| Session (Click here) |
Topics covered |
Lecture notes |
| 1
(9/5/07) |
Introduction to Class
Philosophical Basis for Valuation
|
Syllabus for class
Project Description
Introduction
to Valuation |
| 2
(9/10/07) |
Approaches to Valuation - Continued
Basics of DCF Valuation: Firm vs Equity Valuation |
Packet 1: Pge 1-9 |
| 3 (9/12/07) |
More on firm vs equity valuation
The Riskfree Rate
Historical Risk Premiums |
Kennecott
cashflow exhibit
Packet 1 (9-28) |
| Weekly Challenge # 1 |
Reconciling firm and equity valuation |
Weekly challenge
Solution |
| 4 (9/17/07) |
Country Risk Premiums
Implied Equity Premiums |
Packet 1 (29-45) |
| 5(9/19//07) |
More on implied equity risk premiums
Betas
- Regression betas
- Bottom up betas |
Packet 1 (46-65) |
| Weekly Challenge # 2 |
Estimating country risk premiums (or)
Implied Premium versus Riskfree Rate |
Country premium challenge and solution
Implied premium challenge, data and solution |
| 6 (9/24/07) |
Cost of debt
-- Actual and Synthetic ratings
- Default spreads
- The tax advantage
Debt Ratios
Dealing with Hybrids
Cash flows: Introduction
|
Packet 1 (66-83) |
| 7 (9/26/07) |
Correcting earnings for accounting miscategorization
- Leases
- R&D
One time and extraordinary charges
Negative earnings
The right tax rate
What is cap ex? |
Packet 1 (84-102) |
| Weekly Challenge # 3 |
Adjusting Operating Earnings
|
Weekly challenge
Solution |
|
Take the first
quiz and check out the solution as
well as the distribution of
grades for the class.
Working Capital
- The treatment of cash
- Negative working capital
Dividends versus FCFE |
Packet 1 (103-116) |
| 9 (10/3/07) |
Estimating Growth
- Historical growth
- Analyst estimates of growth
- Fundamental growth
|
Packet 1 (117-143) |
| Weekly Challenge # 4 |
Estimating fundamental growth |
Weekly challenge
Solution |
| 10
(10/10/07) |
Revenue growth and margins
The Terminal Value
- Caps on Growth
- Reinvestment assumptions
- Stable growth cost of capital
Choosing a DCF model
|
Packet 1 (144-171) |
| Weekly Challenge # 4A |
Terminal Value Mechanics |
Weekly challenge
Solution |
| 11 (10/15/07) |
Loose Ends in Valuation
- Cross Holdings
- Other Assets & over fundeed pension plans
- Complexity and its cost
- A "broader" definition of debt
- Equity Options and Value per share |
Packet 1 (172-196) |
| 12 (10/17/07) |
Valuing Management Options
Future option grants
Valuation examples
- Dividend Discount Model
- FCFE
|
Packrt 1 (196-221) |
| Weekly Challenge # 5 |
Dealing with management options |
Weekly challenge
Solution |
| 13 (10/22/07) |
More valuation examples
- New Information
- Negative FCFE and what they mean
- Circular reasoning in valuatioin |
Packer 1 (222-249) |
| 14 (10/24/07) |
Valuing distressed companies
The Dark Side of Valuation
-Valuing young companies |
Packet 1 (250-269) |
| Weekly Challenge # 6 |
Circular Reasoning in DCF valuation |
Weekly Challenge
Daimler
valuation
Solution |
| 15 (10/29/07) |
Google 2006: Valuation blunder?
Dealing with uncertainty in valuation
Introduction to relative valuation
A 4-step approach to deconstructing multiples |
Google addendum
Packet 1 (270-276)
Packet 2 (1-17) |
| 16 (10/31/07) |
Take the second
quiz and check out the solution as
well as the distribution of
grades for the class.
PE Ratio for a high growth firm
An undervalued low PE company
Comparing PE ratios across markets |
Packet 2 (18-32) |
| 17
(11/5/07) |
Comparing PE ratios across time
Comparing PE ratios across a sector
Market regressions
Growth controlled comparisons |
Packet 2 (33-55) |
| 18
(11/7/07) |
PEG Ratios deconstructed
EV Multiples
EV/ EBITDA Multiple |
Packet 2 (56-85) |
| 19 (11/12/07) |
Price to Book Ratios
EV to Capital Ratios
Price to Sales |
Packet 2 (86-119) |
| 20 (11/14/07) |
More on price to sales ratios
EV to Sales Ratios
The Value of a Brand Name
Forward Multiples
Choosing between multiples |
Packet 2 (120-148) |
| 21 (11/26/07) |
Valuing private businesses
- Motive matters
- Estimating discount rates and cash flows
- Valuation
- Illiquidity discount |
Packet 2 (149-180) |
| 22 (11/28/07) |
Take the third
quiz and check out the solution as
well as the distribution of
grades for the class.
More on the illiquidity discount
The Value of Control
- Voing and non-voting shares
- Minority discount |
Packet 2 (181- 196) |
| 23 (12/3/07) |
Real Options
- The Allure of Real Options
- Key questions
- Exclusivity and Option Value
- The option to delay and the value of a patent |
Packet 3 (1- 32) |
| 24
( 12/5/07) |
The value of a company with patents
Natural resource options and companies
The option to expand and the exclusivity test |
Packet 3 (33-57) |
| 25 (12/10/07) |
The option to abandon
The value of financing flexibility
Equity in deeply troubled companies as options
Acqusition Steps |
Packet 3 (58-106) |
| 26 (12/12/07) |
Acquirer's Anonymous: Seven mistakes that doom acquisitions
Closing Thoughts |
Acquirer's Anonyomous
Closing Presentatiion |
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