GRA 6538 Applied Valuation

GRA 6538 Applied Valuation

Course code: 
GRA 6538
Department: 
Finance
Credits: 
6
Program of study: 
Master of Science in Finance
Course coordinator: 
Janis Berzins
Product category: 
Master
Portfolio: 
MSc in Finance
Semester: 
2020 Spring
Active status: 
Active
Teaching language: 
English
Course type: 
One semester
Introduction

The Applied Valuation course is essential for students seeking careers in Consulting, Investment banking, Corporate finance, Private equity, and Asset management. It is practical, consists of targeted lectures, case-based approach and includes industry expert talks.

The central objective of this course is to establish a framework that puts you in a position to make managerial decisions based on an understanding of corporate value creation, corporate value destruction, and on how to enhance the former while avoiding the latter. Case discussions and visitors will be used to illustrate how corporate valuation is related to managerial decision making.

Learning outcomes - Knowledge

Mastering valuation techniques and selecting appropriate valuation techniques relevant in industry today.

Choosing and documenting appropriate inputs to valuation models.

Learning outcomes - Skills

You will enhance your

  •   "digital" modeling skills by analysing international business cases,.
  •   report writing skills by communicating case results.
  •   presentation and debating skills by presenting your results in industry accepted presentation style.
General Competence

Ability to think critically about sources of value creation, ability to integrate valuation techniques in decision making process, ability to critically evaluate investment proposals containing valuation discussion taking both manager and investor perspectives.

Course content

The course builds on the valuation concepts and skills developed in the Corporate Finance course. We will revisit all the valuation techniques that you were exposed to in the core course and introduce some new techniques. The emphasis will be to establish a good understanding of when one valuation technique works better than another.
To accomplish this, we will examine corporate valuation in a variety of settings: Private equity, Mergers and acquisitions, Initial public offerings, Large investment projects, and emerging markets. The main insights will emerge from the process of making and defending your decisions based on the corporate valuations you will be doing throughout the course.

Throughout the course we discuss the following list of classical finance issues and put them in perspective of valuation framework:

  • Time Value of Money
  • Simulation Analysis
  • Analysis of Principal Financial Statements
  • Analysis of Taxes
  • Analysis of Off-Balance-Sheet Assets and Liabilities
  • Analysis of Business Combinations
  • Ratio and Financial Analysis
  • Analysis of Inventories and Long–Lived Assets
  • Analysis of Debt
  • Analysis of Inter–Corporate Investments
  • Financial Reporting System
  • Capital Investment Decisions
  • Working Capital Management
  • Mergers and Acquisitions and Corporate Restructuring
  • Corporate Governance       
  • Private Equity/Venture Capital Valuation

At the end of the course you should be able to:

  • See the relationships between value estimates, bidding strategies, and market values.
  • Master the following valuation approaches: Enterprise Discounted Cash Flow (DCF), Adjusted Present Value, Equity DCF, Economic Profit, traded- and transaction multiples.
  • Understand when and why a particular valuation approach may be better than other in a particular situation.
  • Structure an investment using project financing.
  • Analyze historical performance and understand the importance of value drivers.
  • Understand why economic value analysis (such as EVA) is a useful management/consulting tool.
Teaching and learning activities

Learning outcomes are strengthened via graded case reports, graded and ungraded presentations, a midterm exam and a final exam, lectures and guest lectures. In particular:

  • Four lectures on discounted cash flows, use of valuation result in competitive markets, free cash flow calculation, cost of capital (debt and debt equivalents), multiples valuation, and core value drivers, recognition of off-balance sheet assets and liabilities, tax related cash flows, working capital management, and capital investment decisions.

  • Six/Seven classes using business cases. The cases are used to explore issues related to corporate valuation in settings that includes initial public offerings, large investment projects, mergers and acquisitions, and leveraged buyouts/management buyouts/private equity/venture capital, managerial flexibility and real options, sustainable business models.

  • Several classes with select industry speakers from the private equity industry, major consulting firms, and/or investment banks to illustrate valuation concepts, examine actual cases, talk about specific industry developments, interact with students.

The course is set up as a flipped class where most of work is done at home and enhanced during class. This course rewards active participation. High score on participation is possible also with some missed classes but active participation in the remaining.

Software tools
No specified computer-based tools are required.
Additional information

Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class.

This is a course with continuous assessment (several exam components) and one final exam code. Each exam component is graded by using points on a scale from 0-100. The components will be weighted together according to the information in the course description in order to calculate the final letter grade for the examination code (course). Students who fail to participate in one/some/all exam elements will get a lower grade or may fail the course. You will find detailed information about the point system and the cut off points with reference to the letter grades when the course starts.

At resit, all exam components must, as a main rule, be retaken during next scheduled course.

Honour Code

Academic honesty and trust are important to all of us as individuals, and represent values that are encouraged and promoted by the honour code system. This is a most significant university tradition. Students are responsible for familiarizing themselves with the ideals of the honour code system, to which the faculty are also deeply committed.

Any violation of the honour code will be dealt with in accordance with BI’s procedures for cheating. These issues are a serious matter to everyone associated with the programs at BI and are at the heart of the honour code and academic integrity. If you have any questions about your responsibilities under the honour code, please ask.

Qualifications

All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have specific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.

Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Activity
Form of assessment:
Class participation
Exam code:
GRA65383
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
10No 1 Semester(s)Individual
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65383
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
25No2 Week(s)Group (3 - 6)3 case write-ups
Exam category:
Activity
Form of assessment:
Presentation
Exam code:
GRA65383
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
5No -Group (3 - 6)Presentation
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65383
Grading scale:
Point scale
Grading rules:
Internal and external examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
20Yes1 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual Mid-term examination under supervision.
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65383
Grading scale:
Point scale
Grading rules:
Internal and external examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
40Yes2 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual Final written examination under supervision
Exams:
Exam category:Activity
Form of assessment:Class participation
Weight:10
Invigilation:No
Grouping (size):Individual
Support materials:
Duration: 1 Semester(s)
Comment:
Exam code:GRA65383
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:25
Invigilation:No
Grouping (size):Group (3-6)
Support materials:
Duration:2 Week(s)
Comment:3 case write-ups
Exam code:GRA65383
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Activity
Form of assessment:Presentation
Weight:5
Invigilation:No
Grouping (size):Group (3-6)
Support materials:
Duration: -
Comment:Presentation
Exam code:GRA65383
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:20
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:1 Hour(s)
Comment: Mid-term examination under supervision.
Exam code:GRA65383
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:40
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:2 Hour(s)
Comment: Final written examination under supervision
Exam code:GRA65383
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Type of Assessment: 
Continuous assessment
Grading scale: 
ECTS
Total weight: 
100
Sum workload: 
0

A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.