Valuation in Mergers and Acquisitions

Course goals

Learning objectives
At the end of the course, the student should be able to:

• Compute companies' values using several different models and techniques;
• Analyse companies' accounting statements and the corresponding management discussion;
• Forecast future cashflows, to determine the cost of capital, and to apply discounted cashflow valuation techniques appropriate to the context of the firm.
• Understand the assumptions underlying the various valuation methodologies (discounted cashflow models, and valuation multiples) and the differences and the similarities therein.
• Appreciate the role of judgment in financial accounting and analysis.

Content

Contents
This course will focus on the methods and tools to value corporation in the context of M&A. This knowledge is important for investors, managers, stock pickers and acquisition hunters.  The course will discuss two main methods of valuation, the discounted cash flow method along with all its related principles and concepts, like the discount rate, the growth rate, the free cash flow and the terminal value, This involves analysing available accounting information, coming up with economically meaningful forecasts of future performance and incorporating the same as part of valuation models that are appropriate to the firm-specific context. The second method will be valuing companies by using multiples and comparative ratios. To provide hands on experience, in the workshops we will apply the theories discussed each week to estimate different valuation inputs to complete a real-world valuation exercise by the end of the course. Students will conduct a full-fledged valuation exercise through the course project.

Intended Learning Outcomes

• applying discipline-specific economic knowledge and expertise in social, professional and economic contexts;
• critically evaluating an academic argument;
• forming opinions based on incomplete information, while accounting for social and ethical responsibilities tied to putting one's own knowledge and views into practice;
• selecting and accounting for relevant techniques and methods for analyses;
• interpreting and translating (one’s own) research results to social, professional and economic contexts;
• collaborating in an international context and at an academic level to solve a problem (interdisciplinary or multidisciplinary);
• professional collaboration;
• sharing knowledge and experience when working in a team and applying the relevant knowledge and one’s experience;
• synthesis: combining all team input and structuring it into a coherent whole;
• generating new knowledge with the team.
• debate with fellow economists and other scholars on (international) economic issues, theories and research, in English;
• writing a paper or research report in English;
• giving an oral presentation in English of conclusions and the insights and motivations on which these are based to an audience of specialists or non-specialists.
• assessing one’s own performance based on reflection, and taking steps to improve one’s performance;
• has, at an academic level, knowledge and understanding of the way in which financial decisions are taken within companies, which internal (domestic) and external (international) factors can influence these decisions and what consequences these decisions will have for the financial position of the company;
• will be able to critically read accounting data and use them to address the (financial) value of a company;
• can analyse complex issues from different points of view regarding financial decision making and financial analysis within (multinational) companies and formulate prospective plans of action

Format
Each week there will be two-hour lecture and a workshop. The focus of the lectures is to transfer knowledge and create an understanding about the subject.

In the workshop, we will solve problems related to the content of each lecture which will build towards the completion of student experience to value a company. The focus of the workshop is to get a student to work and to have more time for their questions.