Equity Valuation Masterclass

Course Overview

This course is designed to provide Senior Executives with knowledge and skills to evaluate Critical Success Factors that generate value for Firms, both Target and Acquirer. The executives will sharpen their skills in assessing the business and financial risk of a company or division, being able to determine its financial health and the key value drivers. They will expand their ability to spot opportunities to generate value by driving long-term growth strategies. They will compare the two main valuation methodologies, Relative versus Intrinsic and will gain a greater appreciation of the tools available to impact both.

A key theme of the course will be determining the relationship between the return of an asset or investment against its cost of capital, determined on a risk-weighted basis. We will examine major return measures such as Return on Assets (ROA), Return on Equity (ROE) and the concept of Economic Value Added (EVA).

While there will be some modelling in the two-day format, if desired, an additional day can be added to the course to focus on Excel, creating forecasts, debugging models and advanced topics.

Learning Objectives

At the end of the course, the participants will be able to:

• Explain the impact of business risk on expected returns of a division or firm
• Describe the interaction of the financial statements and the impacts on cash flows
• Assess the financial health of a division or firm and understand its natural level of leverage given its development and maturity
• Forecast short-term and long-term liquidity needs, based on historical trends and industry insights
• Assess the value of a firm or division using Relative Value measures, such as Price/Earnings, Price-to-Book, Dividend Yields and Enterprise Value to EBITDA
• Describe the impact on Relative Value through changes to operations and leverage
• Describe the components of Weighted Average Cost of Capital (WACC) and how to influence it
• Combine forecasting with the Discounted Cash Flow Methodology (Intrinsic) valuation
• Explain the relationship between WACC, internal hurdle rates and ROA measures
• Examine strategies to create and maintain long-term value for the Firm