APPLIES TO ACADEMIC YEAR 2015/2016

GRA 6538 Applied Valuation

Responsible for the course
Janis Berzins

Department
Department of Financial Economics

Term
According to study plan

ECTS Credits
6

Language of instruction
English

Introduction
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 outcome
The course builds on the valuation concepts and skills developed in the core Theory of Finance course (GRA6533, from fall 2008 GRA 6534 Introduction to Financial Economics). 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: Initial Public Offerings, large investment projects, mergers and acquisitions, emerging markets, and private equity. 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.

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, traded- and ransaction 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.

Prerequisites
GRA 6540 Applied Finance or equivalent
GRA 6543 Introduction to Asset Pricing or equivalent
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 spesific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.

Compulsory reading
Books:
Koller, Tim, Marc Goedhart, David Wessels. 2015. Valuation: Measuring and managing the value of companies. 6th ed. Wiley

Collection of articles:
The required readings include a course packet with business cases and articles. The course packet will be available online at the beginning of the course.

Recommended reading

Course outline
- Introduction to corporate valuation. Four lectures on Discounted Cash Flows, cost of capital and Multiples valuation.
- Six 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.
- Two classes with visiting speakers from the private equity industry and a major consulting firm.

Computer-based tools


Learning process and workload
A course of 6 ECTS credits corresponds to a workload of 160-180 hours.
Lectures and case discussions.

Please note that it is the student’s own responsibility to obtain any information provided in class that is not included on the course homepage/It's learning or text book.


Examination
The course grade will be based on the following activities and weights:
Class participation - 20%
Four case write-ups: Take-home exam - 20%
Mid-term: Written exam. 1 hour - 20%.
Final exam. Written exam. 2 hours - 40%