Online Financial Modeling, Investment Banking, Excel Training

PRIVATE COMPANY VALUATION

Package: $500 (Save 50%)

Learn how to model, analyze and value private companies (more)

Overview of Courses
Evaluation of private companies, middle market entities and those with very sparse publicly available data take a completely different approach than those of publicly traded companies. Usually, analysis of private companies requires a different approach to modeling than public entities. Instead of focusing just on corporate finance, a deeper more thorough understanding of the private company's operations is required.

Private Company Valuation

($250)

Course Goals & Overview:
This course builds upon our basic Corporate Valuation course and introduces the complex nuances associated with analyzing and valuing private companies. We dive deep into the details and concepts deeply imbedded with valuation of large publicly traded and listed companies and take it to next level by applying it to companies and regions with very sparse publicly available data. Learn nuances of adjusting for DCF valuation, WACC analysis when no data exists, how to select and adjust peer comparables when no "good comp" exists. While there is certainly no magic bullet to the tough questions and lack of information, there are techniques and best practices to get us as close as possible.

Course Sections:
Fundamental & DCF Valuation Nuances:

Detailed explanation of Discounted Cash Flow (DCF) valuation, its theory and application

Discussion of why the DCF is arguable one of the most important analyses while simultaneously one of the most academic and least practical of them all

Analysis of EBITDA and growth approaches to Terminal Value estimation and pros and cons of each

Discussion on the correct Cash Flow starting point for Gordon Growth Rate: long-term relationship between CapEx and depreciation and the theoretical implications on DCF

Computing reasonable perpetual growth rate and the nuances associated

Perpetual growth rate method and applications: how to value high growth companies in which the terminal year growth has not yet reached steady state growth for perpetuity

WACC and Cost of Component Capital Nuances:

Application of WACC and matching of cash flows with the riskiness of the cash flows

Correct Cost of Debt to use: coupon rate, current YTM if available vs. investment banker rate

Estimating Cost of Debt when there is no outstanding debt or interest rates unavailable

Cost of Equity and CAPM (Capital Asset Pricing Model): theory, implications and application

Concept of diversification and risk/reward model and practical approach as discount factor

Correct risk free rate and market risk premium and the various premiums and adjustments made to MRP

Concept of beta and sensitivity to the market and adjusting for capital structure differences

Estimating beta with none present, and un-levering and re-levering betas to adjust for earnings volatility

Use of beta to manipulate and influence discount rate to affect overall DCF valuation

Thinking through the logic of a company with a ton of cash on the books and adjustments (if any) to beta

Determining the correct capital structure (Debt & Equity / Capitalization) � your own or industry ideal?

Adjusting WACC and DCF for private companies, liquidity, size and country-specific adjustments

DCF Revisited:

Importance of DCF, NPV & IRR analysis for start-ups, growth capital and project finance

Private company PE ratios and nuances associated with Equity Value / Net Income as a proxy

Short, brief discussion on industry specific valuation and introduction to basic nuances and differences

Brief honorable mention of alternative valuation methodologies

Enterprise Value Nuances:

TEV: what is the correct treatment of minority interest and capital leases from a standalone valuation aspect vs. credit perspective vs change of control

What is the relevance of capital structure and leverage on a company�s value?

Crystallizing Enterprise Value: Proper Allocation of TEV in HoldCo context

Case study analyzing proper allocation of value of public traded parent and subsidiaries

Analysis of market valuation attribution to standalone parent and majority owned subsidiary

Difference in treatment of TEV based on if subsidiary�s debt is owed to third party or to parent

Reconciliation of book value treatment of Minority Interest vs. minority owned percentage of sub

Prerequisites:

Accounting & Financial Statements Integration

Finance 101

Corporate Valuation Methodologies & Corporate Finance

Basic Valuation Techniques

Video Length / Estimated Total Course Time:
3 hours / 4 hours

Individual Course Price:

$250

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Segment Build-up & Sensitivity Modeling

($350)

Course Goals & Overview:
Learn how to build detailed revenue and segment build-ups into your larger financial model. Many financial projection models are based off simple revenue growth rate and expense margin assumptions, resulting in reduced precision in the projection model. This course teaches various approaches to true, bottoms-up, fundamental analysis, from both an "account-by-account" and "business segment" basis (very detailed build-up vs. division by division). The results of build-up analysis roll-up into a consolidating income statement that feeds into the Income Statement revenue items.

Course Sections:
Detailed Business Segment Build-Up:

Model out historical change in key drivers of growth and project future detailed growth

Analyze and break down growth based on publicly available data and inputs from 10K filing

Incorporate and remove effect of growth from non-core items such as foreign exchange rate fluctuations

Project future detailed growth assumptions that roll up into larger projection model

Instead of just calculating 10% growth rate in revenue, dig into deeper layers of growth drivers

For instance, for a retailer, calculate Sales / Sq Foot / Type of Store, which captures: (i) number of stores (store count growth); (ii) size of each store (expansion and size creep); (iii) profitability of each sq foot and same store comps sales (YoY sales growth)

Operating & Division Segment Build-Up:

Calculate and analyze different operating segments as reported in public filings to roll-up into IS

Adjust for extraordinary items by segment based on MD&A and disclosed footnotes

Extract, utilize and incorporate volume and pricing increases into operating segment performance

Estimate and project future revenue and segment income and allocate for corporate overhead

Estimate projected COGS and SG&A on the entire base after operating build-up

Detailed New Business Build-Up:

Bridge the gap and quantify future, as-yet-unachieved growth initiatives based on concrete assumptions

Analysis would roll into core "organic growth" model and sensitized

Model out effects of hiring new sales representatives and the associated increased revenue

Triangulate new revenue and tiered commission expenses due to renewal business

Calculate incremental salary and bonus cost of new sales representatives

Calculate additional cost of sales and other expenses related to new business

Detailed Account by Account Build-Up:

Project sources of revenue based on growth in number of accounts and customers

Model out revenue per account and associated commissions and expenses

Incorporate rate increases into model

Further enhance model via sensitivity & scenario modeling and analysis

Detailed build-up consolidates into Consolidating Income Statement which feeds into model

Account for inter-company eliminations in historical pro forma model and projections

Sensitivity Analysis and Multiple Cases:

Layer sensitivity analysis on top of segment build-up to incorporate various assumptions and cases

Build multiple scenarios and cases, including Base Case, Optimistic & Pessimistic Cases

Toggle and sensitize profitability and cash flow of model based on various case assumptions Prerequisites:

Basic Financial Modeling

Advanced Financial Modeling � Core Model

Video Length / Estimated Total Course Time:
4 hour / 5 hours

Individual Course Price:

$350

Click here to register now!

Private Company Pro Forma Modeling

($200)

Course Goals & Overview:
Pro Forma financial statements are a tool to recast financial results in a manner that is more representative of future performance and to remove the effects of private ownership. Pro Forma financial statements have one or more assumptions or hypothetical conditions built into the data and are often used to develop core earnings capacity (quality of earnings) when the objective is to value a company for sale to a third party or for internal perpetuation. The goal is to examine a sampling of the most common types of Pro Forma adjustments most often seen when valuing closely-held entities. Similar to analyzing one-time adjustments for public companies, the adjustments can affect both revenues and expenses, increasing or decreasing either one. However, private company pro form adjustments require a much more detailed analysis of each expense line to adjust for the effects of private ownership.

Course Sections:

How to recast financial results to be more representative of future performance and adjust for the effects of private ownership

Understand the different types of adjustments required, ranging from discretionary to non-recurring to standalone corporate entity

Comprehend the major types of revenue adjustments to isolate true, organic revenue base

Learn the right questions to ask regarding new clients, lost clients, profit sharing agreements and more

Plow through all the expense line items, focusing on SG&A expenses

Apply industry-wide rules of thumbs on compensation and benefits

Adjust for the impact of key officers and management�s run-rate compensation level

Dive in deep on operating expenses, from auto expenses/allowances to advertising/marketing, etc

Adjust for taxes from a private, pass-thru entity to a standalone corporation

Analyze key Balance Sheet adjustments such as midnight shareholder dividends and officer loans

Prerequisites:

Accounting & Financial Statements Integration

Company Overview

Basic Financial Modeling

Video Length / Estimated Total Course Time:
1.5 hour / 2.5 hours

Individual Course Price:

$200

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M&A Earnout Modeling

($200)

Course Goals & Overview:
This Merger Modeling � Earnout Discussion module builds upon our M&A Deal Structuring and Merger Modeling Basics course by reconciling differences that arise in private middle-market transactions in which a buyer wants to be rewarded for future growth and a seller is only willing to pay for growth that has been achieved. But, the seller reckons - "why should I sell when I believe I can achieve greater growth and then sell for an even larger valuation at that future point". The main tool to bridge this gap is for the seller to put his money where his mouth is - if you say you can achieve $1 billion of revenue, then prove it - one should be willing to accept deferred, contingent payments for such future growth that has yet to be realized. In this add-on module, we explore different ways to analyze and structure earnouts.

Course Sections:

Construct a sample earnout model based on a base earnout and a "super-earnout":

Create a two-tiered earnout structure that is dependent on achieving management projections

Structure earnout based on both Revenue and EBITDA targets

Evaluate the "base" target financial goals and calculate corridor earned

Review best practices in calculating the actual earnout earned

Repeat analysis for second earnout tier, the �super-earnout�, a much more difficult to achieve set of financial projections

Evaluate pros and cons of being too optimistic in management projections vs. being too pessimistic

Prerequisites:

Accounting & Financial Statements Integration

Basic Financial Modeling

M&A Deal Structuring

Merger Modeling Basics

Segment Build-up & Sensitivity Modeling

Private Company Pro Forma Modeling BR>
Video Length / Estimated Total Course Time:
1 hour / 1.5 hours

Individual Course Price:

$200

Click here to register now!