Financial Modelling for Private Equity
Course
In City Of London
Description
-
Type
Course
-
Location
City of london
-
Duration
2 Days
Financial Modelling for Private Equity - This Financial Modelling & Structuring seminar will teach the mechanics of modelling and will attempt to equip participants with general framework and “cookie cutter” tools to help them perform various practical financial modelling & structuring tasks as done in most investment banks. The course is designed to make participants think about the detail of creating a financial model and learn about the different types of models used for different purposes. The course will provide a comprehensive picture on why modelling is hopeless without clear structuring and vice versa.
The programme format comprises of limited lecture material aimed at providing guidelines and useful tips, individual assignments and class discussions. Class sessions will be complemented by four individual assignments set around various modelling tasks in Excel (see outline below). Group work on assignments is neither encouraged nor discouraged – it is up to you to select the best learning method for yourself.
This programme is ideal for investment banking, Private Equity and corporate finance junior professionals, as well as those involved in financial advisory in general.
Facilities
Location
Start date
Start date
About this course
• Private equity professionals
• Corporate M&A teams
• Corporate managers
• Finance managers
• Bankers and corporate financiers
• Accountants
• Consultants
Pre-Requisites: The course requires a reasonable knowledge of accounting, basics of corporate finance, and basics of excel.
Reviews
Subjects
- Investment Banking
- Cash Flow
- Financial Modelling
- Investment
- Mechanics
- Banking
- Financial
- Private
- Equity
- Financial Training
Course programme
The course is intended to deliver a general and practical investment banking modeling skill-set that can be applied immediately in the workplace. Attendees of this 2-day course will gain an understanding of:
- How financial models are built in general
- How a fully revolving financial model is built from “scratch”
- How DCF Valuation, Leveraged Buyout (LBO) and M&A models are designed and built
Course Outline
Day 1 Topics
Introduction to financial modelling
- Establishing objectives
- Defining building blocks
- Good house keeping rules
- Business Projections, Building Financial Statements, Tracing Cash Flows
- Business forecasting
- Pro forma statements
- Cash flow analysis
- Funding gap calculation
- Circularity equations:
- I/S to B/S, I/S to C/F, B/S to C/F
- Introduction to Operating Models
- Modelling framework
- Choices of operating models
- Examples of top – down and hybrid models
- Concluding remarks
Introduction to Financial Models
Key principals
- Common pitfalls “Four boxes” of cashflow paradigm
- Comprehensive standalone financial model
- Circularity equations revisited
- Mapping cash and cashflow circularity
- Setting tasks for Individual
Assignment #1
Individual Assignment #1Financial Statements Model – “Does my balance sheet balance?”
Review of Individual Assignment #1
Discounted Cash Flow (DCF) Modelling (I)
- DCF Introduction
- Net present value & IRRs
- Inputs and computations
- Forecasting cashflows
- Calculating free cashflows
- Discount rate (WACC) Terminal value
- Outputs and clever tweaks
- Free cashflows to firm
- Free cashflows to equity
- A few words on Firm ValuePros & cons
- Setting tasks for Individual
Assignment #2 Individual
Assignment #2
- DCF Model – “Getting mechanics right…”
- Discounted Cash Flow (DCF)
- Modeling (II)
We review the common pitfalls related to modelling DCF. We will go “backwards and forwards” through a fully working model. We also discuss the issue of calculating pro formas in our modelling analysis.
- DCF Pitfalls
- Levered & unlevered
- Mid-year conventionMatching exit multiple to growth rateDilution & options calculation
Review of Individual Assignment #2
Capital raising exercises
Concept of financial pro forma-s
Standard formats for presenting IPO and debt issuance transaction
Day 2 Topics
- M&A - Structuring & Modelling
- Considerations for Mergers
- What are merger models for?
- Definitions of M&AM&A
- Considerations
- Generic vs. specific approach to modelling mergers
- Inputs and modelling tasks
- Merger analysis tools
- Contribution Analysis
- Sensitivity tools
- Setting tasks for Individual Assignment
Individual Assignment #3
Merger Model – “Do we have a deal?”
Review of Individual Assignment #3
Debt financing models
Credit view of the world vs. equity story or “show me the money”What to look for when dealing with debt elements of a deal LBO (Leveraged Buyouts) models
Why LBOs?
- Buy out view of the world vs. public equity
- Basic inputs and modelling formats of an LBO model
- Debt capacity factors & structural issues (ex. Subordination)
- Structural enhancements (Derivative Structures; Senior Convertible; Seller Note)
Relative value analysisIncorporating credit analysis into an LBO modelRoll-over equity and a few other optical mattersSetting tasks for
Individual Assignment 4
Individual Assignment #4LBO Model – “Half a turn cheaper and we do a deal… What?”
Review of Individual Assignment #4
- Distress Models
- Framework for corporate work-out modelsModelling examples in work-outs
Additional information
Super Earlybird - Book by Friday 11th August to receive the Super Earlybird prices.Earlybird - Book by Friday 25th August to receive the Earlybird prices.
Financial Modelling for Private Equity