How to Value an Acquisition or Division
Business Valuation And Modeling Using Excel™

• Different Valuation Approaches: Income, Asset, Market, More!
• Business Valuation Mechanics, Techniques and Templates
• Valuation Models Incorporating the Key Drivers of Value
• Normalizing Income, Excess Earnings, and Free Cash Flow
• Justifying and Modeling Projected Income, Growth Rates, Discount,Capitalization Rates, and Terminal Value
• Modeling the Capital Asset Pricing Model and Beta
• Modeling Your Firm’s Optimal Cost of Capital - Levered, Unlevered and Relevered Beta
• Dynamic Modeling Sensitivity Tools: Scenario Manager, Solver, Goal Seek, Sliders, More!
• Ten Most Common Errors Found in Valuation Reports
• “Synergy” - How to Quantify it and Avoid Paying Too Much

• CFOs, CPAs, Controllers, Treasurers, Auditors and Staff Accountants
• Financial Directors, Managers, Analysts and their staff
• The Entire M&A Team and the Strategic Planning Department
• Divisional Managers and Investment Bankers

This workshop focuses extensively on valuation methodology and techniques with an overview only of the M&A transaction. For a complete two-day seminar on the Merger & Acquisition process, please attend NCCE's two-day seminar, Mergers, Acquisitions & Business Valuation.

• Sale, M&A, Divestiture, Spin-Off, IPO
• Partnership Buy-Ins or Buy-Outs
• Economic Loss Analysis, Bankruptcy and Foreclosure
• Mediation, Arbitration and Negotiation
• Employee Stock Ownership Plans (ESOPs)

• Valuation Approaches
  • Asset-Based Valuation, Adjusted Book Value and Tangible Net Worth
  • Income-Based Valuation
  • Market-Based Valuation
  • Going Concern and Goodwill
• Cash Flow and Free Cash Flow
• Capitalization Rate and the P/E Multiple
• Capital and Ownership
  • Capital Structure, Invested Capital and Return on Invested Capital (ROIC)
  • Control Premium and Discount for Lack of Control (DLOC)
  • Minority Interest and Minority Discount
• Key Valuation Ratios

• Defining the Valuation Assignment
  • Establishing the Standard of Value
  • Identifying the Business Interest to be Valued: Equity Only, Equity or Assets, Valuing Invested Capital
• Gathering Data (Includes Bibliography of Sources and Websites)
  • The Industry, the Business, the Competition and the Economic Outlook
  • Company History: Financial and Operational
  • Goodwill and Other Intangible Value
  • Workforce in Place
  • Allocation of Purchase Price
  • Market Price of Similar Companies
• Analyze Data
  • Financial Analysis, Ratio Analysis and Comparison to the Industry
  • Adjustments to the Financial Statements
    • GAAP vs. Business Valuation Analysis
    • Current Value of Tangible Assets
    • Unrecorded Liabilities
    • Excess Compensation and Other Related Party Transactions
    • Non-Operating Income and Expenses
  • Analytical Review and Normalization
  • The Income Statement (Case Study) Typical Normalization Adjustments
    • Top-Line Analysis: Sales Trends and Market Share
    • Bottom-Line Analysis: Profit Margins, Excess Expenses and Potential Synergies
    • Business Segments and Product Lines
    • Unusual and Extraordinary

• Establishing the Discount, Capitalization and Growth Rate
  • Calculating the Weighted After-Tax Cost of Capital (WACC)
    • Risk Free Returns, Market Risk Premiums and Beta
    • The Capital Asset Pricing Model (CAPM), the Cost of Debt and Equity
  • Mechanics for Levered, Unlevered and Relevered Beta
  • Why Debt Increases Beta: Levered Beta as a Function of Debt
  • Understanding the Optimal Debt to Equity Relationship
  • Build-Up Methodologies for Private Companies
    • Company Specific Risk Factors
    • Ibbotson Build-Up Method
• Establishing and Normalizing the Stream of Income to be Valued (Capitalized)
  • Income Concepts: NIBT, Operating Income, NOPAT, Excess Earnings
  • Cash Flow Concepts: Cash Flow from Operations, Free Cash Flow
• Projecting Income to be Valued and Supporting the Projected Growth Rate
• Establishing and Supporting a Terminal Value
• Comparison to Other Valuation Approaches
  • Asset-Based Approaches
  • Market-Based Approaches
    • Comparables, Market Data Analysis
    • Public Companies and P/E Multiples
• Reconciling Differences Between Methods and Selecting a Value
• Premiums and Discounts
  • Control Premium vs. Minority Discount
  • Marketability Discount
  • Other discounts: Key Person and Blockage
• Sanity Checks
  • Who Pays for Synergy?
  • Are You Adding Economic Value? (EVA)
  • Don’t Be Dumb with Rules of Thumb

• Intangible Asset Categories and Examples
  • Customer or Market-Based Assets (Branding)
  • Contract-Based Assets
  • Technology-Based Assets
  • Statutory-Based Assets
  • Workforce-Based Assets
  • Corporate, Organizational and Financial Assets
• Valuation Approaches
  • Market vs. Income Approach
  • Royalty Method
  • FASB 141 & 142, SSVS 1

• Designing the Financial Model: Critical Considerations and Keys to Success
• Using Input Cells, Cell Names, Cell Worksheets and the Insert Function Command
• Excel™ Tools for Modeling
  • Data Tables and Sensitivity Analysis
  • Goal Seek, Scenario Manager and Solver
  • Regression Analysis and Financial Functions
  • Spinners and Sliders
• Communicating the Forecast with Graphics

• Cash Flow and Adjusting for Inflation
• Timing and Compounding Frequency
• Critical Excel™ Financial Functions
  • PV, FV, PV and FV of Annuities, NPV, IRR
  • IPMT, PPMT, CUMIPMT, More!

• Forecast vs. Projection, AICPA/SAARS Definitions and Requirements
• Identifying Key Business Drivers, Assumptions and Uncertainties
• Income Statement Projections
  • Projecting Revenues Based on Key Drivers
  • Projecting Expenses and Expense Drivers
  • Regression Analysis for Fixed and Variable Cost Projections
  • Normalizing Adjustments
  • Flexible Budgeting with Data Tables and Goal Seek
  • Projecting Normalized Profits with Simulation Tools
• Modeling the Balance Sheet
• Statement of Cash Flows
  • Operating Cash Flow and Free Cash Flow
  • Cash From (For) Investments and Financing
• Financial Ratios: Modeling to Meet Objec-tives with Solver and Scenario Manager
  • Liquidity and Leverage Ratios
  • Activity Ratios and Profitability Ratios (ROE, ROIC, Margins)
• Projecting Monthly Cash Flows and Borrowing Requirements

• Weighted Average After-Tax Cost of Capital Overview (Cost of Debt, Equity)
• Modeling the Weighted Average After- Tax Cost of Capital
• Capital Asset Pricing Model and the Estimated Beta Coefficient
• Modeling Levered and Unlevered Beta for Optimal Debt
• Basic and Expanded CAPM
• Build-Up Model
• Evaluating Performance: Modeling Your Firm’s EVA Calculation

• Designing Valuation Models: Key Considerations
• The Income Approach
  • Discounting vs. Capitalizing
  • Sensitivity Analysis
• Discounting Cash Flow and Market Approach Models
• CASE STUDY: Acquisition Candidate Valuation

• Cover Letter, Assumptions and Limitations
• Professional Qualifications of Valuator
• Definition of Valuation Assignment
• Sources of Information
• Analysis of Adjustments to Subject Company Financials
• Critical Review for Comprehensiveness, Accuracy and Coherence

This seminar is ideal for accounting, business and financial professionals who want to clearly understand valuation procedures and mechanics and model valuation scenarios with state-of-the-art computer tools specifically designed to make valuation modeling quick and easy, including:

• CFOs, controllers and accounting staff
• Financial directors, managers, analysts and their staff
• Valuation professionals, mergers and acquisitions specialists
• CPAs in public practice and auditors

Course Level: Basic

Prerequisite: Basic knowledge of finance and Excel™

• Peter Woodlock, CPA, PhD

Some of the organizations who have taken advantage of NCCE’s custom training include: Hewlett-Packard; Stanley Tools; US Small Business Administration; Polaroid; Ernst & Young; US Robotics; Aetna, Inc.; Western Union; Harley-Davidson; General Mills; Florida Power & Light; AOL; and Motorola.

For more information or to schedule a custom in-house program, email NCCE at contact@nccetraining.com or telephone 800-635-9615.