Corporate Valuation Methods

Summary of Financial Modeling and Valuation

• Comprehensive approach to valuing a company, encompassing various methods
• Importance of understanding the specific context
• Consideration of risks and different scenarios for accurate valuations
• Factors influencing valuation: business characteristics, sector, assets
• Different valuation methodologies: DCF, multiples, ANAV, DDM
• Importance of quality inputs, model accuracy, and clear communication
• Key aspects of building a relevant business plan
• Importance of understanding profitability and growth trends.
• Calculation of intrinsic value (DCF method), consideration of future cash flows
• Role of risk and discount rates in Valuation
• Different types of cash flows: FCFF and FCFE
• Critical role of terminal value and how it's calculated.
• Importance of assessing company cost of capital and various approaches, including WACC and Cost of Equity.
• How to make appropriate adjustments while calculating the cost of debt and equity
• Detailed consideration of company characteristics, including its performance, capital structure, and risk profile
• Importance and complexities of building an EBIT bridge for different companies
• Consideration of hedging strategies for mitigating FX exposure and protection of business
• Importance of assessing the impact of currency translations and possible transaction effects
• Detailed focus on the considerations relating to valuation based on different multiples, with different methodologies and practical applications.
• Value of different types of financial assets and companies
• Essential for developing and presenting investment recommendations by using several criteria with a good track record.
• Important consideration of market conditions, including currency exchange rate fluctuations, and how to adjust in various scenarios.

Introduction to Market-Based Valuation: Multiples & Comparables

• Valuation based on multiples of similar companies (or transactions)
• Law of one price: identical assets should sell for the same price
• Different types of multiples: PE ratio, EV/Sales, EV/EBITDA, EV/EBIT.
• Factors to consider for selecting comparable companies: size, growth, profitability, cost structure, geography.

Focus on PE Ratio

• PE ratio = Share price / Earnings per share (EPS)
• Useful for quick valuation, widely used, but depends on accounting methodologies and can be affected by market conditions.

Focus on Enterprise Value (EV) multiples

• EV multiples consider the company's overall value, including equity and debt.
• Different metrics: EV/Sales, EV/EBITDA, EV/EBIT.
• More comprehensive valuation than PE ratios, but calculation can get more complex.
• Importance of comparing to industry averages and previous periods.

Other Valuation Methodologies

• Discounted Cash Flow (DCF): estimates the value of an asset by discounting future cash flows.
• Adjusted Net Asset Value (ANAV): value assets and liabilities based on fair market values within a given sector and adjusting for important aspects to get an accurate market value.
• Dividend Discount Model (DDM): values a company by discounting the stream of future dividends.

Appendices

• Detailed information for certain topics. May include charts, tables, or other supporting data.