Financial Modelling for Valuations and M&A

Timetable for 'Financial Modelling for Valuations and M&A' courses

Duration: 2 days

The valuation of a company can be a complex exercise, with various valuation techniques used to value a corporation, each with its own benefits and pitfalls. Financial Modelling for Valuations and M&A is an advanced two day course designed to help you understand these various valuation techniques, from looking at the past (e.g. historical earnings), the present (e.g. book value) and to the future (e.g. future maintainable earnings and discounted cash flow analysis). This course will also focus on Mergers and Acquisitions (M&A) concepts and associated best practice financial modelling techniques.

A comprehensive and integrated 3-way financial statement model in Microsoft Excel, with trading history and thorough comparable company or peer analysis, is used to demonstrate key principles and provides a robust and flexible tool for generating valuation scenarios and sensitivities.

Financial Modelling for Valuations and M&A will help you and your team to

• Build powerful financial forecast models for corporate and M&A target valuations
• Construct and present robust enterprise and equity valuation scenarios
• Understand market and company specific risk and the impact on discount rates
• Build and analyse key metrics in M&A analysis based on cashflows and accounting
• Scrutinise growth rates and Terminal Value and analyse the impact on valuations
• Assess the value of potential synergies and empower decision making with waterfall and tornadoes

Who should attend this course?

This course gives you the skills and confidence to build up comprehensive and robust DCF valuation models in Microsoft Excel, with a focus on M&A and corporate transactions. It is has been designed to suit an audience from a wide range of professions, including corporate advisors, equity analysts and bankers.

Course outline

Day one

Key concepts in M&A and corporate finance

• Learn about core M&A terminology
• Understand valuation fundamentals – why we make acquisitions
• Identify different types of M&A transactions and associated considerations

Free Cash Flow to Firm, Debt and Equity

• Distinguish between cashflow to the Firm, Debt and Equity
• Learn the reasons for their place in the cashflow waterfall
• Identify the advantages of using each method and when they should be used

Stress testing and forecasting techniques

• Learn about Moving Average and Linear Regression forecasting
• Discuss different methods to model seasonality in key drivers
• Understand when it is appropriate to forecast using automated techniques

Calculating the Weighted Average Cost of Capital (WACC) using CAPM

• Discuss the theoretical underpinnings of CAPM and why it is used
• Derive the WACC formula and model it in Excel
• Learn how to estimate betas from actual public market data

Day two

Understanding Terminal Value and its implications on a valuation

• Learn why Terminal Value isn’t appropriate in some valuation models
• Understand how different factors affect the impact of Terminal Value on a valuation
• Discuss commonly used methods of modelling Terminal Value

Modelling the cash impact of working capital and its flow on effects

• Learn how to build working capital into existing models without changing the structure
• Understanding the impact of working capital on the cash flow
• Discuss common errors in modelling working capital and ways to model around them

Cross checking your Discounted Cash Flow (DCF) with other popular valuation techniques

• Look at other valuation techniques commonly used
• Compare DCF valuation outputs with EBITDA multiples
• Learn the pros and cons of using any single technique and why analysts will use them all

Modelling commonly used accounting ratios for M&A and valuation analysis

• Understand what ratios are important for different stakeholders
• Derive working capital variables from accounting data for modelling use
• Model commonly used ratios for M&A and valuations analysis

Empowering decision making with waterfall and tornado charts

• Explore different presentation methods for displaying key outputs
• Learn how to build perfect waterfall charts that work in all scenarios
• Develop tornado charts for efficient sensitivity analysis.

Timetable for 'Financial Modelling for Valuations and M&A'

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