30257 - CORPORATE VALUATION
Course taught in English
Class-group lessons delivered on campus
Knowledge of basic financial accounting and basic corporate finance is encouraged.
The course aims at providing students with the conceptual and theoretical framework surrounding valuation issues and the practical tools to address such topics in real-life situations. The main methodologies of corporate valuation are analyzed and the approaches commonly used by practitioners (financial analysts, investment and merchant banks, consulting firms) are critically discussed. Examples focus on corporate valuation issues using DCF, stock market and deal multiples completed by industry-specific as well as case-specific valuation techniques.
- Introduction: users and uses of valuation; general approaches and specific methods;
- Financial analysis and cash flows for valuation;
- Business planning and financial modeling;
- Discounted cash flows valuation models. The link between value, leverage and growth;
- The weighted average cost of capital;
- Multiples valuation. Theoretical determinants and market estimates;
- Scenario analysis and Monte Carlo simulations;
- Valuation issues in mergers & acquisitions;
- Valuation issues in rights issues;
- Climate issues in finance.
At the end of the course student will have learned the conceptual and theoretical framework surrounding valuation issues and the practical tools to address such topics in real-life situations. Course participants will benefit from:
- The analytical application on how to prepare and interpret discounted cash flow (DCF) analysis in a variety of contexts.
- Knowledge and comprehension on how to prepare a comparable valuation analysis.
- Understanding how to apply the above analysis and comparison of the outcomes of these analytical approaches.
- Identify the most appropriate methods and approaches to a valuation, based on its final purpose.
- Apply the different company valuation methods consistently and make reliable assumptions.
- Choose the most suitable database as well as determine which key features should be adopted in the implementation of the identified methods.
- Prepare a valuation memorandum compliant to international valuation standards.
- Face-to-face lectures
- Guest speaker's talks (in class or in distance)
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
- Group assignments
The course will be mainly taught through frontal classes; in addition we will dedicate a few sessions to practical exercises to training in applying valuation and modeling in Microsoft Excel. A selected number of guest speakers will be invited, who will provide insights from their professional experience in valuation in different business scenarios (major investment banks directors, CFOs from industrial corporations, etc). Last, the course will include a group project leading to a full valuation with a presentation to the class. The team assignment will strengthen knowledge of the main databases available for valuation purposes as well as of the connections between business and financial skills.
- The assessment will combine a Final Written Exam and a Group Assignment:
- Final Written Exam: from 0 to 25 points;
- Group Assignment: from 0 to 6 points.
- The Final Written Exam will be structured as a combination of:
- multiple choice questions, presented in order to test the ability to recognize basic knowledge and concepts regarding corporate valuation methods and corporate reorganisations;
- practical exercises, aimed at testing the application of the analytical tools illustrated during the course;
- short open-ended essay questions, presented in order to test the students’ ability to describe and critically analyse the key theoretical frameworks and applications in valuation.
- The Assignment will be assessed taking into account the quality of the written deliverables prepared by the groups and the quality of an oral in-class presentation. The written deliverables will test the ability to read, analyze historical financial statements, retrieve data from financial databases, apply valuation methods and write a formal valuation report. The oral presentation will test the ability to deliver to an audience in an effective, concise and organized way the results of the valuation process and to reply to critical observations on the presentation.
- Students that are unable to actively take part in the Assignment (e.g. Bocconi home students studying abroad or working full time during the semester) will have the option to study additional readings for the Final Written Exam as an alternative to the Assignment.
This course will be based on the following textbooks and materials:
- Handouts and files uploaded on Blackboard;
- Corporate Valuation: Measuring the Value of Companies in Turbulent Times; by M. Massari, G. Gianfrate, L. Zanetti, Wiley, 2016;
- Corporate Valuation Workbook; by A. Ghezzi & L. Zanetti, Egea, 2020.