Day 3 - Valuation Complexities

Day 3 - Valuation Complexities

During this session, participants learn how to handle certain items that can generate complexities when valuing a firm. Leases, pensions, taxes (including tax losses), share option expenses, and provisions are covered; the related financial statements analysis issues are reviewed and the impact on the different valuation methodologies are analyzed. Both enterprise value and income statement adjustments are covered for these topics. At the end of the day participants apply the results to the target company.

Key topics:

• Leases
  • Review of accounting
  • Valuation issues and which industries lease adjustments are important for
  • Calculating EBITDAR
  • The present value method to capitalize operating leases
  • The multiple method to capitalize operating leases
• Pensions and OPEBs
  • Review of accounting
  • Adjustments to debt
  • Adjustments to operating profit
• Taxes
  • Permanent and temporary differences
  • Deferred taxes
  • Tax loss carry forwards and carry backs
  • Marginal and effective tax rates
• Share options expenses
  • How share options impact the income statement and balance sheet
  • Understanding their impact on trading comparables and DCF
  • Frequent adjustments made to valuation methodologies
• Provisions
  • Quasi-equity versus quasi-debt provisions
  • Relevant earnings and debt adjustments
• Application to target company