Business Valuation and Corporate Re-structuring

Semester and Year Offered: 3rd Semester

Course Coordinator and Team: Nidhi Kaicker

Email of course coordinator: nidhi@aud.ac.in

Pre-requisites: None

Aim: The objective of the course is to introduce the participants to various valuation methodologies to value firms, mergers, acquisitions and divestitures.

Course Outcomes:

At the end of the course, the participants will be able to:

1. Understand the economic, financial, and strategic reasons for corporate restructurings
2. Comprehensive understanding of various approaches of valuation
3. Conduct valuation of a firm and build financial models using appropriate tools
4. Critically analyse publically available information and use it for valuation for capital raising and corporate retructuring

Brief description of modules/ Main modules:

Unit 1: Valuation Methodologies

Intrinsic Valuation, Relative Valuation and Contingent Claim Valuation; Impact of Capital Structure; Taxation and its impact on Corporate Finance Decisions

Unit 2: Valuation of Specific Assets

Valuation of intangible assets and intellectual property; Valuation of private and family firms; Valuation of financial firms; Valuation of real estate firms; Valuation of infrastructure firms

Unit 3: Mergers, Acquisitions and Corporate Restructuring

Financing issues in M&A: stock vs cash, synergies, accretion and dilution; Using transaction comparables to value deals; Leveraged buyouts; Divestitures and spin offs

Unit 4: Investment Banking, Private Equity and Venture Capital

Fundraising through public offerings (IPOs/FPOs); Private equity acquisition: Venture capital approach to valuation; Valuation of new firms

Assessment Details with weights:

Reading List:

1. Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of any Asset, Wiley.
2. Sahlman, W. (2013). “A Simple Free Cash Flow Valuation Model”, Harvard Business School Publishing
3. Luherman, T. (2009). “Business Valuation and the Cost of Capital”, Harvard Business School Publishing
4. Ruback, R. (1995). “An Introduction to Cash Flow Valuation Methods”, Harvard Business School Publishing
5. Luherman, T. (2009). “Corporate Valuation and Marketing Multiples”, Harvard Business School Publishing
6. Luherman, T. (1997). “What’s it Worth? A General Managers Guide to Valuation”, Harvard Business Review
7. Kester, W.C., Morley, J. and Froot, K. (1997). “Cross Border Valuation”, Harvard Business School Publishing
8. Mitra, S.K. (2010). “Note on Cash Flow Valuation Methods: Comparison of WACC, FTE, CCF and APV approaches”, Richard Ivey School of Business, The University of West Ontario
9. Clarkson, G. (2010). “Intellectual Asset Valuation”, Harvard Business School Publishing
10. Fortier, D. (1995), “A Note on Mergers and Acquisitions and Valuation”, Richard Ivey School of Business, The University of Western Ontario
11. Cannella, M. (2015). “Technical Note on LBO Valuation and Modeling”, Columbia Business School
12. Hellman, T, (2006). “A Note on Valuation of Venture Capital Deals”, by Thomas Hellman, Stanford Graduate School of Business.
13. Harvard Business School Press (2004). “Going Public: Adventure in the Capital Markets”, Chapter 8, Harvard Business School Press

ADDITIONAL REFERENCE:

• A set of readings and cases are provided to the participants in form of a course manual as the commencement of the session.