Investment and International Banking
Building on the disciplines established in the Role of Risk Analysis in Corporate Finance, this program provides an in-depth review of the techniques used by investment and international banks in applying discounted cash flow analysis and comparable multiple valuation techniques in arriving at corporate value. In particular:
- Net Present Value and Internal Rates of Return: With a particular emphasis on how these techniques are used by private equity investors and financial buyers to ascertain the minimum required returns on investment
- Discounted Cash Flow Analysis: computation of free cash flow and how this differs from cash flow computations used in the lending decision
- Weighted Average Cost of Capital (WACC): How this is computed for privately held and publicly traded companies and used as a discount rate to assist in the determination of corporate value
- Terminal or Residual Value: Reviewing the different techniques for this calculation using perpetuity valuation methodology or exit multiple approaches
- Multiple Analysis: Transaction and comparable company multiple analysis and how this is employed as a legitimate, practical alternative to DCF analysis
- Economic Profit Models: a review of various economic value added and economic profit techniques to help identify and evaluate the pitfalls of overpaying for and overfinancing the purchase of acquisition targets.
Following a brief overview of the theoretical building blocks of discounted cash flow valuation techniques, the program will use practical case examples to enable participants to value companies from the perspective of sellers on the one hand, and both financial and strategic buyers on the other.
Most importantly, examples will include opportunities not just to value a company, but also determine the purchase price which should be paid in order to ensure that the buyer creates value for its own investors and thus avoid the pitfalls of overpayment.