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Corporate Valuation (CF30000)

General information

Type:

 OB

Curs:

 1

Period:

 S semester

ECTS Credits:

 4 ECTS

Teaching Staff:

Group Teacher Department Language
Sec: A Santiago Minguez Perez Economía, Finanzas y Contabilidad ENG
Sec: A Gloria Batllori Lloveras Economía, Finanzas y Contabilidad ENG

Group Teacher Department Language
Sec: B Gloria Batllori Lloveras Economía, Finanzas y Contabilidad ENG
Sec: B Santiago Minguez Perez Economía, Finanzas y Contabilidad ENG

Group Teacher Department Language
Sec: C Gloria Batllori Lloveras Economía, Finanzas y Contabilidad ENG

Previous Knowledge

Basic knowledge of Time Value of Money.
Basic knowledge of Capital Budgeting.

Workload distribution

Lectures: 30%
Independent work: 70%

Course Learning Objectives

Understanding the Corporate Valuation Process
Deep dive into different methods:
1. Dividens based valuation
2. Free Cash-Flow Based Methods
3. Market Based valution: Price Multiples

Understanding hte underlying assumptions
1. limits of growth
2. profitability
3. risk
4. innovation
Application to listed companies as well as private firms
Understanding start ups valuaiton

Competences

4. Communicating information and/or knowledge (CB9)
13. Teamwork and collaboration
3. Taking decisions / making judgements (CB8)

Relation between Activities and Competences

4 13 3
Final exam      
Assignaments      

CONTENT

1. Value Creation and Valuation Methods

Operating and No Operating Assets
Reorganization of Balance Sheet and ROCE
Enterprise Value, Equity Value and Value Creation.
Valuation Methods: Multiples and DCF.

United Toys Case

2. Discounted Cash Flow and Financial Statements

Discounted Cash Flow to the Firm Method.
Forecast of Free Cash Flow to the Firm.
Forecast of Terminal value with growth.
Equity Value.

From Discounted Cash Flow to the Firm to Financial Statements
Discounted Cash Flow to the Equity Method.
Forecast of Free Cash Flow to the Equity. Different Approaches.
Equity Value

From Free Cash Flow to the Equity to Financial Statements.

ABC Case
United Value

3. Fundamentals in Terminal Value

Analysis of the Terminal Value. Economic conditions for Terminal Value to hold: constant investment and return on investments, and constant capital structure.
The limits of growth as source of value creation.
XYZ Case. Consistency between growth and risk.
LMN Case. Debt Path in a constant

4. Capital Structure and Limits of DCF

Capital Structure at Market Values (NIKE).
Optima Capital Structure.
Limits of DCF in terms of Capital Structure.

5. Multiple Based Models

The limits of the DCF model for valuation.
How the market is using multiples to approach listed and private companies valuation
The selection of the multiples and its implication

6. Valuation of Private Firms

How to apply the methods to companies that are not listed and Access to information is limited.

7. Project Evaluaiton

Description of Project Finance
Net Present Value and IRR
Modified IRR
MiniPF Case

8. LBO Desing and Value

Design of an LBO and debt repayment.
Valuation and Exit Value
IRR vs NPV

WECANSA Case

9. Start-up Valuation

Characterization of Start-up.
Basics of Valuation for start-up.

Relation between Activities and Contents

1 2 3 4 5 6 7 8 9
Final exam                  
Assignaments                  

Methodology

Conceptual discussion: students should come prepared, readings and exercises will be available.

Application of concepts will be executed with cases and exercises as well as to real current situations.

There will be some activities in-class more focused on application into cases, and some activities to prepare for the class more focused on the conceptual framing. It is absolutely necessary that students come to class prepared since the preparation topics will not be covered during presential activities.





ASSESSMENT

ASSESSMENT BREAKDOWN

Description %
Final exam 70
Assignaments 30

Assessment criteria

Ordinary Evaluation:

Students will be assigned homework to work individually. The purpose of the homework is to be fully aware of the problems solved in class and to consolidate knowledge. The homework will be evaluated in terms of A+/ A/B/C/D. The grading will be equivalent to: A+ =10, A =9, B=7, C =5, D = 3. The assignament will account as 30% fo the grade, will be like a mid-term exam.

More specifically, the course grade will comprise of the following individual evaluations:

Assignament: 30%
Final Exam : 70%



Bibliography

Case studies and readings are in the course Moodle. Additional material will be distributed in class.

Berk J. and DeMarzo P, Corporate Finance. Pearson Prentice Hall. 2017.

Brealey R., S.C. Myers & F. Allen, Principles of Corporate Finance, 9th Edition, Irvin, McGraw-Hill.

Damodaran. Damodaran on Valuation

Damodaran webpage

Higgins R.C. , Analysis for Financial Management, 9th Ed., Irvin, McGraw-Hill (suggested for the most strategic non technical approach)

Timetable and sections

Group Teacher Department
Sec: A Santiago Minguez Perez Economía, Finanzas y Contabilidad
Sec: A Gloria Batllori Lloveras Economía, Finanzas y Contabilidad

Timetable Sec: A

From 2018/9/27 to 2018/11/29:
Each Thursday from 8:45 to 11:45. (Except: 2018/10/4 and 2018/11/1)

Monday 2018/12/10 from 9:00 to 12:00.

Saturday 2019/6/8 from 10:30 to 13:30.

Group Teacher Department
Sec: B Gloria Batllori Lloveras Economía, Finanzas y Contabilidad
Sec: B Santiago Minguez Perez Economía, Finanzas y Contabilidad

Timetable Sec: B

From 2018/9/27 to 2018/11/29:
Each Thursday from 15:30 to 18:30. (Except: 2018/10/4 and 2018/11/1)

Monday 2018/12/10 from 9:00 to 12:00.

From 2019/6/6 to 2019/6/8:
Each Thursday from 15:30 to 18:30.
Each Saturday from 10:30 to 13:30.

Group Teacher Department
Sec: C Gloria Batllori Lloveras Economía, Finanzas y Contabilidad

Timetable Sec: C

From 2018/9/28 to 2018/10/29:
Each Friday from 9:00 to 12:00. (Except: 2018/10/12)
Each Monday from 17:30 to 20:30. (Except: 2018/10/1, 2018/10/8, 2018/10/15 and 2018/10/22)

From 2018/11/9 to 2018/12/10:
Monday and Friday from 9:00 to 12:00. (Except: 2018/11/12, 2018/11/19, 2018/11/26, 2018/12/3 and 2018/12/7)

Saturday 2019/6/8 from 10:30 to 13:30.