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Course Syllabus

Master 2021/2022

Advanced Business Valuation

Category 'Best Course for Career Development'
Category 'Best Course for Broadening Horizons and Diversity of Knowledge and Skills'
Type: Compulsory course (Strategic Corporate Finance)
Area of studies: Finance and Credit
Delivered by: School of Finance
Where: Faculty of Economic Sciences
When: 1 year, 3, 4 module
Mode of studies: offline
Open to: students of one campus
Instructors: Vitaliy Dyachenko, Svetlana Grigorieva, Nikita Pirogov, Irina Skvortsova, Dmitry Tikhomirov
Master’s programme: Strategic Corporate Finance
Language: English
ECTS credits: 6
Contact hours: 64

Course Syllabus

Full Syllabus

Abstract

The Advanced Business Valuation Course explores both the theoretical basis and practical application of all major elements of discounted cash flow valuation, relative valuation and assetbased valuation. You learn to differentiate between long-term value-creating strategies and shortterm indicators, such as market share, earnings per share, share price and others. The course discusses how to evaluate company’s strategic position and develop forecasts using different techniques. Within this course you consider special cases in valuation such as valuation in emerging capital markets, valuation of companies with changing capital structure, valuation of high levered firms, firms with negative earnings, private firms, and valuation of options. You also discuss how to evaluate companies in different industries: mining, telecom, media and finance. Participants are provided with the opportunity to work in small teams in order to prepare reviews of empirical literature, cases and analytical tasks based on real data.
Learning Objectives

Learning Objectives

  • to provide students with sufficient theoretical knowledge and practical experience to be able to value a company using different valuation models (DCF, APV, Residual income, Multiples) in normal and special cases
Expected Learning Outcomes

Expected Learning Outcomes

  • Know how to apply premiums and discounts in business valuation (control premium, discount for lack of control, discount for lack of marketability)
  • Know how to apply traditional valuation techniques (DCF, relative valuation and asset based valuation) in emerging capital markets
  • Know how to distinguish value creation from value destruction in order to ensure long-term competitive success and survival
  • Know how to use option pricing methods to value flexibility
  • Know how to value firms with changing capital structure and high levered firms
  • Know main methods to value company’s intangible assets
  • Know the advantages and disadvantages of Residual income models
  • Know the specificity of valuing companies in different industries
Course Contents

Course Contents

  • Introduction to valuation
  • Premiums and discounts in business valuation
  • Income approach. Valuing companies by cash flow discounting: main steps, models, and problems
  • Income approach. Capitalization methods and residual income valuation methods
  • Market approach. Valuing companies using multiples
  • The role of cost approach in business valuation. Valuation of intangible assets
  • Real options and valuation.
  • Corporate valuation in different industries
Assessment Elements

Assessment Elements

  • non-blocking Home assignments
    Team projects include discussion of different topics, cases, and analytical tasks that are prepared in teams of 5-6 students. Requirements for team projects include (1) clear and understandable calculations in Excel; (2) analytical report in Word; (3) presentation in Power Point. Half of the projects weigh 5% and the other half 10%.
  • non-blocking Final case
    Final case is devoted to valuation of Russian companies in mining, telecom, media and finance industries, based on the open data. Requirements for team projects include (1) clear and understandable calculations in Excel; (2) presentation in Power Point.
  • non-blocking Class participation
Interim Assessment

Interim Assessment

  • 2021/2022 4th module
    0.7 * Home assignments + 0.2 * Final case + 0.1 * Class participation
Bibliography

Bibliography

Recommended Core Bibliography

  • Damodaran, A. (2012). Investment Valuation : Tools and Techniques for Determining the Value of Any Asset, University Edition (Vol. 3rd ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=442925
  • Hitchner, J. R. (2017). Financial Valuation : Applications and Models (Vol. Fourth edition with website). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1506670
  • Wessels, D., Goedhart, M. H., & Koller, T. (2015). Valuation : Measuring and Managing the Value of Companies, University Edition (Vol. 6th ed). Hoboken: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1046521

Recommended Additional Bibliography

  • Arzac, E. R. (2008). Valuation for Mergers, Buyouts, and Restructuring (Vol. 2nd ed). Hoboken, NJ: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1639464
  • Fernandez, P. (2002). Valuation Methods and Shareholder Value Creation. Elsevier. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.eee.monogr.9780122538414
  • Friedl, G., Copeland, T., & Antikarov, V. (2018). Real Options. A Practitioner´s Guide, Book Review. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.5BD264EB
  • Hitchner, J. R., Mard, M. J., & Hyden, S. D. (2013). Valuation for Financial Reporting : Fair Value, Business Combinations, Intangible Assets, Goodwill, and Impairment Analysis. Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1102750
  • King, A. M. (2006). Fair Value for Financial Reporting : Meeting the New FASB Requirements. Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=159616
  • Mercer, Z. C., & Harms, T. W. (2008). Business Valuation : An Integrated Theory (Vol. 2nd ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=208023
  • Pereiro, L. E. (2006). The practice of investment valuation in emerging markets: Evidence from Argentina. Journal of Multinational Financial Management, (2), 160. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.eee.mulfin.v16y2006i2p160.183
  • Pratt, S. P., Reilly, R. F., & Schweihs, R. P. (2000). Valuing a Business : The Analysis and Appraisal of Closely Held Companies (Vol. 4th ed). New York: McGraw-Hill Professional. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=52012