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Certificate Course on Valuation
Course Objective:
Starting with the basic understanding about the term Value, the course runs through the key approaches of valuation discovering the underlying assumptions of various models, as well as best practices, and their applications in live cases. Once the operation knowledge is gained, the same would be applied to case studies. This is an intensive and comprehensive package of face-to-face sessions facilitated by experienced and renowned faculties. This course has the vision to empower our members as leaders in the global service market.
Papers and Syllabus
The course for Valuation shall be comprised of the following four modules
Module 1 - overview of Valuation
Module 2 - Valuation Techniques
Module 3 - Corporate Laws & Income Tax Implications
Module4 - Application of Valuation Techniques & Project Presentation.
Module 1 –Overview of Valuation
Part-1 Introducing valuation
· What is value
· Differentiate price and value
· Who values businesses
· Purpose and role of a valuation
· Principles of valuation
· Definition of Standard of value (basis of valuation)
Fair Market value
Fair value
Investment value
Intrinsic value
· Premise of value
Going concern
Liquidation
· Valuation myths
· Valuation process
· Valuation standards
Ethical Issues
Terms of Engagement (TOE)
Valuation Services
Documentation
Valuation Report
Assumptions & limiting conditions
Reporting Guidelines
Using work of expert
Drafting the Valuation Report
Subsequent event
· Understanding of financial and equity markets
· Sources of financial information
Part – 2 Valuation Analyses
· Research techniques and planning
· Economy and industry research
· Historical analysis
Understanding the business
Understanding the Regulatory framework for the industry
Understanding the value drivers
Accounting analysis
Accounting policy review
Length of financial history
Adjustments to financial statements
Assets and liability analysis including contingent assets and liabilities
Income and expenses analysis
Financial analysis
Ratio analysis
Cash flow analysis
· Strategy analysis
Michael Porter's Five Forces
SWOT
PEST
BCG matrix
GE/McKinsey matrix
ADL matrix
Core competencies
· Company risk analysis
· Prospective analysis – forecasting
· Techniques and elements of forecasting
DuPont model and limitation
Sensitivity analysis
Scenario analysis
Simulation
Regression analysis
Time series model
Stress testing
Others
· Financial projection modeling
· Type of Due diligence
· Effect of due diligence on valuation
Module 2 - Valuation Techniques
Part-1
· Valuation Approaches
Discounted cash flow (DCF) approach
Enterprise value
Equity value
Adjusted present value (APV)
Relative valuation approach
Price to equity (PER) and PEG
Price to book
Price to sales
Price to cash flow
Enterprise value to EBITDA
Income approach
Earning capitalization
EVA (Economic Value added)
Asset Approach
Real option approach or contingent claim approach
· Selection of valuation approach
· Assigning Weight to Approaches
Theory and Practice
Mathematical versus Subjective Weighting
· Valuation of Options
General Principles of Option Valuation
Specific method for Valuing Options
Binomial tree method
BSOPM
Black & Scholes valuation Methodology
Part-2
· Cost of capital
Characteristics of cost of capital
Risk and cost of capital
Methods of Development of cost of capital
CAPM (capital asset pricing model
APT (Arbitrage pricing theory)
DDM (dividend discount model)
Development of WACC
Factors affecting cost of capital
Theory of Modigliani-Miller
Impact of Financial Leverage on Cost of Capital
Forecasting of interest rates and theories of interest rates
· Adjusting value through discounts and premiums
Control premium
LOCD (lack of control discount)
LOMD (lack of marketability discount)
Other premiums and discounts
· Business damages vs business valuation
· Valuation in special situations ;
1. Valuation of unlisted share
2. Valuation of distressed company
3. Valuation of early stage company
4. Valuation in M & A
5. Valuation in buy-sell agreement
6. Valuation of Investment Company
7. Valuation of Intangibles including approaches
8. Valuation for financial reporting
9. Valuation of real assets and real estate
10. Valuation for cross border mergers
11. Valuation of bonds, warrants and convertibles
Module 3 - Corporate Laws & Income Tax implications
Part-1
· Corporate Laws Aspects
Mergers and Amalgamations
De-Mergers
Acquisitions / disposal of business / slump sale
Liquidation
Internal & External Restructuring
· Legal aspects including litigation and contingencies
Vat and other indirect taxes
Financial instruments
Equity investments
Preferential shares
Cross Border Taxation Issues
· Implication of Stamp Duty
· Regulatory overview
Regulating Valuers/Valuations Professionals
SEBI regulations including Take Over Code
Capital Market Controls
Reserve Bank regulations
Part-2
· Income Tax implications
Capital gains / losses under tax treatment
Taxation on transfer of business / securities
Treatment of business losses
Statutory Valuation
Wealth Tax
Carried forward of losses
Losses of closely held companies
Transfer pricing issues
ESOP
Module 4 - Application of valuation techniques & Project Presentation
- The broad objective is to ascertain the fair value while applying the sound valuation principles and techniques.
- Multiple case studies across industries/sectors like Pharmaceutical, Retail, Manufacturing, Banking, Insurance, Aviation, Mining, Infrastructure, private equity valuation etc.
- Evaluation of Project through Dissertation and/or viva- voce/presentation
- In Reference Material, International Scenario and their standards would be referred to for details.
- Influencing factors
(a) YTM of Govt. Corporate Bond
(b) Financial rating of the company
(c) Outlook for Indian economy
(d) Outlook for the Industry
(e) Quality of management
(f) Unexpired period of fiscal benefits
(g) Trading volumes
Self Study- 200 hours
Class room teaching- 50 hours
Case Study in Groups- 50 hours