Corporate Valuation Models

+ knowledge of accounting

+ knowledge of financial analysis

+ basic knowledge of excell and word

+ basic knowledge of English

This one semester course consists of 45 hours of contact with the teacher (3 hours per week) and 62 hours of autonomous work (total: 107 hours). The course is credited with 4 ECTS.
The course is structured in three parts. First, the theoretical foundations of each topic are presented. Second, the students solve case studies to apply the theoretical background. Third, the students need to work on a group assignment with oral presentation about one of the topics discussed in classes.
Final grades under a continuous assessment evaluation methodology will be based on two components:
1. Group assignment: 40%;
2. Written test: 60%.
Students can also apply for a final exam (100% of the final grade) concerning all topics of syllabus.

The objectives to be developed are the following:

1 – Acquire knowledge of the process of evaluating companies;

2 – Mastering the fundamental concepts of company valuation;

3 – Acquire knowledge about the determinants of value;

4 – Acquire knowledge about business valuation methods;

5 – Critically discuss the advantages and disadvantages of each of the company valuation methods;

6 – Prepare a company valuation dossier;

7 – Acquire knowledge about the investment process in real assets.

The skills to be developed are the following:

1 – Discuss the fundamental and critical aspects of evaluating a company;

2 – Apply knowledge of business valuation in the context of SMEs;

3 – Apply knowledge about the investment process in real assets.

1. Introduction
1.1. Basic concepts for valuation.
1.2. Approaches to valuation.
1.3. Capital structure of firms.
2. Estimation of the relevant inputs for valuation
2.1. Estimation of cost of capital.
2.2. Estimation of cash flows.
2.3. Estimation of growth rates and terminal value.
3. Models of valuation
3.1. Adjusted patrimonial value model.
3.2. Dividenddiscount
models.
3.3. Free cash flow to equity models.
3.4. Free cash flow to the firm models.
3.5. Economic value added model.
3.6. Relative valuation models.
3.7. Special cases in valuation.
4. Valuation of investments in real assets
4.1. Traditional models for valuing investments in real assets.
4.2. Limitations of the traditional approach.
4.3. The real options methodology for valuing investments.
4.4. Real options valuation models.
4.5. Applications of option pricing theory for valuing firms.

NAO

FUNDAMENTAL

Copeland, T. E., Weston, J. F., and Shastri, K. (2004). Financial Theory and Corporate Policy. 4th edition, AddisonWesley, Reading, MA.

Damodaran, A. (2018), The Dark Side Of ValuationValuing Young, Distressed, And Complex Businesses. 3rd Edition.Pearson FT Press

Damodaran, A. (2006), Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, 2nd Edition, John Wiley & Sons, New York, NY.

Domingos, S. F. (2018), Fusões, Aquisições, Cisões e Outras Reestruturações de Empresas Vol III, Rei dos Livros.

COMPLEMTAR

Mota, A. G. et al (2009), Investimentos Financeiros: Teoria e Prática. Sílabo.

Neves, J. C. (2002), Avaliação de Empresas e Negócios, McGrawHill, Lisboa.

Rappaport, A. (1997), Creating Shareholder Value: The New Standard for Business Performance, 2nd edition, Free Press, New York, NY.

 Home Page for Aswath Damodaran – NYU Stern (https://pages.stern.nyu.edu/~adamodar/)