Valuation

FIE437 Valuation

Autumn 2022

  • Topics

    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 sensitively 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.

    The main course topics are:

    • Fundamentals of Value Creation (DCF)
    • 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

    Upon completion of the course, the candidate shall:

    Knowledge:

    • have gained 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 substantial effort and high precision needed to excel in the demanding roles of equity research analysts, management consultants or investment bankers.

  • Teaching

    This course is a case-based course on corporate valuation. The main topics are  applications of valuation at an advanced-level. In order to achieve maximum learning potential, the course will mainly use a textbook and lecture notes to learn the frameworks for valuation, and cases to apply the valuation knowledge to real companies. The course includes active discussions and presentations based on their analysis. Students are responsible to come prepared and participate in class.

    To help reinforce students' knowledge on essential elements for valuation models, there will be quizzes, which must be done during the class hours and cannot be retaken.

    Students will work in groups of up to four members on cases. Each group will analyze a given case about which they have to hand in a written report including a spreadsheet model and make a presentation. 

  • Recommended prerequisites

    Previous knowledge and experience on corporate finance and investment (including financial derivatives) may be helpful. The experience of using market data with computer software (e.g., spreadsheets and/or programming languages) is recommended, albeit not required.

  • Required prerequisites

    Students taking this course are required to have taken a master-level course in Corporate Finance (FIE402) or equivalent courses at other institutions.

  • 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.

  • Compulsory Activity

    Mandatory attendance: This is a case-based course and requires active participation by students. Students are expected to attend every class in-person unless the permission has been given to miss a class for a compelling reason (at least 24 hours in advance with documentation).

    Quizzes: Students are required to complete multiple "in-class" quizzes. The quizzes must be done individually and cannot be re-taken.

    Cases: Students are required to work on cases. Students will have to apply various valuation methods to investigate firms' fundamental value, submit a written report, and make a presentation. 

  • Assessment

    The class is graded as a portfolio of work. Portfolio assessment pre-supposes that the student's development along the way is included in the assessment. The grade is based on a portfolio assessment of in-class quizzes, in-class participation, and cases. The final grade is based on the whole portfolio as a unified whole. Students will also submit a reflection note that summarizes their learning and development.

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

    Given the nature of case studies, students are not allowed to retake the course unless a student fails.

    This course will be closed for registration after the 3rd class session.

  • Grading Scale

    A - F.

  • Computer tools

    The ability to use spreadsheets or data will suffice

  • Literature

    1. Koller / Goedhart / Wessels ("The McKinsey Book"), Valuation, 7th Edition, McKinsey & Co (2020) - recommended but not required.
    2. Cases will be available to purchase via a webpage course.

Overview

ECTS Credits
7.5
Teaching language
English
Semester

Autumn. Offered Autumn 2022.

Course responsible

Associate Professor Kyeong Hun Lee, Department of Finance, NHH