Advanced Company Analysis Valuation & Financial Modelling. 5-9 March 2017 Manama, Bahrain. euromoneylearningsolutions.

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1 Advanced Company Analysis Valuation & Financial Modelling 5-9 March 2017 Manama, Bahrain euromoneylearningsolutions.com/learnmore

2 Advanced Company Analysis Valuation & Financial Modelling Accelerate your career with this intensive 5-day workshop covering advanced analysis, valuation and forecasting skills. Course overview Company valuation is used for the purposes of investment, M&A or as part of internal measures of financial control. It is extensively applied when companies issue new shares, divest operations or acquire other companies. The rapidly growing private equity industry is also dependent on solid analysis. There are many different approaches to the analysis and valuation of companies and it is paramount to know when and how to apply what method. It is also essential to understand that analysis is not an absolute science but also based on interpretation and judgment. This highly practical course will lead you quickly from the basics through to the more advanced valuation methodologies and modelling techniques. This 5-day case study based workshop exploring advanced issues in valuation and financial modelling will feature: Who should attend? This course is aimed at those with a solid financial background who wish to explore the more advanced aspects of financial modelling and valuation methodologies, including: Investment bankers Equity analysts M&A professionals Fund managers Treasurers and finance directors Commercial bankers Private equity and venture capital specialists Business analysts Building a comprehensive financial model Complexities in using comparative valuation measures Absolute valuation methodologies: DCF,EVA Developing an appropriate cost of capital Decomposing sources of return Building a fade model Capitalising Intangibles Introduction to real options Merger and acquisition issues Understanding LBOs Valuing distressed assets COURSE CODE: FIN076 Accreditation Visit to register.

3 Agenda Day 1 ADVANCED MODELLING Overview Why create a model Review of good modelling practices The main structure Historic P&L information Restating historic information Non-recurring items Historic B/S information Non-core assets Review of initial model for target Forecasting the income statement Detailed revenue forecasts Fixed vs variable costs: operating leverage Hedging policies Taxation issues Current vs deferred tax Estimating the effective tax rate Operating losses: carry-back and carry forward Fixed Assets Understanding capital intensity Maintenance vs expansion Capex Understanding asset lives Forecasting disposals Impairment of assets Dealing with intangible assets Working Capital Components of cash and non-cash working capital Working capital ratios and their interpretation The relationship between working capital and margins Provisions The different types of provisions and their accounting Impact of provisions on valuation Associates and investments Accounting for associates and investments Forecasting associates and investment income Day 2 ADVANCED MODELLING AND MULTIPLES BASED VALUATION Equity financing Minority interest- impact on equity financing Common shareholders- forecasting dividends and retained earnings Share buy-backs and rights issues Debt Financing Linking cash flow and debt requirements Different types of debt financing Scenario analysis What are scenarios? Developing flexible scenarios with excel Review of completed model for target Advanced ratio analysis Equity vs Enterprise value multiples Definitions Calculating EV: core vs non-core Assessing liabilities Dealing with different kinds of provisions Dealing with pension liabilities Hybrid financial instruments Options Off balance sheet liabilities Equity multiples What do equity ratios tell us? Decomposing P/Es: linking growth, Cost of equity and RoE Free cash flow yield EV multiples What do EV multiples tell us? Choosing the most relevant multiples Theoretical EV ratios Interpreting ratios Which ratios for which companies? Different ratios different answers? Implied Valuation Valuing a one business

4 Valuing a conglomerate: sum of the parts valuation Valuing cyclical and fast growing companies Interpreting results and deriving an implied valuation for the target Day 3 DCF AND COST OF CAPITAL Cost of Capital What the theory says The elusive equity risk premium Is Beta a reliable measure of risk? Which cost of capital? Whose cost of capital? WACC in emerging markets Valuing negative cash flows Time Varying Cost of Capital Forecasting FCF Pitfalls in FCF calculation Estimating normalised FCF Forecasting of FCF for target Terminal value TV using the perpetuity method: volatility Uses and misuses of the exit multiples approach Liquidation value Why the value drivers method gives more stable and meaningful results Running sensitivities Review of final dcf model Day 4 ABSOLUTE VALUATIONS: ADVANCED ISSUES Understanding returns Understanding ROCE Components of Capital Employed Decomposing ROCE The ROCE frontier : trade-off between higher margins and higher asset turnover The link between ROCE and ROE Distortions in calculating ROCE The impact of changing asset lives The invisible assets: valuing intangibles Historic capitalisation Estimating the current value of intangibles EVA as an alternative to DCF Definition Why use DCF and not DCF The mathematical equivalence of EVA and DCF Using EVA to better understand value creation The potential pitfall of EVA Building an EVA model Valuing fast growing companies The concept of fades Fading ROCE and growth Choosing an appropriate fade period Impact of fades on DCF valuation Day 5 ALTERNATIVE METHODS AND M&A ISSUES Scenarios and real options Normal distributions and DCF When the world is not normally distributed Valuing companies using binomial distribution Real options: myth or reality- the valuation Building a binomial model for a biotech Valuing Distressed assets Why DCF is not appropriate Estimating default risks Distressed assets as options Mergers and Acquisitions The drivers of M&A Horizontal and vertical integration Price Strategy Valuing the target As a standalone Valuing synergies

5 euromoneylearningsolutions.com/learnmore Estimating the price premium Financing the acquisition Using shares or cash EPS accretion and dilution: does it reflect value added? In partnership with: Modelling acquisitions Accounting issues New developments Calculating Goodwill Proforma balance sheet Merging income statements Course summary and close

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