Valuation

FIE437 Valuation

Autumn 2019

  • Topics

    The main course topics are:

    • Fundamentals of Value Creation
    • Relative Valuation - the Link to Fundamental Value
    • Corporate Portfolio Strategy
    • Reorganizing Financial Statements
    • Analyzing Historical Performance
    • Forecasting Future Performance
    • Estimating Continuing Value
    • Calculating and Interpreting Results
    • Sensitivity and Scenario Analysis
    • Cost of Capital
    • Cost of Equity
    • Cost of Debt
    • Debt & Taxes
    • Minorities & Debt Equivalents
    • Getting to Price Per Share

  • Learning outcome

    The course covers advanced valuation techniques used for thorough modeling of a firm's value. The aim is to provide students with advanced knowledge and in-depth understanding of the concepts behind fundamental value, and the underlying assumptions in order to sensibly apply their existing theoretical understanding of valuation. The course will be relevant for students seeking a career in equity research, investment banking, management consulting, and larger corporations in Norway and internationally.

    Upon completion of the course, the candidate shall:

    Knowledge:

    • have obtained an advanced understanding of fundamental drivers of value
    • be able to understand the integration of analysis and forecasting
    • have achieved an advanced understanding of valuation techniques.

    Skills:

    • be able to apply the main valuation techniques to real companies, to form an informed opinion as to the fair value of a company.
    • have implemented and understood the use of this knowledge in practical settings.
    • have increased competence in presenting and discussing complex corporate valuation issues in a challenging context.
    • be able to take complex financial information and distill from this the information important for valuation.

    General Competencies:

    • have confidence in conducting clear, written analyzes and presentation of fair value of a corporation or project towards investors, top management and board of directors.
    • understand the need for a substantial effort and high precision needed to excel in the demanding roles of equity research analysts, management consultants or investment bankers.

  • Teaching

    Students will work in groups of up to four.

    This course is an advanced and applied corporate valuation course. In order to achieve maximum learning potential, the course is entirely case-based, which means extensive casework on the part of the students.

    The student groups will have to hand in multiple reports and spreadsheet models (with 'user manuals'), as well as conduct discussions (within industry group) of modeling issues. Students will present their casework three times. Finally, each group will issue an "Analyst Report" and "Pitch" (present) their "Investment Case" (BUY/HOLD/SELL) to "investors" (the class).

    In addition, the students will be given feedback on their Presentation, Writing and Typography skills in relation to their reports and presentations of their case company. The final report and presentation will partly be graded on how convincing, understandable and well argued the report and presentation are. Communication efficiency is therefore essential.

  • Recommended prerequisites

    Students taking this course are required to possess a good understanding of corporate finance, as documented through either a prior completion of the course FIE402 or equivalent courses at other institutions. This is an advanced course in Corporate Valuation and students are expected to have a basic grasp of valuation prior to taking the course. Students not meeting these requirements will need the instructor's approval.

  • Required prerequisites

    Students taking this course are required to possess a good understanding of corporate finance, as documented through either a prior completion of the course FIE402 or equivalent courses at other institutions. This is an advanced course in Corporate Valuation and students are expected to have a basic grasp of valuation prior to taking the course. Students not meeting these requirements will need the instructor's approval.

  • Credit reduction due to overlap

    FIE437 is a continuation of FIE437A and FIE437B and students will not get credit for more than one of these courses.

  • Requirements for course approval

    Case write-ups: Students are required to work on cases with their team and submit their report on each case before the deadline.

    Mandatory Attendance: This is a case-based course and requires active participation by students. Students are expected to attend every class unless the permission has been given to miss a class for a compelling reason.

  • Assessment

    The course is offered in English, all the parts of the assessment should be done in english. The grade is based on a portfolio consisting of (1) class participation (approximately 30%), (2) three cases (approximately 60%), and (3) a peer review (approximately 10%). One grade is given for the entire portfolio. Grading scale A-F.

    Class participation is solely based on "individual" contribution - raising insightful questions and making comments. There is no makeup for a missed class.

    Cases (about 60%) are a "group" effort, and consists of 3 of the cases given during the course, as decided by the course responsible. Group size is 3-4 students.

    At the end of the course, students will be asked to evaluate the contribution of their team members. The peer review requires you to make good contributions (e.g., responsible and respectful behavior for your team). Note that I may overrule the peer review if I deem a student to have deviated from such behavior.

    All parts of the assessment must be completed in the same semester, and in the semester you attend class.

    Since this is a case-based course with several cases reappearing year after year, students can take the course only one time. It is possible to retake the course only if a student fails. As the assessment in this course by its nature cannot be re-examined, the grades awarded may not be appealed.

    This course will be closed for registration after the 5th class session (but no later than September 1st).

  • Grading Scale

    A - F.

  • Computer tools

    Excel, Word, Powerpoint (or equivalent) and relevant data-sources will suffice.

  • Literature

    Koller/Goedhart/Wessels ("The McKinsey Book"), Valuation, 6th Edition, McKinsey & Co (2015). The whole book, but in particular Parts I-III (and any other chapter applicable to your case).

    Additional texts: The lecture material

Overview

ECTS Credits
7.5
Teaching language
English
Semester

Autumn. Offered autumn 2019.

Course responsible

Associate Professor Kyeong Hun Lee, Department of Finance, NHH