FIE437 Valuation

• 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 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.

  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 an advanced and applied corporate valuation course. In order to achieve maximum learning potential, the course will mainly use (1) the valuation textbook by McKinsey and Co. and (2) cases on real companies.

  Students will work in groups of up to four members on selected cases and work individually on the final exam.

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

  Due to the situation caused by COVID19, this course is offered online via Zoom.

  The instructor will live stream lectures, and students must sign in for each online lecture.

  Approximately every other week, there will be an "(optional) open-studio class": physical classroom where the instructor livestreams a lecture and students can sit in to participate.

  Students who are physically present in the open-studio class still have to sign-in to the Zoom lecture (in their devices) in order to stay connected with the entire class.

  Location and time of open-studio class will be announced later.

• 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 permission has been granted to miss a class for a compelling reason.

• Assessment

  The course is offered in English. The grade is based on a portfolio consisting of (a) attendance (15%), (b) two cases (40%) which are subject to other group members’ assessments, and (c) individual final exam (45%). One grade is given for the entire portfolio. Grading scale A-F.

  Attendance is individual contribution. There is no makeup for a missed class.

  Cases (40%; 20% per each case) are a group effort, and 2 cases will be selected by the instructor. Group size is 3-4 students. For each case, 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.

  Final Exam is an individual effort, a 3-hour-long written home exam in English.

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

  This course will be closed for registration after the 5th class session.

• Grading Scale

  A - F.

• Computer tools

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

• Literature

  1. Koller/Goedhart/Wessels ("The McKinsey Book"), Valuation, 6th Edition, McKinsey & Co (2015). The whole book, in particular Parts One to Three.
  2. Cases will be available to purchase via a course webpage.
  3. Online resources by Prof. Aswath Damodaran at NYU (http://people.stern.nyu.edu/adamodar/http://people.stern.nyu.edu/adamodar/).