M&A / Private Equity Modeling

M&A / Private Equity Modeling (T202) is a 1-day course that teaches participants how to apply basic corporate valuation approaches to a well-structured MS Excel-based financial model. The course will focus on modeling forecast financial statements and calculating a discounted cash flow (DCF) based valuation, and highlights modeling issues relevant to corporate valuations (as distinct from the project-finance focus of Project Finance Modeling (T201). This course builds on the techniques and knowledge acquired in the pre-requisite course, FAST Modeling Skills (T101). At the conclusion of the course, participants will have constructed a fully-functional valuation model and gained an in-depth understanding of each of the topics modeled.

M&A / Private Equity Modeling is aimed at individuals who need to build, or routinely adapt, basic valuation models in the private equity and mergers & acquisition sectors. Although the course will review basic principles, participants without prior knowledge of the underlying business concepts, valuation theory, and basic model building skills will struggle to keep up with the pace of this course. Attendance of FAST Modeling Skills (T101) is a prerequisite for M&A / Private Equity Modeling.

Consistent with all Financial Mechanics T-series courses, M&A / Private Equity Modeling is a hands-on course with only moderate lecturing or speaking to PowerPoint slides. Attendees follow along with the instructor, building their own financial model on their own computers; in this way they immediately practice what they have been taught and can confirm their understanding of both basic valuation principles and modeling techniques.

The course also applies the FAST Modeling approach, namely producing models that are flexible, accurate, structured, and transparent, i.e. avoid complex formulas so that they are simple to follow even if the subject-matter is complicated.

The course day is broken into four sessions covering the following topics:

• Setting up an efficient and flexible time structure reflecting historic position (e.g. past three years of financials), acquisition date cash and accounting flows; and forecast.
• Developing a variation on the T101 7-line corkscrew; projecting P&L component, ending balance, and deriving cash flow.
• Reconciling WACC-based valuation with explicit DCF-based valuation of leveraged, after-tax cash flows to equity holders. What issues will create a variance between the two approaches?
• Review of additional complications in acquisition modeling and application to the financial model, e.g. potential changes in tax and/or accounting bases on the acquisition date, terminal value issues

Attendees must be familiar with the principles and specific techniques of FAST modeling which is applied throughout the M&A / Private Equity Modeling course. Preferably this knowledge should be obtained from reasonably recent attendance of the FAST Modeling Skills (T101) course followed by some practical on the job application. If you feel you may qualify without such a credential, please contact us to see if this course pre-requisite can be waived.

Attendees will need to bring a laptop with them, ideally one they are accustomed to using, with a Microsoft Windows operating system and MS Excel loaded. Laptops may be rented from Financial Mechanics for an additional charge.