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Advanced Valuation Skills

This workshop is for experienced valuation or M & A professionals who wish to learn new skills, and to explore commonly used valuation tools in more depth.

The workshop is modular, and in practice, our clients either assemble a two- or three-day workshop from modules in our valuation library, or request new bespoke modules for their individual requirements.

List of Advanced Valuation Skills Topics

The list below is a menu of topics from which you can select modules to assemble into your own customised workshop. Each of the topics below contains several modules, which you can supplement with any modules from Business Valuation Skills or Intermediate Valuation Skills. Explore each topic by either following the links (left in grey) to access a separate web page for each topic, by downloading a printable pdf document below, or by scrolling down to the bottom of this page.

  • Cost of capital
  • Cash flow issues
  • Equivalence of income models
  • Discounts and premiums
  • Market multiple issues
  • Debt and financial instruments
  • Taxation issues
  • Pension obligations
  • Understanding options
  • Real options analysis
  • Monte Carlo simulation

You can either download a full menu of topics and modules below in pdf format, scroll down further below to access each topic, or follow the links on the side menu (above left)

Downloadable Documentation

Cost of capital

  • Risk-free rate methodologies
  • Country risk
    • International market models including iCAPM, country spread models (Goldman and modified Goldman), sovereign spread model (Damodaran), country risk rating model (Erb, Harvey, Viskanta)
    • Currency risk - inflation delta
  • Market risk premium research and models
  • Betas
    • Extracting betas (markets, capture intervals and periods)
    • Unlevering and relevering betas using different models (Practitioner, Hamada, Harris Pringle, Miles Ezzell and Fernandez models)
    • Raw and adjusted betas
    • Sum betas
    • Total beta
  • Alphas - size and specific firm premiums
  • Fama-French 3-factor model
  • Arbitrage Pricing Theory

Cash flow issues

  • Inflation and growth
  • Integration (funding reconciliations and cash distribution assumptions)
  • CFROI (cash flow return on investment) and EVA (economic value added) models
  • Net investing cash flows
    • Growing FCF (free cash flows) model
    • RONIC (return on new invested capital) model
    • Growing EBITDA model

Equivalence of income models and spreadsheet proofs

  • FCFF (Free cash flows to the firm)
  • FCFE (Free cash flows to equity)
  • APV (Adjusted present value)
  • MEEM (Multi-period excess earnings)
  • DDM (Dividend discount model)

Discounts & Premiums

Modules include:

  • Levels of value
  • Market anchor model
  • DLOMs and minority discounts
    • Review of studies
      • Minority interest studies in public firms (restricted stock studies, pre-IPO studies, event studies, public shares in PE fund studies, and LEAPS studies)
      • Controlling interest studies (matched pair studies)
      • Minority interest studies in closely held firms (including PE secondary market studies and the Pepperdine capital markets project)
    • Option and CAPM models (Chaffe, Longstaff, Finnerty, Meulbroek and Tabak)
    • Practitioner methods (including the Mercer, Abrams, Stockdale, Butler Pinkerton and NICE models)
    • Comparative factor analysis (including Mandelbaum)

Market multiple issues

  • Choice of multiples
  • Maintainable EBIT extraction
  • Debt monitoring
  • Calendarisation
  • Prospective figures
  • Price # durable value (spikes and troughs)
  • Currencies
  • Associates
  • Recent acquisitions
  • Preference shares and minority interests
  • Dilution and option overhangs
  • Value synthesis

Debt and financial instruments

  • Fixed and floating rate debt
  • Warrants
  • Convertibles
  • Derivatives (forwards, futures, FRAs, swaps and swaptions)

Taxation issues

  • Which tax rate (statutory, marginal or effective)?
  • NOPLAT, cash taxes and deferred taxes
  • Tax loss carry-forwards
  • Thin capitalisation - impact on interest tax shield
  • TABs (tax amortisation benefits)
  • International tax regimes and double taxation

Pension obligations

  • Understanding financial reporting (IAS 19 - SFAS 158)
  • Incorporating actuarial assumptions

Understanding options

  • Options basics
    • Option definitions, types and payoffs
    • Required option inputs
  • Options calculators
    • Closed form (Black-Scholes)
    • Binomial modelling (Cox-Ross-Rubinstein)
  • Estimating annualised volatility
  • Share options and dilution

Real options analysis (ROA)

  • Real option analysis (ROA) definitions
  • Usefulness of ROA
  • ROA adoption over time
  • Mapping project scenarios
    • Mapping of option inputs on to project variables
    • Real option archetypes
  • Uncovering embedded real options
  • Estimating project annualised volatility

Monte Carlo simulation

  • Hands-on experience of Oracle Crystal Ball
  • Model development
  • Deterministic and probabilistic worksheets
  • Distribution types
  • Correlation
  • Tornado charts
  • Variance sensitivity analysis
  • Time-series forecasting
  • Scenario analysis

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