Embed Size (px)
Citation preview
The Banking and Corporate Finance Training Specialist
Corporate Finance Modelling and
Advanced LBO Modelling
Masterclass
This course is presented in London on:
12-16 November 2018, 11-15 February 2019, 24-28 June 2019, 4-8
November 2019
This course can also be presented in-house for your company
or via live on-line webinar
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Course Overview
Participant will: Learn about the key drivers on M&A Master the modelling of integrated financial statements
Learn how to use financial statements to value a business Get grip with modelling the balance sheet impact of transactions
Gain an appreciation of incorporate synergies into modelling work Learn how to differentiate between financing and operating synergies
Be taught how acquisitions can be structured Learn how to work with integrated financial statements Be shown how to develop the acquisition structure and modelling instruments
Become familiar with running scenarios, iterating and optimising Learn about the LBO Market and the effect of leveraged on the value of a business
Get an overview of the LBO process, including how to determine the capital structure and assess the value creation.
Have explained to them how to value the target by sourcing information, building a
DCF valution and comparing and contrasting DCF and the LBO model structure Master the key elements of an LBO model including debt waterfalls
Gain an understanding of the debt capacity for LBO financing Learn about the capital providers and their typical characteristics Be introduced to APV analysis and its uses
Days 1, 2 & 3 - Modelling for M&A
M&A model build up: the starting point Modelling integrated financial statements
Model structure Key forecast ratios
Sourcing and cleaning historic data What makes a good model?
Modelling – integrating financial statements: participants complete a partially-developed financial model for a public quoted company which integrates P&L,
balance sheet and cash flow. This company will be the target company used in the merger analysis
Modelling stand-alone valuation
Overview of valuation methodologies What do investment banks do? What methodologies could we use?
How should we define firm value? Equity vs. enterprise value Calculating free cash flow before financing
Understanding and calculating WACC Discussion – calculating WACC Key issues with a two stage DCF valuation – WACC and terminal value assumptions
Modelling - valuation: participants calculate the cost of capital and complete a
DCF valuation for the target company, producing a stand-alone valuation as a cross check to the acquisition price
Course Content
Course Objectives
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Accounting for corporate transactions
Different types of transaction and how they are modelled in practice Consolidation accounting under the current IFRS 3 an IAS 27
Change of control triggers Accounting for non-controlling interests (“NCI”) Accounting for disposals
Partial disposals – creating a NCI Partial disposal – loss of control
Recent changes to acquisition accounting under IFRS Definition of control Calculation of goodwill
Modelling: delegates complete a variety of transaction models incorporating all
types of corporate transaction and calculate the effect of a transaction on a set of consolidated accounts in preparation to perform a merger analysis with the target business and an acquirer
Acquisition finance
Types of transactions and synergies Availability of synergies and problems in achieving them Methods available for valuing synergies
Key differences between public vs. private deals, recommended vs. hostile bids Choices for growth: acquisition vs. organic vs. joint venture
Defence strategies for target companies resisting a hostile bid
Case study: Participants calculate synergies for a case company
Structuring acquisition finance Once price has been agreed, how is it paid? Cash vs. Shares Financing choices for raising cash for an acquisition: Debt vs. Equity
Calculating the success of a deal, accretion vs value creation The nature of equity instruments
The different risks and rewards accruing to different parties The impact of loan stock, convertibles and preference shares on WACC Calculating returns to key participants
Case study: Calculating accretion/dilution and the effect of hybrids on cost of
capital
Merger modelling case study Completing a merger model
Getting to DCF valuation for the combined business Combined WACC Valuing operating synergies
Valuing financing synergies Accretion/dilution analysis vs wealth creation
Sense-checking the output and adjusting the capital structure
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Modelling – bringing it all together: participants complete a complex merger
model for an acquisition of the target business incorporating synergy analysis and varying capital structure. The transaction is analysed on an accretion/dilution analysis and a wealth creation/return on capital analysis
At the end of this session participants will have a working acquisition model incorporating a variety of different forms of transaction analysis
Course conclusion: best practice in transaction analysis
Participants will have improved their understanding of and have had experience of modelling mergers and acquisitions from first principles
Simple and clear reference Excel models - providing participants with a platform for
future internal modelling efforts and aiding decision making Participants who, at the end of the course, understand the drivers on transactions and
how transactions can be modified to suit the various parties Days 4 & 5 -Advanced LBO Modelling
Leverage Overview
Background to the LBO market Introductory theory - The effect of leverage on firm value
Valuing the target Sourcing information – Historic and forecast data Analysing equity research
Key attributes of broker analysis Pluses and minuses of equity research
Building a DCF valuation using equity research Modelling the stand alone valuation
DCF valuation Use of multiples in valuation (EV/EBIT, EV/EBITDA)
Case Study I: Participants model the stand alone valuation of the target using historic data and equity research
LBO Modelling Overview Key elements of an LBO model
Comparing and contrasting DCF and LBO models Sources and uses of funds Key drivers in an LBO model
From stand alone valuation to LBO analysis
Case Study II: Participants use the stand alone valuation of the target to complete an LBO model
Assessing debt capacity for LBO financing
Financial interdependencies Financing growth
Sustainable debt Target debt capacity assumed in a WACC calculation, debt capacity and interest cover Debt capacity in LBOs
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Debt capacity multiples in practice and credit analysis Case Study III: Modelling the debt capacity of the target using multiple and
credit analysis
Capital providers and their typical characteristics Institutional and management equity Traditional/new lenders
Senior tranche profiles A, B, C, RCF
Subordinated tranche profiles Second lien Mezzanine (with/without warrants)
PIK High yield bonds
More complex issues – warrants and options Typical LBO transaction sensitivity analysis, management, base and payout cases
Case Study IV: Modelling a more complex capital structure with various scenarios calculating exit value and IRR for each of the capital providers
Assessing value creation in LBO transactions – APV analysis
Key components of an APV valuation Unlevered value Value of the tax shield
Direct and indirect cost of leverage APV valuation and DCF valuation
APV valuation in a steady state Calculating AP in a steady growth environment Incorporating APV analysis in an LBO transaction analysis
Case Study V: Where has value been created, modelling APV analysis for an LBO transaction
The trainer is a qualified chartered accountant, who spent several years in corporate
finance post qualification. He then spent 18 years in the investment management industry as an analyst/fund manager with Threadneedle Asset Management, a director and head of
UK Equities at Scottish Widows Investment Partnership as European, then Global Head of Equity Research at HSBC Asset Management. He ran various types of retail and wholesale funds and produced research on companies in Europe and on a global basis. He developed
valuation and research processes and managed teams of European and global analysts and fund managers.
Since leaving the investment management industry the trainer has managed the investment management and investment banking operations of a UK based training
company developing programmes for clients as diverse as HSBC, Morgan Stanley, Deutsche Bank, Citigroup, Allen & Overy, JP Morgan, Barclays Bank, Barclays Wealth,
Morgan Stanley Investment Management and Schroders. He has managed major graduate programmes for investment banking and investment management clients, training
Background of the trainer
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
graduate to managing director level participants and advising clients on their training
requirements for accountancy, corporate finance and valuation, investment management and private wealth training.
On days one, two and three the course covers the key elements of an acquisition or
merger, from the initial stand-alone valuation of the target to the more complex accounting and modelling issues to be considered and finally analysing and assessing the value created by synergy benefits and leverage
This course is run in an interactive, participative format, where participants learn by doing.
The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.
The approach has been designed to equip participants to put key concepts into practical use immediately.
Participants will be led through a comprehensive review of analysis practices, from initial
principles through to more advanced techniques that are used in transaction analysis. As part of their work on this course participants model transactions based on real-life
companies and scenarios.
On the last two days participants will cover the key elements of modelling in an LBO analysis. Participants will value the target business using historic data and available equity research. The valuation process will incorporate absolute and relative valuation techniques.
Once the target business has been valued, participants will be introduced to LBO analysis and construct an LBO model. The LBO modelling analysis will be developed by assessing
the debt capacity of the business to determine the range of capital structures available for the transaction and how credit analysis is used in the LBO modelling process.
The participants will then cover more complex LBO instruments such as warrants and PIKs, how they can be incorporated into an LBO structure and how to calculate returns to each of
the equity and debt providers. Participants will model a more complex capital structure and calculate exit values and the IRRs generated by each investor. Using the integrated model participants will then analyse various scenarios (management case, base case, payout
case) to derive the optimum financing structure taking into account the financial constraints of each investor.
The participants will then undertake an adjusted present value (“APV”) analysis to determine where value has been created in the LBO transaction using an APV model and
finally look at a recovery analysis for a failed LBO transaction.
Case Study: The participants will use a variety of case studies and exercises during the two days, based on publically quoted and generic companies.
Participants will be required to bring a laptop and a calculator to the course
Course Summary
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
What Redcliffe’s clients are saying about the course:
“IDe-consolidation were good points to cover.Good job!”
-- Ernst & Young
“Covered different subjects through well guided case studies.” -- Analyst, Ardian
“Nice models used with good examples and good teaching.”
--Analyst, Caixa Capital Risk
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
09:30-17:00
London
Standard Price: £3000 +VAT Membership Price: £2400 + VAT
In-House Training
Delivering this course in-house for a number of participants could be very cost effective.
The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the
precise contents of the seminar.
Tailored Learning
All of our training courses can be tailored to suit your company’s exact training needs.
We will work closely with you to help develop a training programme with content that is unique for your organisation.
Please email us on [email protected] for more information
E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact
requirements.
