corporate finance masterclass - redcliffe training...the banking and corporate finance training...

The Banking and Corporate Finance Training Specialist

Corporate Finance Masterclass

A 3 Day Course

This course is presented in London on:

04-06 June 2018, 15-17 October 2018

This course can also be presented in-house for your company or via live on-line webinar

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Course Overview

At the end of this programme, the participants will be able to:

Understand the main transactions in Corporate Finance; Analyse the key steps for Mergers & Acquisitions (“M&A”) processes; Compute the key metrics for an M&A including accretion/dilution and synergies paid

away; Analyse the financial returns and capital structure of an LBO; Review all the key valuation methodologies including DCF and trading multiples; Understand complex valuation issues including two-stage DCF, NOLs, pensions,

leases, associate and non-controlling interests’ adjustments; Cover the main capital markets products, namely initial public offerings, rights issues

and bond issuances using recent capital markets examples.

The training will be a mix of lectures, case studies, exercises, Excel modelling and analysis to equip the participants with the tools to further enhance their understanding of Corporate Finance. Financial models will be built up from partially-complete models on real case scenarios.

Each participant should bring a laptop to the course to facilitate computation of case studies and modelling work. The trainer has 15 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Equity Valuation (Industrials and Banks), Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French. Day 1 – Corporate Finance Transactions Corporate Finance Transactions

Review of main Corporate Finance transactions Buy-side and Disposals Fairness opinions Leveraged Buy-Out (LBO)/Management Buy-Out (MBO) Initial Public Offering (IPO) and secondary issuance Debt financing

Advisers and their roles

Mergers & Acquisitions M&A trends: volume, industries, actors in the US, Europe and China Buy-side and sell-side Type of transactions

Auction/Competitive process/Bilateral negotiation Timetable and process Due Diligence

Course Objectives

Course Content

Background of the trainer


+44 (0)20 7387 4484

Due diligence as deal breaker or deal adjusters Private vs. listed companies

Synergies Types of synergies: cost and revenues Phasing and initial restructuring costs

Basic documentation review Letter of intent Key clauses of sale and purchase agreement

Case Study I: Participants anlayse existing M&A transactions in the steel and industrial sectors

M&A Financial Analysis Review of key financial metrics in M&A

EPS accretion/dilution Ownership dilution RoIC vs. WACC Pro forma leverage Net present value of synergies vs. control premium

Calculating goodwill Dealing with fair value adjustments to the target's net assets Refinancing of target's debt Fees (advisory, debt-issuance and equity-issuance) Identifying the maximum offer price and a suitable financing mix

Case Study II: Participants analyse the acquisition of a food manufacturer on Excel Leveraged Buy-Out (LBO)

LBO trends: volume, industries, actors in the US, Europe and China General overview of a levered transaction: basic principles Drivers of value creation in a levered transaction

How leverage increases the return on equity What makes a good LBO candidate

The concept of cash flow lending The lender’s perspective: risk, return and exit routes

Structural subordination Financial instruments used in levered transactions

Senior debt (revolving facility, term A, term B, term C) Second lien Mezzanine loans High yield bonds and PIK notes Preferred shares, shareholder loans, vendor loan notes

Case Study III: Participants perform the LBO of a cloud computing company


+44 (0)20 7387 4484

Day Two – Equity & Debt Capital Markets

Capital Markets Fundamentals What financial markets do? Who are the major players? Domestic and international capital markets Debt versus equity Primary versus secondary market Distinguishing between retail, corporate and investment banking Buy side versus sell side League tables, equity & debt underwriting Loan and bond markets Corporate advice and finance Where transactions take place: Exchanges vs. OTC vs. ECNs The buy-side industry/investors Active vs. passive investment management Asset allocation

Equity Capital Markets ECM and IPO trends: volume, industries, actors in the US, Europe and China The corporate lifecycle and equity financing options ECM role and fees Initial public offering

Process Prospectus Book building and arriving at a price Quiet period Stabilization and greenshoe option

IPO modelling with pre and post offering Secondary offering

Follow on placements Right issues Accelerated book building Modeling a follow on placement

Share classes Different classes Preference shares Pricing Issuing shares in different markets Modelling different classes of shares

Listing rules Key rules in main equity markets Minority squeeze out Compulsory purchase

Debt Capital Markets The corporate lifecycle and debt financing options Bond issuance process

Due diligence Prospectus Roadshow Syndicate and bond allocation


+44 (0)20 7387 4484

Market making and after-market Short-term debt funding

Overdraft/ Revolving credit facility/Commercial paper Long- term debt funding

Bank debt Publicly issued bonds

Case Study II: Participants analyse the recent apple bond issuance, term sheet and prospectus Day Three – Advanced Equity Valuation DCF and Mulitple Valuation Reminder Reminder of the five steps of DCF valuation Review of trading multiples Discussion of key issues affecting Terminal Value, WACC and Enterprise Value to

Equity reconciliation Advanced DCF Valuation Fast growing companies and the use of multi-period terminal value and fade rates

Two-stage terminal value (growing annuity followed by a perpetuity growth rate) Valuation of Net Operating Losses (NOLs) Normalised steady-state cash flows to avoid abnormal terminal value

Use of target RoIC vs. WACC returns Effective and marginal tax rates Mid-year discounting on cash flows Flexible valuation dates Case study I – Modelling of two-stage terminal value

- Modelling of NOLs, flexible deal dates and mid-year discounting

Weighted Average Cost of Capital (WACC) Review of capital asset pricing mode (CAPM) How to think about cost of equity for private companies How betas are derived – regressing company and market returns Which beta to choose for company valuation? Why unlever betas? How do we unlever betas? Use of Damodaran industry betas Optimal capital structure and gearing risk Case study II – Unlever and relever betas for a food manufacturing company Enterprise Value to Equity Value Issues Stock Options Expenses Essentials of stock based compensation accounting

Expensing to the income statement over the vesting period Intrinsic value of stock based compensation

Treasury method of accounting for stock based compensation Restricted stock and performance stock units Multiples adjustments (EV/EBIT)

Fully diluted market capitalisation in EV


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EBIT post stock option expense DCF adjustments

Stock option expense to be included in FCF Diluted share count to compute equity

Case study III – Analysing the stock options of Linkedin Non-Controlling Interests and Associates Accounting for NCI NCI valuation

Book values Market values P / E multiples, Price to Book multiples

Adjustments of NCI to multiples (EV/EBIT) Include NCI at market value in EV EBIT to include both parents and NCI earnings

Adjustments of NCI to DCF Deduct NCI at market value from EV to reach Equity

Accounting for equity affiliates / associates Equity affiliates and core, consolidated and total EV Equity affiliate valuation

Book values/Market values/Multiples Adjustments for equity affiliates to DCF and multiples

Depends on definition of EV (core, consolidated or total) Case study IV – AB InBev and subsidiaries’ NCI AB InBev and Grupo Modelo as associate

Operating Leases Differences between operating and financing / capital leases Fundamentals of operating and financing / capital lease accounting Moody’s multiple method and present value of non-cancellable lease arrangements Operating leases adjustments to multiples

Capitalised operating leases to be added to EV Rental expense to be allocated between interest expense and depreciation

Operating leases adjustments to DCF Free cash flow post rental expenses

New accouting rules to abolish difference operating vs. finance leases

Case study V – Computing Ryanair and Easyjet adjusted EV/EBIT Pensions Fundamentals of pension accounting Defined benefit vs. defined contribution plans Funded vs. unfunded plans Pension deficits and surpluses Pension adjustments to multiples

Add pension deficit to enterprise value Only service costs to remain in EBIT

Pension adjustments for DCF Only service cost in EBIT/free cash flow Deduct pension deficit from EV to equity

Case study VI – Analyse the pension deficit of British Telecom


+44 (0)20 7387 4484

This programme has been designed to develop the participants’ understanding of Corporate Finance gradually over a three-day period. Participants are welcome to attend all or part of the gradual steps of the training depending on their business needs.

Day 1 – Corporate Finance Transactions During the first day, participants are introduced to the main transactions in Corporate Finance: Mergers & Acquisitions (M&A), including buy-side and sell-side transactions, equity and debt financing and Leveraged Buy-Out (LBO). The steps in an M&A process are explained in detail alongside due diligence and synergies. Key metrics in M&A analysis, including accretion/dilution, pro forma leverage, synergies paid away are discussed based on real life case studies. Finally, participants learn about the key characteristics of an LBO model with its financing structures and private equity returns. Day 2 - Equity & Debt Capital Markets The second day will start with a discussion of the main functions and players of capital markets. Participants are then introduced to equity markets and products. We will focus on the life-cycle of equities, starting with the Initial Public Offering and moving afterwards to secondary offerings (rights issues, accelerated book building, bought deals, etc.). We will also look to the secondary market, including motivations of investors. We will drill down on the characteristics of equity and introduce comparable and fundamental equity valuation. Finally, participants will cover the main debt products available to corporates. The bond issuance process and key documentation are discussed. Both long and short term, public and private financing options are explained.

Day 3 – Advanced Equity Valuation Methodologies During the third and final day, participants will focus on advanced equity valuation concepts. Following a reminder of the key steps of Discounted Cash Flows and key features of trading multiples, participants will discuss complex valuation issues such as a two-stage terminal value, valuation of net operating losses, WACC for private companies and valuation issues in the reconciliation between enterprise and equity value (associates, non-controlling interests, operating leases, pension deficits). Much of the course work involves Excel modelling and analysis, equipping participants with the tools to further enhance their understanding of valuation issues: Building up from partially-complete models on real case scenarios

Each participant should bring a laptop to the course to facilitate modelling work.

What Redcliffe’s clients are saying about the course:

“Instructor had excellent experience of M&A to draw from and tell the class

about”

“Lecturer was very good and easy to approach with queries”

“The course was very practical with real world applications”

Course Summary


+44 (0)20 7387 4484

09:30-17:00

London

Standard Price: £1,995 + VAT

Membership Price: £1,596 + VAT

“Diversified case studies, switching between presentations and models were

great! The instructor was very professional”

“There was depth of content and detail – real life use cases and citing helped

bring concepts into reality”

In-House Training

Delivering this course in-house for a number of participants could be very cost effective.

The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar.

Tailored Learning

All of our training courses can be tailored to suit your company’s exact training needs.

We will work closely with you to help develop a training programme with content that is unique for your organisation.

Please email us on [email protected] for more information

E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact

requirements.

mailto:[email protected]

corporate finance masterclass - redcliffe training...the banking and corporate finance training...

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