Agenda
Program Instructor: Professor Arturo Bris
A detailed schedule will be included with the pre-reading material sent to paid registrants about two weeks prior to the program; however, most program days begin at 9:00 a.m. and conclude at 5:00 p.m.
| Monday, 11 January 2010 |
Valuation Concepts, Historical Analysis, and Value Drivers
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Building blocks of a DCF valuation
- Review of valuation fundamentals
- What is value and why do we care?
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P/E multiples and other short-cut valuation techniques
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Building a cash flow model I
- Performing historical analysis
- Identifying and calculating value drivers, such as RONIC, ROIC, WACC, invested capital, and economic profit
- Building a cash flow model II
- Drawing the connections between industry structure, competitive landscape, corporate strategy, business planning, cash flow model, and valuation
Case study: Iridium LLC
In this session the basic components of a Discounted Cash Flow valuation are discussed. The DCF methodology will be compared with the valuation methods based on multiples. Part of the session will be devoted to constructing a sensible forecast of cash flows for Iridium LLC, and to discuss the particularities of the DCF method when applied to telecommunication companies. Participants will have an opportunity to discuss the value drivers of Iridium, checking for the consistency of the cash flow forecasts.
| Tuesday, 12 January 2010 |
Model Building, Forecasting Cash Flow, Continuing Value, Capital Structure
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Cost of capital
- Theoretical basis for asset pricing models (CAPM, APT)
- Standard assumptions and their sources
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Emerging markets and other complications
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Capital structure and cost of capital
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Valuation in particular industries: banking, e-commerce, real
estate
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The most common problems in the cost of capital calculation
- Cost of capital in emerging markets — exchange rate risk
- Cost of capital and the inexistence of a risk-free rate
- Cost of capital for privately held companies
Case study: Air Arabia
In the second session, the focus will be on the pitfalls of the cost of capital calculation. First the main components of the cost of capital are examined, and then the method will be applied to specific situations — like privately held companies, or firms in emerging markets. Participants will be asked to evaluate a proposed Initial Public Offering and make a price recommendation. The case also discusses the shareholders' strategy regarding how they should manage this investment going forward (i.e., sell or hold the shares in the new company). The case presents an opportunity to discuss several issues involved in valuing international companies using somewhat limited data.
| Wednesday, 13 January 2010 |
Cost of Capital, Emerging Markets, Adjusted Present Value, and M&A
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Adjusted present value methodology, and valuation in M&A
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Dilution analysis, multiple analysis, and comparable transaction
analysis
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The incorporation of risk and uncertainty to the valuation of
companies
- Real options
Case study: Drilling South: Petrobras evaluates Pecom
The case deals with the valuation of an M&A transaction in an emerging market. It allows participants to understand the importance of currency, political, and economic risks. It explores issues of corporate governance in emerging markets and the interplay between a firm’s financial strategy and politics. The proposed acquisition of Pecom allows participants to identify key valuation issues in emerging markets and in cross-border acquisitions. The session concludes with a discussion of the real option valuation method.