FIRM VALUATION

Academic Year 2011-2012 3rd Quarter Instructor: Jos Carlos Tudela Martins

Course Description: This course is about the value of a company, how we can measure it, and what variables have a strong impact on it. The course is based on cases that have to be solved by students, as if they are working for an investment bank, so a practical approach is used. The course will be time demanding, but at the same time students have the feeling of what they might expect if they decide to pursue a career in investment banking.

Course Content (see detailed schedule at the end of the syllabus):

Firms Valuation using multiples, the DCF and APV methods; Special cases like emerging markets, natural resources companies, banks, etc; M&A, LBO & LBU; Venture Capital.
Course Objectives:

Capacity to select and use appropriate quantitative methods for solving management problems. Achieve an integrated perspective of the firm and of the value-creation chain. Capacity to use computers to describe and analyze data, present them graphically and explore relationships between variables. Develop capacity to adequately structure a management decision problem, and develop, evaluate and select decision alternatives for its solution. Capacity to prepare written reports about the analysis and solution of management decision problems in a clear and synthetic way. Capacity to communicate in English, both orally and in writing.

MRSyllabus_E0211.v1

Grading:

Solving and presentation of one of the cases in groups of up to 3 persons + class attendance + participation in class discussions (40%); Final Exam(60%). You must have a minimum final grade at the exam of 7.0 to pass the course.

Bibliography:

Suggested books: Valuation: measuring and managing the value of companies 5th edition, from Tim Koller, Marc Goedhart, and David Wessles; McKinsey & Co. Investment Valuation 2nd edition; Damodaran Articles posted in the web page of the course + class slides

Biography:

Graduate and MBA with a major in Finance from FCEE Catlica. Coordinator of the Finance major at the PGG executive education program from FCEE - Catlica. Teacher at several executive education programs from FCEE - Catlica, in subjects such as Firm Valuation, Derivatives and Financing Decisions. Supervisor of the Equity Valuation thesis program from FCEE Catlica. Director of Invesfin, a small consulting company. Non-executive director of Echiron and TruewindChiron, IT companies that operate in Portugal and Spain.

Contact(s) & Office Hours: By email: tudela.martins@echiron.com Office hours every Thursday at the end of class (either 9.30 or 12.30) and by appointment only.

MRSyllabus_E0211.v1

Week

Topic

Readings Book chapters: Readings 58 to 60 from CFA level I book Readings 39, 40, 42 and 44 from CFA II level II book Chapter 10 to 12, 14, 16 to 20 from Investment Valuation Chapter 1, 3, 12 and 14 from Valuation Lectures: The right role for multiples in valuation Whats it worth; Book chapters: Readings 43 and 45 from CFA level II book Chapter 15, 21 to 23, and 24 from Investment Valuation Chapter 5 to 11, 13, 34 to 36 from Valuation Lectures: All roads lead to Rome; Using APV; Valuing financial services firms

Suggested Exercises

7/2 to 10/2

1st session:
Welcome Valuation using multiples

2nd session:
Company valuation using DCF-I

13/2 to 17/2

1st session:
Company valuation using DCF-II Methods based on profitability Special cases in valuation

Problems number 13, 16 and 25 from reading 60 CFA level I book Problems number 4, 6, 7, 10 and 13 from reading 42 CFA level II book Problems number 6, 7,10 and 13 from reading 44 CFA level II book

2nd session:
Example of DCF Valuation: M&A in wine county

27/2 to 2/3

1st session:
Venture Capital Financial companies valuation

2nd session:
Class presentation of Hershey Foods case

Problems number Book chapters: 6, 9 and 11 from Reading 46 from CFA level reading 43 CFA level II book II book Chapter 23 from Problems number Investment Valuation Chapter 19 to 20, 23 to 25, 2, 7 and 13 from reading 45 CFA 32 from Valuation level II book Lectures: Making real options real; The real power of real options

MRSyllabus_E0211.v1

5/3 to 9/3

1st session:
Foreign company valuation Emerging markets valuation

Book chapters: Problems number Reading 41 from CFA level 3, 13 to 15 from reading 46 CFA II book level II book Chapter 30 and 33 from Valuation Lectures: Valuation in emerging markets; Emerging markets arent risky as you think; Cross border valuation

2nd session:
Class presentation of Finnasbank case

12/3 to 15/3

1st session:
M&A LBOs - LBUs

2nd session:
Class presentation of Bidding for Fortune Minerals

Book chapters: Readings 33 and 35 from CFA level II book Chapter 21 to 22 from Valuation Lectures: Five types of successful M&A; Are you paying too much for that acquisition

19/3 to 23/3

1st session:
Class presentation of Yellow Pages case

MRSyllabus_E0211.v1