cash flows method.
Learning Objectives:
After completing this module, you'll be able to:
Identify the rationale and scenarios for doing business valuations.
List the roles played by the public markets in business valuation.
Recognize the different methods used to value businesses.
Identify three reasons why the DCF model is the method of choice for valuing businesses.
The Foundations of Free Cash Flows
Module Code
:
crpf_3008
Level
:
Basic
Training Hours/ CPE Credits
:
1
Module Description:
This module will discuss how to create a projection of free cash flows to use as the foundation of our DCF valuation. First, you'll learn how free cash flow differs from what you see on the cash flow statement. Then we'll start laying down the free cash flow foundation. We'll see that there are important factors that will determine which way our foundation comes out — whether it's firm, wobbly, flexible, or brittle. These are called value drivers and each has an impact on our free cash flow projections.
Learning Objectives:
After completing this module, you'll be able to:
Describe the difference between cash flow and free cash flow.
List the differences and similarities in the direct and indirect methods of determining free cash flow.
Recognize the value drivers of free cash flows.
Identify components of the calculation of free cash flow from the value drivers, using the direct method.
The Weighted Average Cost of Capital (WACC)
Module Code
:
crpf_3009
Level
:
Basic
Training Hours/ CPE Credits
:
1
Module Description:
This module deals wit hthe Weighted Average Cost of Capital - or WACC - and how to calculate it pre-and post- acquisition.
Learning Objectives:
After completing this module, you'll be able to:
Define leverage in terms of its influence on the WACC.
Determine the elements necessary to calculate the after-tax expected cost of debt.
Recognize the elements of the CAPM formula.
Describe the role of beta in determining the cost of equity.
Calculate the expected cost of equity and WACC.
Terminal Value
Module Code
:
crpf_3010
Level
:
Basic
Training Hours/ CPE Credits
:
1
Module Description:
This module involves looking at the different methods for calculating terminal value.
Learning Objectives:
After completing this module, you'll be able to:
Define terminal value and its role in company valuation.
List and describe each of the methods of determining terminal value.
Describe the factors that influence the choice of valuation method.
The DCF Approach to Business Valuation
Module Code
:
crpf_3011
Level
:
Basic
Training Hours/ CPE Credits
:
1
Module Description:
This module covers valuing businesses using the discounted cash flow approach.
Learning Objectives:
After completing this module, you'll be able to:
Recognize the components of Total Entity Value and its relationship to the Value of Equity.
Calculate the per-share value of equity.
Using the DCF approach, determine whether or not the Keebler acquisition added value to Kellogg's.
The Limitations of the DCF Approach
Module Code
:
crpf_3012
Level
:
Basic
Training Hours/ CPE Credits
:
1
Module Description:
This module takes a closer look at the limitations of the DCF model and the assumptions used to make it work. Then it shows how to use sensitivity analysis to examine the sensitivity of the base case valuation to changes in the value driver, WACC and terminal value assumptions. Then it shows how to use scenario analysis and Monte Carlo simulations to further refine the valuation.
Learning Objectives:
After completing this module, you'll be able to:
Identify the impact of changes in value drivers, WACC and terminal value assumptions on a base case valuation through sensitivity analysis.
Describe the use of scenario analysis to improve a base case valuation.
Recognize limitations of the DCF methodology.
