Certificate in Company Valuation Modelling

LEORON Professional Development Institute
Training overview
Professional Course
Virtual Classroom
5 days

Start dates
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Course description

Certificate in Company Valuation Modelling

In real life, the main challenge in valuing different entities is the ability to understand and quantify the various inputs. If the inputs are nonsensical, the valuation output will unquestionably be nonsensical. For this reason, a large section of this course is devoted to understanding and modeling valuation inputs including adjustments to financial statements.

This intensive five-days workshop offers in-depth and practical analysis of the different valuation techniques that can be used to value different entities. It will also examine the use of real options modeling that are used to value patents, contracts, natural resources and for various other applications.The workshop will focus on the framework that can be used to pick the right model for any task and it will also extensively expose Participants to the modeling of various real life valuation cases.

Companies are valued for the purposes of investment, mergers and acquisitions or as part of internal measures of financial control. There are many different approaches to the valuation of companies and it is paramount to know when and how to apply what method. It is also essential to understand that company valuation is not an absolute science but also based on interpretation and judgment. In the broadest possible terms, firms or assets can be valued in one of four ways: asset based valuation approaches, discounted cash flow valuation approaches, relative valuation approaches and option pricing approaches.

Who should attend?

Who Should Attend?

  • Corporate financiers
  • Portfolio managers
  • Research analysts
  • Investment bankers
  • CEO’s
  • Board members
  • Financial advisors
  • Hedge fund managers
  • Private equity managers
  • Transactors
  • Trustees
  • Venture capitalists
  • Risk controller
  • Strategic planners
  • Corporate lawyers
  • Compliance officers
  • Senior managers
  • Corporate accountants
  • Auditors

Training content


Real Estate Investment: Basic Concepts

  • Two General Classifications of Estates
  • Estates Not Yet in Possession (Future Estates)
  • Examples of Leasehold Estates
  • Interests, Encumbrances, and Easements
  • Methods of Title Assurance
  • Abstract and Opinion Method
  • The Title Insurance Method
  • Limitations on Property Rights
  • Notes and mortgages
  • Seller financing
  • Reconstructing a mortgage loan

Introduction to valuation

  • The five myths about valuation
  • The principles and practice of time value for money

Exercise 1: modeling a straight bond valuation

  • Benjamin Graham’s safety margin
  • Introduction to DCF
  • Some useful Excel modeling tips

Exercise 5: modeling synthetic rating for a listed and a private company

  • Cost of capital modeling
  • The explicit and implicit costs of financing.

Meaning and importance

  • What happens practically when companies don’t meet their cost of capital?
  • The practice of changing assumptions in the stable growth period
  • Some analysts don’t use CAPM. Practical alternatives?
  • What does Warren Buffet use as cost of capital? Case study 1: calculating the cost of capital of Marriott

Financial Statements adjustment

  • The reasons for adjusting financial statements
  • Capitalizing operating leases
  • The capitalization rate Exercise 6: modeling the adjustment to EBIT and adjustment to total debt
  • Capitalizing R&D
  • Nature of industry and how many years to look back Exercise 7: modeling the tax effect of R&D adjustment and final effect on EBIT Case study: capitalizing operating leases and R&D at Boeing

DAY 2 Free Cash Flow to Equity (FCFE) vs Free Cash Flow to Firm (FCFF)

  • Meaning, measurement and modeling
  • Which one to use? Why?
  • Normalizing EBIT, capex and working capital
  • What does and doesn’t capex include?
  • Why we need the non-cash, non-debt working capital?
  • Adjustments required if firms have negative working capital
  • Marginal vs. effective tax rate
  • Stable debt policy and FCFE
  • FCFE and leverage. Is there a free lunch?

Exercise 8: calculating FCFF of a listed company

  • Calculation of terminal value Case study 2: modeling the FCFF of Boeing

Estimating Growth

  • The three ways of estimating growth rates
  • Extrapolation and its danger
  • High growth period vs. stable growth period
  • Length of the high growth period
  • Fundamental growth rate
  • Effect of ROC and Reinvestment rate on growth rate

Exercise 9: calculating the fundamental growth rate of a listed company

  • High growth rate estimation vs. stable growth rate assumption
  • Real vs. nominal growth rates
  • The three growth patterns and which to use

Exercise 10: modeling the three growth patterns Tying up loose ends

  • Effect of management options on valuation Exercise 11: valuing management options of a listed company
  • Effect of minority interest on valuation Exercise 12: applying relative valuation to minority interest
  • Valuing operating and non-operating assets
  • Effect of contingent claims Putting it all together Case study 3: full valuation of a cement company covering all the previous topics

DAY 3 Dividend discount models (DDM)

  • Gordon growth model
  • Versions of the model
  • Issues in using DDM

Exercise 13: valuing S&P 500 using DDM Case study 4: valuing a utility company using DDM Free cash flow to equity and free cash flow to the firm:

  • Adjusting the accounting records
  • The cost of capital approach
  • Effect of leverage on firm value Relative valuation
  • Standardized values and multiples
  • Three different ways to using multiples

Exercise 14: using regression analysis with multiples

  • Earnings multiples
  • Book value multiples
  • Sales multiples
  • Calculation of terminal value using multiples
  • Presentation of a fully automated model developed by Hamed Behairy using multiples to screen for quality and cheap investment ideas worldwide.

Valuing financial services firms

  • What is unique?
  • General framework
  • Excess return model
  • Valuing financial services firms using DDM

Exercise 15: valuing Morgan Stanley using Excess Return Model Exercise 16: Valuing Morgan Stanley using multiples Valuing distressed firms and firms with negative earnings:

  • Distressed firms: implications of viewing equity as an option
  • Negative earnings: causes and consequences

Exercise 17: once off charge at Daimler Chrysler Exercise 18: temporary or sector wide reasons at Volvo

DAY 4 Valuing private companies

  • What makes them different?
  • Estimating the cost of capital for private companies
  • Charging for higher risk: haircut from valuation or increasing the cost of capital?
  • Estimating the size of liquidity discount
  • Estimating the value of control premium

Exercise 19: modeling valuation of a private company Case study 4: Building a venture capital valuation model in Excel using sensitivity analysis for different exit options

  • Using IRR in venture capital valuation
  • IPEVCVG (International Private Equity and Venture Capital Valuation Guidelines) developed by 35 internatinal private equity and venture capital associations Real options valuation
  • Introduction to Black-Scholes model
  • Payoffs of put vs. call options and long vs. short options Exercise 20: Using Black-Scholes model to value financial options
  • Real options: meaning and applications
  • Valuing a patent Exercise 21: model of a pharmaceutical patent valuation
  • Valuing natural resources as options Exercise 22: model of an oil mine valuation
  • Valuing a contract with options to expand or abandon Exercise 23: model of value to expand operations of Disney in Latin America Exercise 24: model of value to abandon of Disney from a construction contract

Valuing properties

  • Real vs. financial assets
  • DCF, relative valuation
  • Capitalization rates Exercise 25: valuing a building in New York Case study 5: valuing a piece of land in South Africa.General framework
  • Choosing the right DCF model
  • Choosing the right relative valuation model
  • When should you use the option pricing model?
  • Conclusion

DAY 5 M&A valuation and modeling

  • Model-building process
  • Key M&A model formulas
  • Modeling the Acquirer standalone valuation (Excel Model)
  • Modeling the Target standalone valuation (Excel Model)
  • Modeling the combined valuation and synergy estimation (Excel Model)
  • Modeling Initial offer price calculation (Excel Model)
  • Modeling forecasted EPS of the Acquirer after acquisition (Excel Model)
  • Modeling the combined company financing capacity (Excel Model)

Deal structuring and financing

  • The deal structuring process
  • What is the best form of payment? Why?
  • Alternative financing options
  • Common forms of leveraged buyout deal structures
  • Analyzing leveraged buyouts
  • Applying LBO valuation models
  • Real life case studies

Alternative restructuring exit strategies

  • Motives for exiting businesses
  • Divestitures
  • Carve outs
  • Split ups vs split offs
  • Spin offs
  • Bust ups
  • Real life case studies

DAY 1 course topics include:

  • Execution of Operations
  • Scheduling and Authorization
  • Control of Production

DAY 2 course topics include:

  • Control of Cost
  • Management and Communication
  • Quality and Continuous Improvement

DAY 3 course topics include:

  • MORNING session
  • Design Tradeoffs class topics
  • AFTERNOON session
  • Developing the Business Strategy
  • Global Environment & Sustainability

DAY 4 course topics include:

  • Operations Strategy
  • Operations Strategy Choices & Financial Measurements
  • Aligning Operations with Supply Chain Partners

DAY 5 course topics include:

  • Infrastructure Systems
  • Change Management
  • End of Course Recap
  • Exam preparation recommendations

Certification / Credits

35 NASBA CPE credits

Learning Outcomes

Attend this course and addresses fundamental questions like:

  • How to calculate the cost of capital that a business should cover?
  • Why is there a need to adjust the accounting records?
  • What is the TRUE meaning of normalized free cash flows?
  • How do employee options affect valuation?
  • How to calculate capitalizations rates in valuing properties?
  • How to model the control premiums and liquidity discounts in private entities?

Why choose Leoron?

LEORON has worked with some of the largest companies in the World - but importantly we care about the individual. Through our Customer Happiness Team we ensure that everyone who attends a LEORON course has the support before, during and after to ensure their training needs are met.

We offer the highest level of training delivery, whether that be in our live-virtual training or in-classroom sessions, with our expert instructors guiding you through everything so that you’re left feeling assured and confident to utilize your new knowledge going forward.

About Leoron

LEORON Professional Development Institute

LEORON is the fastest growing global training institute in the World, having evolved over the past 11 years into a dominant training institute that offers a comprehensive set of training and development solutions to both individuals and businesses. Our locations...

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