
Explore valuation concepts, including discounted cash flow, comparative company analysis, and precedent transactions, and learn how to determine fair value in mergers and acquisitions, fundraising, or litigation.
Examine absolute value based techniques like discounted cash flow to determine a company's intrinsic value, and relative valuation methods using comparable company analysis and precedent transactions.
Compute enterprise value using discounted cash flow by deriving free cash flows from EBIT, taxes, non-cash charges, working capital changes, and capex, then model in Excel.
Compute free cash flows and the cost of capital using the weighted average cost of capital (WACC) as the discount rate.
Learn to estimate a firm's enterprise value by calculating free cash flow, terminal value, and perpetual growth, then discount with the cost of capital to derive equity value.
Clarifies DCF pitfalls by focusing on operating free cash flow, future cash flows, timing, discounting with the weighted average cost of capital, and computing enterprise value from present values.
Explore a real Infosys case study of comparable company analysis, calculating enterprise value from market cap, net debt, and minority interest, and contrast forward-looking and historical multiples.
Derive equity value from comparable company analysis using enterprise value and equity multiples, forward looking revenue and EPS, and multiple scenarios, while noting pitfalls and apples-to-apples considerations.
Learn how precedent transactions valuation uses past M&A deals and total deal value multiples to value a target, including a control premium, while noting limitations compared to comparable company analysis.
Explore a precedent transactions case study to value a company using revenue multiples for enterprise value, normalize data, and derive equity value after adjusting for debt and minority interest.
Valuation refers to the quantitative process used to determine the fair value of a company, asset or liability. This course on Valuation starts with introduction of valuation concept, its importance and where it is used. It then goes on to compares the various valuation approaches that are used in the market i.e. absolute valuation and relative valuation. The course then moves on to introducing three valuation technique and each one is explained with a working example.
The course also has the models that can be downloaded
Following is the course structure
1. Discounted Cash Flow Method - Introduction of the valuation method, Case Study of an ecommerce company with the working model and Pitfalls
2. Comparable Company Analysis Method -Introduction of the valuation method, Case Study of a tech company including selection of a peer set with the working model and Pitfalls
3. Precedent Transactions Method - Introduction of the valuation method, Case Study of a tech company including selection of a peer set with the working model and Pitfalls
This course is designed for beginners who are typically looking to understand the concept of valuation and get a working knowledge of how the concepts can be applied to a real working model. Simple examples and illustrations have been used to drive the concept. Students and financial modelers early in their career will find it useful to understand/refresh their knowledge of the topic