This is a practical 6-day training in Business Valuation & Deal Structuring (Investment Banking M&A) and the main topics are: valuation, leveraged buyouts (LBO’s) and mergers & acquisitions (M&A’s).

The training mainly focuses on giving the participant hands-on tools to build financial models in Excel to determine the value of a company on 1) a stand-alone basis,  2) in an LBO situation and 3) in a buy-side M&A scenario.

We will look at different valuation techniques to calculate “enterprise value” like: 1) Comparable companies analysis, 2) Precedent transaction analysis, 3) Discounted cash flow analysis (DCF), 4) LBO analysis and 5) Buy-side M&A analysis.

Different techniques are studied to get from “enterprise value” to the “value of the shares” taking (adjusted) net debt into account.

The training is very practical in the sense that the trainer will explain the concepts first and will then apply them in class to real-life companies with the participants. With all the calculations “Microsoft Excel” is used to build the needed financial models.

This training is meant for analysts and associates from international investment banks. Moreover, the training is meant for analysts and consultants in: M&A, private equity, venture capital and strategy. In addition, the training is meant for accountants, tax lawyers, bankers in credit analysis, financial managers, CFO’s etc.

The training will be focussed on international companies listed on the stock exchange. However, the valuation techniques are also applicable to (non-listed) private firms.

Learning goals

• Being able to determine the value of a company using “comparable companies analyses”;
• Being able to determine the value of a company using “precedent transaction analysis”;
• Being able to determine the value of a company using “discounted cash flow analysis”;
• Getting acquainted with “leveraged buyouts” (LBO’s);
• Being able to determine the value of a company using “LBO analysis”;
• Getting acquainted with the process of “sell-side M&A”;
• Being able to determine the value of a company using “Merger consequence analysis” (buy-side M&A analysis).

In addition, you will learn all the “excel shortcuts” to become an excellent financial modeller by using your keyboard instead of the mouse

Recommended background

This training is for analysts and associates from international investment banks, consultants in M&A, private equity, venture capital and strategy, accountants, tax lawyers, bankers in credit analysis, financial managers, CFO’s etc.

We will be focussing on international companies listed on the stock exchange, but the valuation techniques are also applicable to (non-listed) private firms. The participants need to have a basic knowledge of the 1) balance sheet, 2) profit & loss statement and 3) cash flow statement. In addition, participants need to have a basic understanding of Microsoft excel.

What you will learn

You will learn to decide which valuation techniques you can use to your maximum advantage.  Value companies for mergers, acquisitions, privatisation and new issues and quantify and deal with the risks associated with corporate valuation.

Course format

The training is very practical, concepts are explained and applied in the class with real-life examples.  “Microsoft Excel” is used to build financial models.   
The training will be focussed on companies listed on the stock exchange. But the valuation techniques are also applicable to (non-listed) private firms.

Day 1: Morning (10 AM – 1 PM):

Topic: Comparable companies’ analysis

Step 1: Select the universe of comparable companies

• Study the target;
• Identify key characteristics of the target for comparison purposes;
• Screen for comparable companies.

Step 2: Locate the necessary financial information

• SEC filings: 10-K, 10-Q, 8-K, and proxy statements;
• Equity research;
• Press releases and news runs;
• Financial information services;
• Summary of financial data primary resources.

Step 3: Spread key statistics, ratios and trading multiples

• Calculation of key financial statistics and ratios;
• Supplemental Financial concepts and calculations;
• Calculation of key trading multiples.

Day 1: Afternoon (2 PM – 7 PM)

Topic: Comparable companies’ analysis

Step 4: Benchmark the comparable companies

• Benchmark the financial statistics and ratios;
• Benchmark the trading multiples.

Step 5: Determine valuation

• Valuation implied by enterprise value (EV)/ EBITDA;
• Valuation implied by Price/ Earning (PE).
• Key pros and cons of comparable company analysis

Day 2: Morning (10 AM – 1 PM)

Topic: Comparable transactions analysis

Step1: Select the universe of comparable acquisitions

• Screen for comparable acquisitions;
• Examine other considerations.

Step 2: Locate the necessary deal-related and financial information

• Public targets;
• Private targets;
• Summary of primary SEC filings in M&A transactions.

Step 3: Spread key statistics, ratios and transaction multiples

• Calculations of key financial statistics and ratios;
• Calculation of key transaction multiples.

Step 4: Benchmark the comparable acquisitions;

Step 5: Determine valuation

Key pros and cons of comparable

Day 2: Afternoon (2 PM – 7 PM)

Topic: Discounted cash flow analysis (DCF)

Step 1: Study the target and determine key performance drivers

• Study the target;
• Determine key performance drivers.

Step 2: Project free cash flow

• Considerations for projecting free cash flow;
• Projection of sales, EBITDA and EBIT;
• Projection of free cash flow.

Step 3: Calculate weighted average cost of capital (WACC)

• Determine target capital structure;
• Estimate cost of debt;
• Estimate cost of equity;
• Calculate WACC.

Day 3: Morning (10 AM – 1 PM)

Topic: Discounted cash flow analysis (DCF)

Step 4: Determine terminal value

• Exit multiple method;
• Perpetuity growth method.

Step 5: Calculate present value and determine valuation

• Calculate present value;
• Determine valuation;
• Perform sensitivity analysis.
• Key pros and cons of DCF

Day 3: Afternoon (2 PM – 7 PM)

Topic: Leveraged buyouts (LBO’s)

Key participants

• Financial sponsors;
• Investment banks;
• Bank and institutional lenders;
• Bond investors;
• Target management.

Characteristics of a strong LBO candidate

• Strong cash flow generation;
• Leading and defensible market positions;
• Growth opportunities;
• Efficiency enhancement opportunities;
• Low capex requirements;
• Strong asset base;
• Proven management team.

Economics of LBO’s

• Return analysis: Internal rate of return (IRR);
• Return analysis: Cash return;
• How LBO’s generate return;
• How leverage is used to enhance returns.

Primary exit/ monetization strategies

• Sale of business;
• Initial public offering (IPO);
• Dividend recapitalisation;
• Below par debt repurchase.

LBO financing: Structure

LBO financing: Primary sources

• Bank debt;
• High yield bonds;
• Mezzanine debt;
• Equity contribution.

LBO financing: Selected key terms

• Security;
• Seniority;
• Maturity;
• Coupon;
• Call protection;
• Covenants;
• Term sheets.

LBO financing: Determine financing structure

Day 4: Morning (10 AM – 1 PM)

Topic: LBO analysis

Step 1: Locate and analyse the necessary information

Step 2: Build the pre-LBO model

• Build historical and projected income statement through EBIT;
• Input opening balance sheet and project balance sheet items;
• Build cash flow statement through investing activities.

Day 4: Afternoon (2 PM – 7 PM)

Topic: LBO analysis

Step 3: Input transaction structure

• Enter purchase price assumptions;
• Enter financing structure into sources and uses;
• Link sources and uses to balance sheet adjustments columns.

Step 4: complete the post LBO model

• Build debt schedule;
• Complete pro forma income statement from EBIT to net income;
• Complete pro forma balance sheet;
• Complete pro forma cash flow statement.

Day 5: Morning (10 AM – 1 PM)

Topic: LBO analysis

Step 5: Perform LBO analysis

• Analyse financing structure;
• Perform return analysis;
• Determine valuation;
• Create transaction summary page.

Day 5: Afternoon (2 PM – 7 PM)

Topic: Sell-side M&A

• Auctions
• Organisation and preparation
• First round
• Second round
• Negotiations
• Closing
• Negotiated sale

Day 6: Morning (10 AM – 1 PM)

Topic: Buy-side M&A

Buyer motivation

• Synergies;
• Cost synergies;
• Revenue synergies.

Acquisition strategies

• Horizontal integration;
• Vertical integration;
• Conglomeration.

Form of financing

• Cash on hand;
• Debt financing;
• Equity financing;
• Debt vs. equity financing summary – Acquirer perspective.

Deal structure

• Stock sale;
• Asset sale.

Day 6: Afternoon (2 PM – 7 PM)

Topic: Buy-side M&A

Buy-side valuation

• Football field;
• Analysis at various prices;
• Contribution analysis.

Merger consequences analysis

• Purchase price assumptions;
• Balance sheet effects;
• Accretion/ dilution analysis;
• Acquisition scenario’s: 50% stock/ 50% cash, 100% cash, 100% stock.

• I began this course with very limited knowledge about valuation and ended it with a great overview, of the techniques and the different aspects of it.
• Very good course, teacher, and approach. Material available online prior the course + request to the participants about their expectations from the course.
• A pleasant and knowledgeable instructor with a lot of interaction among participants.
• The classes were really easy to follow and the problem sets helped in making the course more understandable. I learned valuable lessons and concepts from this course that I could use in almost all of my valuation projects. I would like to thank Finance Xplained! 
• Congratulations! Very well done. Nothing more to add.