Comparative Valuation Workshop

Course Content:

Introduction: valuation camps

• Comparative valuation in context
• Introduction to and discussion of common valuation techniques
• Comparison of comparative with absolute (DCF) valuation
• Pros & cons of comparative valuation

Choosing comparable companies

• Manipulating comparative company analysis
• Issues in choosing comparable companies
• Stepping through comparative company analysis – the process
• Sources of info
• Keys to selecting comparables
• Comparative analysis: pitfalls

Selecting multiples

• Overview of common multiples
• Which strip out variability? Which are more volatile?

Normalising earnings and source data

• Key issues in source data: getting to harmonised and maintainable earnings, making use of data available to the market
• Cleaning the numbers
• Key adjustments
  • Discontinued operations
  • One off & exceptional items
  • Tax effects
  • Pensions and other items that look like finance costs
• The role of judgement & detective work

Case exercise – cleaning the numbers: delegates work from a set of accounts and adjust to get to underlying profitability

• Summary: cleaning the numbers – a check list

Defining firm value and calculating multiples

• Enterprise vs. shares value
• Routes to valuation/ applying it in practise
• Key adjustments e.g. provisions and minority interests
• Overview of common multiples

Case exercise – equity to enterprise value: delegates work from a set of accounts to reconcile equity and enterprise value, adjusting for debt, cash, provisions and minority interests

• Discussion – multiples – which are more volatile? Which is best when?
• Applying it in practise.

Discounts available for multiple participants:

• 3-4 participants: 15% discount per participant
• 5-6 participants: 20% discount per participant
• 7-8 participants: 25% discount per participant
• 9 or more participants: 30% discount per participant