Advanced Valuation Modelling


Advanced Valuation Modelling – Two Day Programme 


The purpose of the course is for participants to learn how to build a leveraged buyout valuation model. This will include the development of integrated financial statements and the mastering of the main Excel techniques (such as forecasting, risk issues, differing scenarios and optimisation). They will learn how to deal with more problematic modelling issues and gain hands-on experience of applying these skills.

The main topics covered are:

• Overview of best practice financial modelling
• Key Excel features and techniques
• How to handle financing and other issues
• Build in sensitivities
• Present findings effectively
• Gain hands-on modelling experience

Module 1 Model Design Best Practice

  • Starting position
  • Model layout and design
  • Spreadsheet design best practice
  • Design standard
  • Model building steps
  • Practical: producing a model framework using best practice

Module 2 Modelling Assumptions

  • Outline of case study
  • Modelling process
  • Review existing statements
  • Setting up template sheets
  • Practical: incorporating basic assumptions

Module 3 Modelling Financial Statements

  • Income statement
  • Balance sheet
  • Practical: financial statements

Module 4 Modelling Cash Flow

  • Outline of case study
  • Financing structures
  • Cash flow
  • Debt repayments
  • Practical: cash flow and capital structure

Module 5 Cost of Capital and Terminal Value

  • Free cash flows
  • Capital Asset Pricing Model (CAPM)
  • Cost of debt
  • Weighted average cost of capital
  • Terminal methods
  • EV / EBITDA multiples
  • Practical: cost of capital, terminal value and initial valuation

Module 6 Adjusting for Management Incentives

  • Value enhancing measures
  • Incentives
  • Financial covenants
  • Model completion – cover ratios, decision factors
  • Acceptability of result against cover ratios and key multiples
  • Practical: adjusting for covenants

Module 7 Testing Assumptions

  • Testing model assumptions
  • Sensitivity analysis
  • Scenarios
  • Goal Seek and Solver techniques
  • Practical: adding sensitivity and scenarios

Module 8 Model Summary and Presentation

  • Model checks and auditing
  • Management summary
  • Dynamic charts
  • Presenting key findings
  • User feedback
  • Version control

Questions and answers