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Web Casts: Executive Valuation - July 2014


This three-day equity valuation class was offered in New York from July 15-17, 2014, and the lectures are available for download. To get a full flavor for the class, you may want to start with the pre-class website that I put together for the class and download the lecture notes for the class. Once you are done with the class, try the post-class website.


And here are the webcasts, organized into six really long sessions , with the lecture note pages that are relevant for each session. Note that these sessions are long (about 3.5 hours, though there should be a 30-minute break in the middle of the video, where the webcast continues but there is nothing happening. Jump past that session or use it to take a break). Also, the last 5 minutes of the morning session and the last 20 minutes of the evening sessions get cut off and the audio is not great. I fixed the first problem by making webcasts of the missing pages but there is little I can do about the second. (I tried headphones and it is a little better!) I am sorry, though!

Session (Click here) Topics covered Lecture notes/ Other material

1 (July 15, 9-12.30)
Live Stream
Video download
Audio download

Add on: Missing section (Pg 23-24)

Introduction to Class
Approaches to Valuation

Big Picture of valuation
- Amgen & Tata Motors Valuations
- The inputs to value
- Riskfree rate

LN: Page 1-24

  1. Government Bond rates (7/14)
  2. Sovereign CDS spreads (7/14)
  3. Sovereign Ratings (7/14)

In practice webcasts

  1. Estimating a risk free rate

2 (July 15, 1.30-5)
Live Stream
Video download
Audio download

Add on: Missing section (Pg 74-84)

Equity Risk Premiums
Beta estimation
From cost of equity to cost of capital

LN: Page 25-84

  1. Implied ERP (7/14)
  2. Betas by sector (US, Global)
  3. Synthetic Ratings/Default Spreads
  4. Cost of capital by sector (US, Global)
  5. Lease converter
  6. R&D converter

In practice webcasts

  1. Implied Equity Risk Premium
  2. Bottom up Beta
  3. Debt and the Cost of Debt

3 (July 16, 9-12.30)
Live Stream
Video download
Audio download

Add on: Missing section (Pg 142)

Cash flow estimation: Getting earnings right
Net Cap Ex and Working Capital
Expected growth
Terminal Value
Value Creation
- Value versus Price Enhancement
- Pathways to increase value
- Acquisitions and value

LN: Page 85-142

  1. Calculate accounting returns (ROIC/ROE)
  2. Terminal value Checker
  3. Valuing Synergy
  4. Optimum Capital Structure

In practice webcasts

  1. Converting leases to debt
  2. Converting R&D to capital expenditures
  3. Estimating ROIC/ROE
  4. Terminal value checklist
  5. Optimizing capital structure

4 (July 16, 1.30-5)
Live Stream
Video download
Audio download

Add on: Missing section (Pg 192-201)

More on acquisitions/value creation
- Acquistions
- Capital Structure
Loose Ends in Valuation
- The value of cash, cross holdings & other assets
- The cost of complexity
- The value of control
- Dealing with truncation risk
- Management options

Narrative and Numbers: Valuation as a bridge

LN: Page 143-201

  1. Complexity Worksheet
  2. Value of Control
  3. Valuing employee options

In practice webcasts

  1. Valuing Employee Options

5 (July 17, 9-12.30)
Live Stream
Video download
Audio download

Add on: Missing section (Pg 257-258)

The Dark Side of Valuation
- Valuing young companies
- Valuing mature companies
- Valuing distressed companies
- Valuing financial service companies
- Valuing companies with intangible assets
- Valuing commodity & cyclical companies
- Valuing multibusiness companies
- Valuing private businesses

Page 202-259

  1. Distress probability estimator
  2. Financial service company valuation
  3. Liquidity Discount estimator
  4. Total Betas (by sector)
  1. Valuing Equity in a Distressed firm as an option
  2. Valuing Patents as Options

6 (July 17, 1.30-5)
Live Stream
Video download
Audio download

Add on: Missing section (Pg 350-End)

Value versus Price
Relative valuation
- The philosohical basis
- The Definitional tests
- The Descriptive tests
- The Analytical tests
- The Application tests
Closing thoughts

Page 260-End

  1. PE ratios by sector
  2. EV/EBITDA by sector
  3. Book value multiples by sector
  4. Revenue multiples by sector
  5. Market Regressions (January 2014)
  6. Equity Multiple Estimator
  7. EV Multiple Estimator


  1. EV, Firm value and Equity Value
  2. Multiples and Fundamentals

General valuation models

A complete dividend discount model that can do stable growth, 2-stage or 3-stage valuation. This is your best choice if you are analyzing financial service firms.
fcfeginzu.xls A complete FCFE valuation model that allows you to capital R&D and deal with options in the context of a valuation model.
growthbreakdown.xls A model to value the premium you should pay for growth in either an intrinsic valuation or a relative valuation.
fcffsimpleginzu.xls A complete FCFF model that allows for changing margins and has default assumptions built in (to protect you from inconsistent assumptions). If you want a quick, all-in-one model to value a company with relatively few inputs, try this.
This model tries to do it all, with all of the associated risks and rewards. I hate having to work with a dozen spreadsheets to value a firm, and I have tried to put them all into one spreadsheet - a ratings estimator, an earnings normalizer, an R&D converter, an operating lease converter, a bottom-up beta estimator and industry averages. Try it out and make your own additions.
fcffginzulambda.xls This model is very similar to the fcffginzu model, but it allows the user to enter a measure of company exposure to country risk (that is different from beta).