FIE437 Valuation

• 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 will:

  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.Additionally, FIE437 overlaps with BUS440X and ACC421X and can not be taken i combination with these courses.

• Compulsory Activity

  The following coursework requirements must have been approved for the student to take the exam:

  • Coursework 1: Buy-side analysis
    • Consists of an individual online quiz, and a written report (6 pages) and oral presentation (10 min + 10 min feedback) carried out in groups
  • Coursework 2: Analyzing Performance
    • Consists of an individual online quiz, and a written hand-in (spreadsheet/slides with analysis + log) and oral presentation (10 min + 10 min feedback) carried out in groups
  • Coursework 3: Forecasting Performance
    • Consists of an individual online quiz, and a written hand-in (spreadsheet/slides with analysis + log) and oral presentation (10 min + 10 min feedback) carried out in groups

  Each group is assigned a separate publicly listed case company within a common industry for 3 or more groups in the class. The case company assigned to a group is analyzed throughout all coursework and is the subject of the final report and presentation for that group.

  The coursework requirements will be carried out in groups of 3 students, except for one or two groups of 2 if the number of students is indivisible by 3. These group stay the same throughout the coursework and exam. Changes will be done in agreement with the lecturer on a case-by-case bases, including group size.

  The aim of the coursework requirements is to work systematically towards producing the content necessary for a good final report and presentation.

  All required coursework must be completed and approved by the given deadline for the student to take the exam. If one or more coursework requirements have not been approved, the student will be given one opportunity to submit an improved version by the given deadline.

• Assessment

  The assessment in the course consists of two equally weighted parts:

  1) A portfolio containing a reworked 10-page (excluding appendices) Sell-side report based on the three written assignments carried out in groups during the coursework requirements with a target price and buy/hold/sell recommendation, the Spreadsheet with the financial analysis (block 2) and the forecasting valuation model(s) (block 3), and optionally the groups decision log if produced.

  2) An oral exam carried out in groups (10 minutes).

• Grading Scale

  A - F.

• Computer tools

  The ability to use spreadsheets or data will suffice

• Literature

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