Gain key concepts and practical application of how to determine the worth of a company based on future cashflows, as well as other popular valuation methods.
Learn real-world valuation theory and hone your practical modelling skills by working side by side with an expert financial modeller to build your own valuation models to take away for future reference during this interactive and hands-on course.
While valuation theory and practice is a broad and complex subject matter that varies by both sector and situation there are nonetheless some core skills which are underpin all sensible and robust valuation analysis.
Essential Valuation Modelling focuses on these central tenants, leading course attendees methodically through the valuation lifecycle, using hands-on modelling exercises throughout. While concurrently discussing underlying theory, highlighting common valuation errors and investigating alternative valuation methods for analytical rigour.
The course is based around an Equity Research case study of a listed company.
Course Agenda
Accurately representing the target company
- Identifying key information required to value a target
- Understanding and developing the key modules of a target
- Comparing forecasting options and knowing when to apply which
- Simple growth vs CAGR
- Rolling average vs total average
- Linear regression
- Calculating from fundamentals and manual input
- Modelling seasonality correctly and applying long term trends / fluctuations to forecast
Discounted cash flow (DCF) valuation
- Free cash flow firm (FCFF) and free cash flow to equity (FCFE): how to derive accurately and their implications for valuation
- Derive an appropriate discount rate
- Understanding the role of CAPM and WACC
- Calculate both from component parts using ‘live’ data
- Calculate both NPV (net present value) and IRR (internal rate of return) from both first principles and using different Excel formula
- Learn about critical errors frequently made in the use of Excel NPV and IRR formula
Other valuation methods
- Learn about other key valuation methods and how and when they are utilised by valuation professionals
- Cross check DCF valuation and discuss implication of variations in valuation
Introducing valuation rigour
- Understand the role and importance of valuation ranges
- Build a scenario / sensitivity tool
- Integrate scenario analysis into valuation
- Use data tables (one and two variable) to extract multiple results concurrently
- Integrate tornado analysis and make a final valuation of target asset
About your Consultant
Theo West is the founder and managing director of financial modelling consultancy LMS. Theo’s career includes a wide range of financial exposure from private equity and infrastructure funds to large-scale financial services roles. Throughout, Theo has retained a strong focus on financial modelling and precision analytics and within his roles worked on acquisition, project and AUM valuations for significant transactions and assets in Australia, Europe, North America and Africa. Theo also holds the position of Director and Head of Modelling at the consulting group, Claymore Advisory.
Attendees
It is assumed that participants have a financial background and have had some exposure to building financial models in the past. The course material includes extensive use of Excel and participants will gain the maximum benefit from this course if they do use Excel on a regular basis, and are comfortable with using its tools and functions.
Attendees receive a detailed course hand book, a fully integrated best practice valuation model on completion and post course support.
Software used
Public workshops are run in a computer laboratory with workstations provided. Participants may bring their own laptops if they prefer. The course is demonstrated using Microsoft Excel 2016, but participants can use any version of Excel if they prefer.
Comments from past students
- ‘I recently attended a financial modelling course in London led by Theo West. I was very impressed by the course content and the depth of Theo’s knowledge. I would recommend Theo to any with a need for financial modelling’
- ‘As an experienced financial modeller I primarily attended Theo’s course to investigate new ways of undertaking common modelling challenges. Theo showed his trainer skills by delivering the course superbly, but also by encouraging an open forum that allowed attendees to make wide-ranging ‘off-course’ queries which he responded to with precise answers and worked examples.’
- ‘Theo’s training was highly informative and the material presented kept participants focussed and interested. He was able to explain complex financial concepts and demonstrate how to model these using simple, logical formulae. Theo is very personable which makes the training interactive and enjoyable.’
