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Valuation, Trading Comparables & DCF

CFA Accreditation in India.
This 2 day program lays the foundations to build a solid understanding of corporate valuation. Some of the most common valuation methodologies are introduced, explaining the difference between a company's fundamental value, and how much an acquirer would pay for the business. The concepts of enterprise value and equity value are explained, using simple but rigorous exercises.


CFA Accreditation in India. 

We will drill down on how to select comparables, where to find data in published financials and equity research reports, how to clean the raw data, and how to document and check the output. Identifying the most commonly used multiples and complexities are also covered.

During day 2 of the program we will learn how to build a discounted cash flow valuation model. We will focus on the calculation of free cash flow. A detailed ratio analysis is used to establish the reasonableness of the forecasts and to identify when the target company reaches steady state. We analyze the weighted average cost of capital, calculate terminal values, using both the exit multiple method and the perpetuity growth method. We discount the free cash flows to arrive at enterprise values and calculate the implied share price. 

Who should attend?

Those working within the following functions:

  • Finance
  • Corporate Finance/Investment Banking
  • Equity Research
  • Fund/Asset Management
  • Consultancy
  • Private Equity

Course Objectives

  • Determine and identify valuation Methodologies
  • Examine the concepts of enterprise value and equity value
  • Examine the comparables, the data, where it is found and how it is used
  • Discuss some of the most commonly used multiples
  • Calculate free cash flows and discount them
  • Learn how to calculate the value

Course Content

Valuation fundamentals

  • The importance of valuation in the investment banking industry
  • Fundamental vs. transaction value
  • Overview of the major valuation methods
    • Trading comparables analysis
    • Discounted cash flow analysis
    • Transaction comparables analysis
    • LBO analysis
  • Enterprise vs. equity value
  • Book values vs. market values
  • Derivation of enterprise values using market values
  • Derivation of enterprise values using a fundamental valuation approach

 Trading comparables

  • Screening companies to identify a suitable comparable set
  • Calculating the company’s value
    • Number of shares and value of share options
    • Equity value
    • Net debt calculations
    • Minority interests and equity method investments
    • Enterprise value
  • Calculating the earnings numbers
    • Cleaning non-recurring items from earnings and resulting tax adjustment
    • Calendarization issues
    • Last-Twelve Months (LTM) analysis
  • Calculating a range of forward looking and historical earnings multiples
    • Revenue
    • EBITDA
    • EBIT
    • P / E
    • P / E / G
    • Industry-specific multiples
  • Calculating and using operating and credit ratios
  • Troubleshooting and checking the output
  • Applying the results

 DCF valuation

  • Calculating unlevered free cash flows
    • Drivers of cash flow
    • Ratio analysis
  • Weighted average cost of capital
    • Optimal capital structure using peer analysis
    • Establishing the company’s forward looking cost of debt
    • Cost of equity: understanding the risk free rate, the equity risk premium and beta
    • Unlevering and relevering the beta
    • Calculating WACC for the case company
  • Calculating the terminal value
    • Perpetuity growth (Gordon Growth model) method
    • Exit multiple method
  • Building a discounting model
    • Mid-year adjustments
  • Calculating enterprise and equity values
  • Sanity checks
    • Reinvestment rate and ROIC
    • Implied multiples and growth rates
    • Percentage of value in the terminal period



A working knowledge of the Financial Statements and Financial Modeling

Please note:

This course is non-residential. The venue will provide light refreshments.

You need to bring a Windows-based laptop to the training with Excel, Winzip and Adobe to access the files. Our teaching materials are designed for PCs and not MAC based systems. Download details for the necessary files will be emailed a few days before the course.

AMT reserve the right to cancel or postpone sessions or change content if registrations are insufficient to continue 2 weeks prior to scheduled commencement date. Registrants will be given at least 5 business days’ notice of such changes.