GRA 6538 Applied Valuation
GRA 6538 Applied Valuation
The Applied Valuation course is essential for students seeking careers in Private equity, Consulting, Investment banking, Corporate finance, and Asset management. It is practical, consists of targeted lectures, case-based approach and includes industry expert talks on selected topics.
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. We examine how ESG and SDG concepts relate to the firm value by influencing cashflow or discount rate forecasts.
- Mastering valuation techniques and selecting appropriate valuation techniques relevant to the industry today.
- Choosing and documenting appropriate inputs to valuation models.
- Understand how valuation techniques are practiced in various finance sectors through exposure to guest lectures.
You will enhance your
- "digital" modeling skills, especially Excel modeling skills, by analyzing international business cases,
- report writing skills by communicating case results,
- presentation and debating skills by presenting your results in industry accepted presentation style.
You will enhance your
- 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.
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 and relate to what is currently used in the finance industry. 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:
- Relationship between ESG performance and value
- 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
- Value in sustainability, in ESG categories and in the SDG goals
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 multiples, and transaction multiples.
- Understand when and why one valuation approach may be better than another.
- 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.
Learning outcomes are strengthened via graded case reports, graded and ungraded presentations, and a final exam, regular 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, 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 include sustainability (including ESG and SDGs), initial public offerings, large investment projects, mergers and acquisitions, leveraged buyouts/management buyouts/private equity/venture capital, managerial flexibility and real options.
- 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, and interact with students.
The course is set up as a flipped class where most of the work is done at home and enhanced during class. This course rewards active participation. A high score on participation is possible also with some missed classes but active participation in the remaining.
The exam for this course has been changed starting academic year 2023/2024. The course now has two exam codes instead of one. It is not possible to retake the old version of the exam. Please note new exam codes in the Exam section of the course description.
It is the student’s own responsibility to obtain any information provided in class.
Honor Code
Academic honesty and trust are important to all of us as individuals and represent values that are encouraged and promoted by the honor code system. This is a most significant university tradition. Students are responsible for familiarizing themselves with the ideals of the honor code system, to which the faculty are also deeply committed, including the use of AI tools. Any violation of the honor 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 honor code and academic integrity. If you have any questions about your responsibilities under the honor code, please ask.
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.
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 40 Grouping: Group/Individual (4 - 6) Duration: 1 Semester(s) Comment: Portfolio submission consisting of three case write-ups, and a written self-reflection report related to participation and presentations in class. Exam code: GRA 65384 Grading scale: ECTS Resit: Examination when next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 60 Grouping: Individual Support materials:
Duration: 2 Hour(s) Comment: Final written examination under supervision Exam code: GRA 65385 Grading scale: ECTS Resit: Examination when next scheduled course |
All exams must be passed to get a grade in this course.
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.