financial modelling courses - redcliffetraining.com · the specialist in highly technical,...

The specialist in highly technical, market-driven banking and corporate finance training

Financial Modelling CoursesAll courses can be presented In-House or via Live Webinar

web: redliffetraining.co.uk email: [email protected] phone: +44 (0)20 7387 4484

Corporate Membership Scheme

Our Corporate Membership Schemes are not valid on any courses held on an in-house basis and are in line with our standard Terms & Conditions

If you would like to enquire about one of our Corporate Membership Schemes then please call or email us for more information.

Email: [email protected] Tel: +44 (0) 20 7387 4484

Our Corporate Membership Scheme gives clients the benefit of discounted course places with absolutely no

restrictions.

Clients pay an annual subscription fee of £595 + VAT to receive 20% discount on all public course and conference

bookings irrespective of the numbers booked.

You Corporate Membership Scheme can be used once payment is received and will be valid for one year.

web: redliffetraining.com email: [email protected] phone: +44 (0)20 7387 4484

To book this course or find out more, please click the “Book” button

Course Content

Advanced Negotiation Issues in M&ADate:

Location: London Price: .....+VAT

BOOK NOW

Course Overview

Brochure Content

PUBLIC COURSES

• Modelling For Mergers & Acquisitions• Advanced LBO Modelling• Corporate Finance Modelling Masterclass• Business Case Modelling• Modelling for Restructuring• Modelling for Stressed and Distressed Companies• Modelling for Disposals• Advanced Private Equity and LBOs Training Masterclass• Bank Valuation• Valuing A Business• Valuing Start Up and Pre IPO Companies• Valuing a Technology Company Course• Project Finance Modelling• Basic Financial Modelling in Excel

http://redcliffetraining.co.uk


Course Content



BOOK NOW

Course Overview

Brochure Content

IN-HOUSE COURSES

• Advanced M&A Modelling• Project Finance Modelling for Renewable Energy• Advanced Business Valuation and Modelling Training

Course• Advanced Excel and Risk Modelling Course• Applied Financial Mathematics in Excel Training Course• Bank Analysis and Modelling Training Course• Emerging Market Bank Modelling & Valuation• Excel Auditing Workshop• Lease Modelling in Excel Training Course• Modelling For Credit Risk Training Course• Modelling Service-based Businesses• Modelling for Debt Restructuring Course• VBA and Macros• Valuing Commodity Companies and Sectors• Valuing Emerging Market Companies• Valuing a Pharmaceutical Company• Agribusiness Investment Modelling• Real Estate Modelling


To book this course or find out more, please click the “Book Now” button

Course Content

Modelling For Mergers & Acquisitions - A Practical 3-Day WorkshopDate: 25-27 Jun 2018, 12-14 Nov 2018

Location: London Standard Price: £1,800 +VAT Membership: £1,440 + VAT

BOOK NOW

Course Overview

This course covers the key elements of an acquisition or merger, from the initial stand-alone valuation of the target to the more complex accounting and modelling issues to be considered and finally analysing and assessing the value created by synergy benefits and leverage.

This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.Participants will be led through a comprehensive review of analysis practices, from initial principles through to more advanced techniques that are used in transaction analysis.

As part of their work on this course participants model transactions based on real-life companies and scenarios.

By the end of this course participants will understand: ■ Drivers on M&A ■ How to model integrated financial statements ■ How to use financial statements to value a business ■ How to model the balance sheet impact of transactions ■ How to incorporate synergies into modelling work ■ How to differentiate between financing and operating synergies ■ How acquisitions can be structured

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse leveraged acquisitions: ■ Building up from partially-complete models ■ Working with integrated financial statements ■ Developing the acquisition structure and modelling instruments ■ Running scenarios, iterating and optimising

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

Day 1

M&A model build up: the starting point

■ Modelling integrated financial statements ■ Model structure ■ Key forecast ratios ■ Sourcing and cleaning historic data ■ What makes a good model?

Modelling – integrating financial statements: participants complete a partially-developed financial model for a public quoted company which integrates P&L, balance sheet and cash flow. This company will be the target company used in the merger analysis

Modelling stand-alone valuation ■ Overview of valuation methodologies ■ What do investment banks do? ■ What methodologies could we use? ■ How should we define firm value? Equity v.s. en-

terprise value ■ Calculating free cash flow before financing ■ Understanding and calculating WACC ■ Discussion – calculating WACC ■ Key issues with a two stage DCF valuation – WACC

and terminal value assumptions Modelling - valuation: participants calculate the cost of capital and complete a DCF valuation for the target company, producing a stand-alone valuation as a cross check to the acquisition price Day 2

http://redcliffetraining.com/training/financial-modelling/modelling-for-ma/


Modelling For Mergers & Acquisitions - A Practical 3-Day Workshop

Continued

BOOK NOW

Course Content

Accounting for corporate transactions ■ Different types of transaction and how they

are modeled in practice ■ Consolidation accounting under the current

IFRS 3 an IAS 27 ■ Change of control triggers ■ Accounting for non-controlling interests

(“NCI”) ■ Accounting for disposals ■ Partial disposals – creating a NCI ■ Partial disposal – loss of control ■ Recent changes to acquisition accounting

under IFRS ■ Definition of control ■ Calculation of goodwill

Modelling: delegates complete a variety of transaction models incorporating all types of corporate transaction and calculate the effect of a transaction on a set of consolidated accounts in preparation to perform a merger analysis with the target business and an acquirer

Acquisition finance ■ Types of transactions and synergies ■ Availability of synergies and problems in

achieving them ■ Methods available for valuing synergies ■ Key differences between public vs. private

deals, recommended vs. hostile bids ■ Choices for growth: acquisition vs. organic

vs. joint venture ■ Defence strategies for target companies

resisting a hostile bid Case study: Participants calculate synergies for a case company

Day 3Structuring acquisition finance ■ Once price has been agreed, how is it

paid? Cash vs. Shares ■ Financing choices for raising cash for an

acquisition: Debt vs. Equity ■ Calculating the success of a deal, accretion

vs value creation ■ The nature of equity instruments ■ The different risks and rewards accruing to

different parties ■ The impact of loan stock, convertibles and

preference shares on WACC ■ Calculating returns to key participants

Case study: Calculating accretion/dilution and the effect of hybrids on cost of capita

Merger modelling case study ■ Completing a merger model ■ Getting to DCF valuation for the combined

business ■ Combined WACC ■ Valuing operating synergies ■ Valuing financing synergies ■ Accretion/dilution analysis vs wealth creation ■ Sense-checking the output and adjusting the

capital structure

Modelling – bringing it all together: participants complete a complex merger model for an acquisition of the target business incorporating synergy analysis and varying capital structure. The transaction is analysed on an accretion/dilution analysis and a wealth creation/return on capital analysis

At the end of this session participants will have a working acquisition model incorporating a variety of different forms of transaction analysis

Course conclusion: best practice in transaction analysis ■ Participants will have improved their understand-

ing of and have had experience of modelling mergers and acquisitions from first principles

■ Simple and clear reference Excel models - provid-ing participants with a platform for future internal modelling efforts and aiding decision making

■ Participants who, at the end of the course, under-stand the drivers on transactions and how trans-actions can be modified to suit the various parties

What our clients are saying about the course

“Methodical and clear. Liked how it went through whole process of linking up

financial statements”

http://redcliffetraining.com/training/financial-modelling/modelling-for-ma/


Course Content



BOOK NOW

Course Overview


Course Content

Advanced LBO Modelling - A Practical WorkshopDate: 28-29 Jun 2018, 15-16 Nov 2018

Location: London Standard Price: £1,300 +VATMembership Price: £1,040 + VAT

BOOK NOW

Course Overview

This course covers the key elements of modelling in an LBO analysis. Participants will value the target business using historic data and available equity research. The valuation process will incorporate absolute and relative valuation techniques. Once the target business has been valued, participants will be introduced to LBO analysis and construct an LBO model. The LBO modelling analysis will be developed by assessing the debt capacity of the business to determine the range of capital structures available for the transaction and how credit analysis is used in the LBO modelling process.

The participants will then cover more complex LBO instruments such as warrants and PIKs, how they can be incorporated into an LBO structure and how to calculate returns to each of the equity and debt providers. Participants will model a more complex capital structure and calculate exit values and the IRRs generated by each investor. Using the integrated model participants will then analyse various scenarios (management case, base case, payout case) to derive the optimum financing structure taking into account the financial constraints of each investor.

The participants will then undertake an adjusted present value (“APV”) analysis to determine where value has been created in the LBO transaction using an APV model and finally look at a recovery analysis for a failed LBO transaction.

Case Study: The participants will use a variety of case studies and exercises during the two days, based on publically quoted and generic companies.

Leverage Overview ■ Background to the LBO market ■ Introductory theory - The effect of leverage

on firm value

Valuing the Target ■ Sourcing information – Historic and forecast

data ■ Analysing equity research

• Key attributes of broker analysis• Pluses and minuses of equity research

■ Building a DCF valuation using equity re-search

■ Modelling the stand alone valuation• DCF valuation• Use of multiples in valuation (EV/EBIT, EV/

EBITDA)

Case Study I: Participants model the stand alone valuation of the target using historic data and equity research

LBO Modelling Overview ■ Key elements of an LBO model

• Comparing and contrasting DCF and LBO models

• Sources and uses of funds

■ From stand alone valuation to LBO analy-sis

Case Study II: Participants use the stand alone valuation of the target to complete an LBO model

Assessing debt capacity for LBO financing ■ Financial interdependencies ■ Financing growth ■ Sustainable debt ■ Target debt capacity assumed in a WACC

calculation, debt capacity and interest cover

■ Debt capacity in LBOs ■ Debt capacity multiples in practice and

credit analysis

Case Study III: Modelling the debt capacity of the target using multiple and credit analysis

Capital providers and their typical characteristics ■ Institutional and management equity ■ Traditional/new lenders ■ Senior tranche profiles


http://redcliffetraining.com/training/financial-modelling/advanced-lbo-modelling-course/


Course Content



BOOK NOW

Course Overview


Advanced LBO Modelling - A Practical WorkshopContinued

BOOK NOW

Course Content

• A, B, C, RCF ■ Subordinated tranche profiles

• Second lien• Mezzanine (with/without warrants)• PIK• High yield bonds

■ More complex issues – warrants and options ■ Typical LBO transaction sensitivity analysis,

management, base and payout cases

Case Study IV: Modelling a more complex capital structure with various scenarios calculating exit value and IRR for each of the capital providers

Assessing value creation in LBO transactions – APV analysis

■ Key components of an APV valuation• Unlevered value• Value of the tax shield• Direct and indirect cost of leverage

■ APV valuation and DCF valuation ■ APV valuation in a steady state ■ Calculating AP in a steady growth environ-

ment ■ Incorporating APV analysis in an LBO trans-

action analysis

Case Study V: Where has value been created, modelling APV analysis for an LBO transaction


http://redcliffetraining.com/training/financial-modelling/advanced-lbo-modelling-course/


Corporate Finance Modelling MasterclassDate: 25-29 Jun 2018, 12-16 Nov 2018

Location: London Standard Price: £3,000 + VATMembership Price: £2,400 + VAT

BOOK NOW

Course Overview

On days one, two and three the course covers the key elements of an acquisition or merger, from the initial stand-alone valuation of the target to the more complex accounting and modelling issues to be considered and finally analysing and assessing the value created by synergy benefits and leverage This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.

Participants will be led through a comprehensive review of analysis practices, from initial principles through to more advanced techniques that are used in transaction analysis.

As part of their work on this course participants model transactions based on real-life companies and scenarios.

On the last two days participants will cover the key elements of modelling in an LBO analysis. Participants will value the target business using historic data and available equity research. The valuation process will incorporate absolute and relative valuation techniques. Once the target business has been valued, participants will be introduced to LBO analysis and construct an LBO model. The LBO modelling analysis will be developed by assessing the debt capacity of the business to determine the range of capital structures available for the transaction and how credit analysis is used in the LBO modelling process.

The participants will then cover more complex LBO instruments such as warrants and PIKs, how they can be incorporated into an LBO structure and how to calculate returns to each of the equity and debt providers. Participants will model a more complex capital structure and calculate exit values and the IRRs generated by each investor. Using the integrated model participants will then analyse various scenarios (management case, base case, payout case) to derive the optimum financing structure taking into account the financial constraints of each investor.

The participants will then undertake an adjusted present value (“APV”) analysis to determine where value has been created in the LBO transaction using an APV model and finally look at a recovery analysis for a failed LBO transaction.

Course Content

Days 1, 2 & 3M&A model build up: the starting point ■ Modelling integrated financial statements ■ Model structure ■ Key forecast ratios ■ Sourcing and cleaning historic data ■ What makes a good model?

Modelling – integrating financial statements: participants complete a partially-developed financial model for a public quoted company which integrates P&L, balance sheet and cash flow. This company will be the target company used in the merger analysis

Modelling stand-alone valuation ■ Overview of valuation methodologies ■ What do investment banks do?

■ What methodologies could we use? ■ How should we define firm value? Equity vs.

enterprise value ■ Calculating free cash flow before financing ■ Understanding and calculating WACC ■ Discussion – calculating WACC ■ Key issues with a two stage DCF valuation –

WACC and terminal value assumptions Modelling - valuation: participants calculate the cost of capital and complete a DCF valuation for the target company, producing a stand-alone valuation as a cross check to the acquisition price

Day Two Accounting for corporate transactions ■ Different types of transaction and how they

are modelled in practice

http://redcliffetraining.com/training/corporate-finance-training-courses/corporate-finance-modelling-course/


Corporate Finance Modelling MasterclassContinued

BOOK NOW

■ Consolidation accounting under the current IFRS 3 an IAS 27

■ Change of control triggers ■ Accounting for non-controlling interests

(“NCI”) ■ Accounting for disposals ■ Partial disposals – creating a NCI ■ Partial disposal – loss of control ■ Recent changes to acquisition accounting

under IFRS ■ Definition of control ■ Calculation of goodwill

Modelling: delegates complete a variety of transaction models incorporating all types of corporate transaction and calculate the effect of a transaction on a set of consolidated accounts in preparation to perform a merger analysis with the target business and an acquirer

Acquisition finance ■ Types of transactions and synergies ■ Availability of synergies and problems in

achieving them ■ Methods available for valuing synergies ■ Key differences between public vs. private

deals, recommended vs. hostile bids ■ Choices for growth: acquisition vs. organic

vs. joint venture ■ Defence strategies for target companies

resisting a hostile bidCase study: Participants calculate synergies for a case company

Day Three

Structuring acquisition finance ■ Once price has been agreed, how is it paid?

Cash vs. Shares ■ Financing choices for raising cash for an

acquisition: Debt vs. Equity ■ Calculating the success of a deal, accretion

vs value creation ■ The nature of equity instruments ■ The different risks and rewards accruing to

different parties ■ The impact of loan stock, convertibles and

preference shares on WACC ■ Calculating returns to key participants

Case study: Calculating accretion/dilution and the effect of hybrids on cost of capital

Merger modelling case study ■ Completing a merger model ■ Getting to DCF valuation for the combined

business ■ Combined WACC ■ Valuing operating synergies ■ Valuing financing synergies ■ Accretion/dilution analysis vs wealth creation ■ Sense-checking the output and adjusting the

capital structureModelling – bringing it all together: participants complete a complex merger model for an acquisition of the target business incorporating synergy analysis and varying capital structure. The transaction is analysed on an accretion/dilution analysis and a wealth creation/return on capital analysis

At the end of this session participants will have a working acquisition model incorporating a variety of different forms of transaction analysis

Course conclusion: best practice in transaction analysis ■ Participants will have improved their un-

derstanding of and have had experience of modelling mergers and acquisitions from first principles

■ Simple and clear reference Excel models - providing participants with a platform for future internal modelling efforts and aiding decision making

■ Participants who, at the end of the course, understand the drivers on transactions and how transactions can be modified to suit the various parties

Days 4 & 5Leverage Overview ■ Background to the LBO market ■ Introductory theory - The effect of leverage

on firm value Valuing the target ■ Sourcing information – Historic and forecast

data ■ Analysing equity research

• Key attributes of broker analysis • Pluses and minuses of equity research

■ Building a DCF valuation using equity re-search

■ Modelling the stand alone valuation



Corporate Finance Modelling MasterclassContinued

BOOK NOW

Course Content

• DCF valuation• Use of multiples in valuation (EV/EBIT,

EV/EBITDA)Case Study I: Participants model the stand alone valuation of the target using historic data and equity research

LBO Modelling Overview ■ Key elements of an LBO model

• Comparing and contrasting DCF and LBO models

• Sources and uses of funds• Key drivers in an LBO model

■ From stand alone valuation to LBO analy-sis

Case Study II: Participants use the stand alone valuation of the target to complete an LBO model

Assessing debt capacity for LBO financing ■ Financial interdependencies ■ Financing growth ■ Sustainable debt ■ Target debt capacity assumed in a WACC

calculation, debt capacity and interest cover

■ Debt capacity in LBOs ■ Debt capacity multiples in practice and

credit analysisCase Study III: Modelling the debt capacity of the target using multiple and credit analysis

Capital providers and their typical characteristics ■ Institutional and management equity ■ Traditional/new lenders ■ Senior tranche profiles

• A, B, C, RCF ■ Subordinated tranche profiles

• Second lien• Mezzanine (with/without warrants)• PIK• High yield bonds

■ More complex issues – warrants and op-tions

■ Typical LBO transaction sensitivity analy-sis, management, base and payout cases

Case Study IV: Modelling a more complex capital structure with various scenarios calculating exit value and IRR for each of

the capital providers

Assessing value creation in LBO transactions – APV analysis ■ Key components of an APV valuation

• Unlevered value• Value of the tax shield• Direct and indirect cost of leverage

■ APV valuation and DCF valuation ■ APV valuation in a steady state ■ Calculating AP in a steady growth environ-

ment ■ Incorporating APV analysis in an LBO trans-

action analysisCase Study V: Where has value been created, modelling APV analysis for an LBO transaction



Business Case ModellingDate: 17-18 May 2018, 29-30 Nov 2018

Location: London Standard Price: £1,300 + VAT Membership Price: £1,040 + VAT

BOOK NOW

Course Overview

Business Case Modelling will allow users to improve the reliability, quality and construction of their Excel models. Financial modelling demands a logical consistent approach and this workshop builds a business case model through a series of practical stages.

Upon completion, attendees will have a comprehensive understanding of advanced modelling, as well as how each technique can practically be applied through the use of Excel.

Course Objectives:On completion of this highly practical, hands-on training course, attendees will: ■ Be able to build a financial model from a blank sheet ■ Be able to design models which minimise errors ■ Be able to write models which can be maintained and augmented in the future

Be able to develop models with advanced techniques such as sensitivity analyses Workshop Structure:The workshop starts with a discussion of modelling techniques and methods. Each session reviews the next stage of the model in terms of the financial theory, modelling techniques and potential difficulties and delegates build the model in stages.

This is an intensive workshop and delegates will be spending the majority of the time on practical model building tasks. With the help of the Course Director and through a proven step-by-step approach, delegates will leave this intensive two-day workshop with the confidence and ability to apply advanced modelling techniques in Excel effectively.

Workshop Methodology:This programme will be delivered through a practical and interactive case study and worked examples, demonstrating how and why each technique is used. Emphasis is placed on the delegates gaining practical, hands-on experience of the design and construction of financial models in Excel. Attendees will also benefit from formal lectures, demonstrations and group discussions. Comprehensive product notes and example models will be provided for future reference.

Pre-requisite:Attendees need basic Excel skills to be able to participate fully in the modelling workshops. For example: ■ Opening and closing Excel files ■ Excel screen menu and standard ribbon menus ■ Moving around a worksheet and between different worksheets in a file ■ Creating files ■ Deleting files and individual sheets ■ Changing column width and row height ■ Entering simple formulas ■ Chart wizard ■ Entering labels ■ Cell references ■ Centering titles and merging cells ■ Simple cell and number formatting ■ Changing font sizes and colours ■ Copying, cutting and pasting cell contents ■ Previewing worksheets ■ Printing documents and ranges

Basic Excel functions and the ability to insert functions: ■ Basic Excel formulas – SUM, SUMIF, MAX, MIN ■ Basic financial functions - NPV, IRR, PMT ■ Logic functions - IF, AND, OR

http://redcliffetraining.com/training/financial-modelling/business-case-modelling-training-course/

http://redcliffetraining.co.uk/training/financial-modelling/business-case-modelling-training-course/


Business Case ModellingContinued

BOOK NOW

Course Content

Modelling Style ■ Introduction ■ Modelling style ■ Systematic Design Method ■ Case study outline ■ Required inputs and outcomes ■ Risk factors ■ Model planning

Review - Examples of poor modelling style

Best Practice Modelling ■ Best financial modelling practice ■ Importance of flexibility in the model ■ Logic flow within the model ■ Separation of inputs, calculations and outputs ■ Use of flags to control timing factors ■ Use of switches to allow option selection ■ Keeping control of versions ■ Use of corkscrews ■ Making the model robust ■ Common mistakes ■ Demonstrations of all of the above

Revenue and Costs ■ Operational revenue ■ Volume drivers ■ Flags to control timings of changes ■ Consistent coding techniques to enable flexi-

bility ■ Fixed and variable cost ■ Real and nominal considerations ■ Dealing with inflation

Exercise – build a simple cash flow model with revenues, fixed and variable costs, flags and switches

Financial Structure ■ Capital structure ■ Debt and equity funding ■ Weighted average cost of capital (WACC) ■ Fixed asset schedule ■ Depreciation calculations ■ Debt amortisation calculations ■ Dealing with circular references

Exercise – add a capital structure to the previous model, with debt and equity injections, interest costs, debt amortisation and constrained dividend payments

Adding Income Statement & Balance Sheet ■ Cash flow schedule ■ Adding a basic income statement (profit and

loss account) ■ Basic balance sheet ■ Integrity checks

Exercise – add a simple income statement

and balance sheet to the previous model

Returns ■ Accounting returns ■ Adding a terminal value ■ Project ratios – DSCR, LLCR ■ Discounted cash flow measures: NPV, IRR,

XNPV, XIRR ■ Comparing projects to assess most attractive

choiceExercise – add accounting returns, project ratios and discounted cash flow measures to the previous model

Sensitivity Analysis ■ Purpose of sensitivity analysis ■ Sensitivity analysis:

• Goal seek• Watch window• Data tables• Scenario manager

Exercise – add sensitivity analyses to the previous model

Executive Summary and Audit ■ Model checks & robustness ■ Basic audit techniques ■ Executive summary ■ Charts ■ Shortcomings of Excel models

Exercise – add an executive summary and charts to the previous model

Workshop Summary ■ Workshop summary ■ Key points ■ Future planning ■ Workshop actions

http://redcliffetraining.com/training/financial-modelling/business-case-modelling-training-course/

http://redcliffetraining.co.uk/training/financial-modelling/business-case-modelling-training-course/


Course Content

Modelling for RestructuringDate: 24-26 Sep 2018


BOOK NOW

Course Overview

Day one covers the main divestiture options available to a firm as a going concern. We focus on private market sale, Initial Public Offering (IPO), spin-off, split-off and equity carve-out. The motives, pros and cons of each structure are explained in detail in light of precedent transactions. We also discuss financial impact including balance sheet deconsolidation and EPS accretion (dilution). Spreadsheet work and real divestiture cases are used throughout the session. Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse divestiture transactions:

Building up from partially-complete models on real case scenarios Running scenarios, iterating and optimising Day two and three focuses on modelling restructuring for stressed and distressed companies. First, we analyse stressed corporate from a credit analysis perspective and model the debt payment and key credit ratios. We then look at gone-concern scenarios and review distressed companies. We explore and model the steps facing distressed corporates, including debt restructuring packages, in-court and out-of-court settlements and liquidation. We look at the perspective of distressed corporates, debt holders and creditors

At the end of the training, the participants will be able to: ■ Explain the differences between a stressed and a distressed company ■ Understand the valuation of a distressed company ■ Model the various options for the debt holders and creditors of a distressed company ■ Model the pecking order of debt repayment in a liquidation

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

DAY ONE

Introduction ■ Why do corporates divest or restructure their

assets? ■ Review of key considerations

• Strategic; • Liquidity; • Valuation; • Tax; • Regulatory and anti-competition;

■ Promoted by management, sometimes pushed for by shareholders

■ Types of divestitures • Private sale; • Initial Public Offering (IPO); • Spin-off/split-up; • Split-off; • Carve-out.

■ Financial analysis performed • Structural impact; • Balance sheet deconsolidation; • Earnings Per Share (EPS) accretion (dilu-

tion) and relative P/Es.

Private Market Sale ■ Structural considerations

• Pre-deal and post deal structures ■ Balance sheet deconsolidation ■ Tax impact of deconsolidation ■ EPS accretion (dilution) ■ Reinvesting the sales proceeds

Case study I – T-Mobile USA divestiture to AT&T

Subsidiary IPO ■ Minority vs. majority stake IPO ■ Size of the offering ■ Cost of listing and disclosure requirements ■ Trading multiples as main valuation benchmark ■ IPO discount pricing

Case study II – Citigroup listing of Primerica

Spin-Off & Split-Up ■ Definition, advantages & disadvantages ■ Existing shareholders receive a new share in

spun-off entity ■ Adjustment of capital structure prior to spin-off ■ Best executed with traded stock for valuation

http://redcliffetraining.com/training/corporate-restructuring-training-courses/modelling-for-restructuring/

http://redcliffetraining.co.uk/training/corporate-restructuring-training-courses/modelling-restructuring-2-day-programme/


Modelling for RestructuringContinued...

BOOK NOW

Course Content

purposes ■ Ownership structure impact ■ Balance sheet impact - treatment as divi-

dend-in-kind ■ EPS accretion (dilution) ■ Split-up similar to spin-off except old parent

dissolved

Case study III – ITT three-way spin-off in Exelis, Xylem and “old” ITT

Split-Off ■ Definition, advantages & disadvantages

• Choice between keeping shares in parent company or swapping parent company shares for subsidiary shares

■ Different treatments in over vs. under sub-scription scenarios

■ Split-off structure impact ■ Balance sheet impact treatment as own

shares repurchased ■ EPS accretion (dilution)

Case study IV – Kraft split-off of post cereals business Carve-Out ■ Definition, advantages & disadvantages

• Usually initial step of a two-step spin-off and split-off

• IPO of subsidiary shares (primary/second-ary shares)

■ Financial structures typically adjusted prior to the offering

■ Carve-out structure impact ■ Balance sheet impact treatment and

non-controlling interests ■ EPS accretion (dilution)

Case study V – Mead Johnson separation from Bristol-Myers Squibb as a two-step process: equity carve-out followed by split-off Conclusion ■ Review of all strategic alternatives, struc-

tures, balance sheet and EPS impacts

DAY TWO ■

STRESSED COMPANIES This module focuses on the analysis of companies that are solvent, but might become distressed should trading or financing circumstances deteriorate. We focus on

operating cash flow dynamics (e.g. cash conversion), capital structure issues (e.g. understanding structural issues and assessing refinancing risk) and valuation implications.

Introduction ■ Definition and review of stressed companies ■ Introduction to Dominos Pizza stressed situa-

tion Capital structure analysis ■ Using credit ratios to assess credit risk (e.g.

debt / EBITDA, EBITDA / interest) ■ Understanding structural issues

• Cash flow upstreaming issues and structural subordiantion issue

• Intercompany debt guarantees, multiple bor-rowers with joint & several liability, intercom-pany loans, etc.

■ Assessing refinancing risk ■ Market data (credit “spread” to measure credit

risk, bond prices & bond yields, CDS and credit indices), sources and reliability of data

Financing issues ■ Different debt products and which companies

realistically have access to them and what creditors look for in re-financing / new financ-ing

■ Debt terms & conditions including credit ratio covenants and the potential to trigger early debt repayment

Case study I – Dominos Pizza – detailled modelling and full credit analysis

DISTRESSED COMPANIES Objective This module focuses on the analysis of companies that have become distressed. We focus on reviewing the capital structures and model different alternatives, including liquidation and restruturing the debt package taking into acccunt the perspectives of the different equity and debt holders. Insolvency and Valuation ■ Balance sheet involvency ■ Cash flow insolvency ■ Link between Entreprise Value and Equity Value

• Equity value is zero and debt trades below book values


http://redcliffetraining.co.uk/training/corporate-restructuring-training-courses/modelling-restructuring-2-day-programme/


Modelling for RestructuringContinued...

BOOK NOW

Course Content

Subordination ■ Secured vs. unsecured ■ Contractual ■ Structural ■ Guarantees

Strategic Options ■ Raising capital ■ Debt restructuring (out-of-courts) ■ Debt restructuring (in-court) ■ Asset sales ■ Sell the business ■ Liquidation

Valuation Methodologies ■ Liquidation vs. going concern ■ Liquidation value

• Recovery rate ■ Going concern

• EBITDA multiples

Valuation issues ■ Limited time for due diligence ■ Usefulness of historical record as a proxy for

the future ■ Management issues

DAY THREE

Recovery Values ■ Asset liquidation value usually estimated as a

% of book value ■ Most liquid assets (cash and marketable se-

curities): 100% recovery rate ■ For most assets only a fraction of book value

recoverable ■ Liquidation fees

Case Study II: Modelling of different recovery values of an industrial company

Priority Ranking ■ Contractual subordination

• Senior, subordinated, preferred and equity ■ Security ■ Structural subordination

• Borrowing entity • Maturity • Guarantees

Distressed Companies – Financial Modelling ■ Workout of Schefenacker, a German auto-parts

manufactuer ■ Valuation of companies under different options

• Going concern, liquidation and restructuring ■ Modelling of the debt under restructuring sce-

narios • Debt forgiveness, payment extensions,

debt-equity swaps

Case study III – Detailed modelling of Schefenacker workout



Course Content

Modelling for Stressed and Distressed CompaniesDate: 25-26 Sep 2018


BOOK NOW

Course Overview

This course focuses on modelling restructuring for stressed and distressed companies.

First, we analyse stressed corporate from a credit analysis perspective and model the debt payment and key credit ratios. We then look at gone-concern scenarios and review distressed companies. We explore and model the steps facing distressed corporates, including debt restructuring packages, in-court and out-of-court settlements and liquidation. We look at the perspective of distressed corporates, debt holders and creditors.

At the end of the training, the participants will be able to: ■ Explain the differences between a stressed and a distressed company ■ Understand the valuation of a distressed company ■ Model the various options for the debt holders and creditors of a distressed company ■ Model the pecking order of debt repayment in a liquidation

DAY ONE

STRESSED COMPANIES

This module focuses on the analysis of companies that are solvent, but might become distressed should trading or financing circumstances deteriorate. We focus on operating cash flow dynamics (e.g. cash conversion), capital structure issues (e.g. understanding structural issues and assessing refinancing risk) and valuation implications.

Introduction ■ Definition and review of stressed companies ■ Introduction to Dominos Pizza stressed situ-

ation

Capital structure analysis ■ Using credit ratios to assess credit risk (e.g.

debt / EBITDA, EBITDA / interest) ■ Understanding structural issues

• Cash flow upstreaming issues and struc-tural subordiantion issue

• Intercompany debt guarantees, multiple borrowers with joint & several liability, intercompany loans, etc.

■ Assessing refinancing risk ■ Market data (credit “spread” to measure

credit risk, bond prices & bond yields, CDS and credit indices), sources and reliability of data

Financing issues ■ Different debt products and which compa-

nies realistically have access to them and what creditors look for in re-financing / new financing

■ Debt terms & conditions including credit ratio covenants and the potential to trigger early debt repayment

Case study I – Dominos Pizza – detailled modelling and full credit analysis

DISTRESSED COMPANIES

ObjectiveThis module focuses on the analysis of companies that have become distressed. We focus on reviewing the capital structures and model different alternatives, including liquidation and restruturing the debt package taking into acccunt the perspectives of the different equity and debt holders.

Insolvency and Valuation ■ Balance sheet involvency ■ Cash flow insolvency ■ Link between Entreprise Value and Equity

Value• Equity value is zero and debt trades below

book values

Subordination ■ Secured vs. unsecured ■ Contractual ■ Structural ■ Guarantees

http://redcliffetraining.com/training/corporate-finance-training-courses/modelling-for-distressed-companies/


Modelling for Stressed and Distressed CompaniesContinued...

BOOK NOW

Course Overview

Strategic Options ■ Raising capital ■ Debt restructuring (out-of-courts) ■ Debt restructuring (in-court) ■ Asset sales ■ Sell the business ■ Liquidation

Valuation Methodologies ■ Liquidation vs. going concern ■ Liquidation value

• Recovery rate ■ Going concern

• EBITDA multiples

Valuation issues ■ Limited time for due diligence ■ Usefulness of historical record as a proxy

for the future ■ Management issues

DAY TWO

Recovery Values ■ Asset liquidation value usually estimated

as a % of book value ■ Most liquid assets (cash and marketable

securities): 100% recovery rate ■ For most assets only a fraction of book

value recoverable ■ Liquidation fees

Case Study II: Modelling of different recovery values of an industrial company

Priority Ranking ■ Contractual subordination

• Senior, subordinated, preferred and equity

■ Security ■ Structural subordination

• Borrowing entity• Maturity• Guarantees

Distressed Companies – Financial Modelling ■ Workout of Schefenacker, a German au-

to-parts manufactuer ■ Valuation of companies under different

options• Going concern, liquidation and restructuring

■ Modelling of the debt under restructuring sce-narios• Debt forgiveness, payment extensions,

debt-equity swaps

Case study III – Detailed modelling of Schefenacker workout

http://redcliffetraining.com/training/corporate-finance-training-courses/modelling-for-distressed-companies/


Course Content

Modelling for DisposalsDate: 24 Sep 2018

Location: London Standard Price: £695 + VAT Membership Price: £556 + VAT

BOOK NOW

Course Overview

This session covers the main divestiture options available to a firm as a going concern.

We focus on private market sale, Initial Public Offering (IPO), spin-off, split-off and equity carve-out. The motives, pros and cons of each structure are explained in detail in light of precedent transactions. We also discuss financial impact including balance sheet deconsolidation and EPS accretion (dilution). Spreadsheet work and real divestiture cases are used throughout the session.

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse divestiture transactions:

■ Building up from partially-complete models on real case scenarios ■ Running scenarios, iterating and optimising

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

Introduction ■ Why do corporates divest or restructure

their assets? ■ Review of key considerations

• Strategic;• Liquidity;• Valuation;• Tax;• Regulatory and anti-competition;

■ Promoted by management, sometimes pushed for by shareholders

■ Types of divestitures• Private sale;• Initial Public Offering (IPO);• Spin-off/split-up;• Split-off;• Carve-out.

■ Financial analysis performed• Structural impact;• Balance sheet deconsolidation;• Earnings Per Share (EPS) accretion (dilu-

tion) and relative P/Es.

Private Market Sale ■ Structural considerations

• Pre-deal and post deal structures ■ Balance sheet deconsolidation ■ Tax impact of deconsolidation ■ EPS accretion (dilution) ■ Reinvesting the sales proceeds

Case study I – T-Mobile USA divestiture to AT&T

Subsidiary IPO

■ Minority vs. majority stake IPO ■ Size of the offering ■ Cost of listing and disclosure requirements ■ Trading multiples as main valuation bench-

mark ■ IPO discount pricing

Case study II – Citigroup listing of Primerica

Spin-Off & Split-Up ■ Definition, advantages & disadvantages

• Existing shareholders receive a new share in spun-off entity

■ Adjustment of capital structure prior to spin-off

■ Best executed with traded stock for valua-tion purposes

■ Ownership structure impact ■ Balance sheet impact - treatment as divi-

dend-in-kind ■ EPS accretion (dilution) ■ Split-up similar to spin-off except old parent

dissolved

Case study III – ITT three-way spin-off in Exelis, Xylem and “old” ITT

Split-Off ■ Definition, advantages & disadvantages

• Choice between keeping shares in parent company or swapping parent company shares for subsidiary shares

■ Different treatments in over vs. under sub-scription scenarios

http://redcliffetraining.com/training/corporate-finance-training-courses/modelling-for-disposals/


Modelling for DisposalsContinued...

BOOK NOW

Course Content

■ Split-off structure impact ■ Balance sheet impact treatment as own

shares repurchased ■ EPS accretion (dilution)

Case study IV – Kraft split-off of post cereals business

Carve-Out ■ Definition, advantages & disadvantages

• Usually initial step of a two-step spin-off and split-off

• IPO of subsidiary shares (primary/sec-ondary shares)

■ Financial structures typically adjusted prior to the offering

■ Carve-out structure impact ■ Balance sheet impact treatment and

non-controlling interests ■ EPS accretion (dilution)

Case study V – Mead Johnson separation from Bristol-Myers Squibb as a two-step process: equity carve-out followed by split-off

Conclusion Review of all strategic alternatives, structures, balance sheet and EPS impact to the course to facilitate modelling work

http://redcliffetraining.com/training/corporate-finance-training-courses/modelling-for-disposals/


Course Content



BOOK NOW

Course Overview


Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-ClassDate: 25-29 Jun 2018, 12-16 Nov 2018


BOOK NOW

Course Overview

The programme will review the impact of the draft ECB guidance on leveraged transactions.

This programme provides participants with a comprehensive view of private equity, particularly the various types of buy-outs (e.g. LBOs, MBOS). The programme takes participants through all the major stages of the deal; from entry, through the operational phase to exit (liquidity events). In doing this the course provides insight into how the PE firm can add value to the process at each of the three major stages. To do this it approaches PE from the respective perspective of all the main protagonists; Private equity professionals, lenders and other providers of debt financing; the various professional advisers (lawyers, accountants in due diligence or audit), corporate finance advisors and management teams looking to enter or exit the market. It will also appeal to investors who may wish to invest directly (co-invest) or indirectly (via funds) in different parts of the debt or equity capital structure, such as pension funds, insurance companies, private family offices and corporates who are trying to understand the radically different business model of their PE competitors

Whilst simple in theory private equity, the highly competitive nature of the PE market means that adding value can no longer be achieved by leverage and reliance on rising markets. The course covers the three key stages of PE value creation. Stage 1; the acquisition, where it is vital to structure the transaction in the optimal fashion in terms of both the Offer to minimize risk. Disastrous mistakes can be made ab initio by failing to understand the main risk areas of the equity bridge (i.e. the value traps from enterprise value to equity value) or in the completion method (e.g. locked box rather than completion accounts). Developing the optimal capital structure is a critical as it is essential to use both the correct level of debt for and the most appropriate type of debt that will allow the company to achieve its business plan (e.g. organic growth or buy and build).

The second stage requires the PE firm to add value during the operational phase and here there is much the PE firm can do in terms focusing on operation improvements. These do not occur in a vacuum and require the best management team. Top quartile PE firms have large in-house teams to assist them in the process but smaller firms can achieve the same results through different “operating partner” models. In the current seller friendly environment, deal origination is another key point of differentiation between top quartile teams and the course reviews various ways of approaching this issue.

The third and final stage relates to liquidity events however PEs have the luxury in the current market of opting for soft as well as hard exits to generate value for LPs.

The programme adopts a pan-European approach to the topic but the presenter has experience of PE in other jurisdictions including, USA, Asia Pacific and Africa. Reference will be made to current trends and data in the markets across Europe.

Participants will be provided with numerous case studies to reinforce the various aspects and will also be provided with an LBO model which will be used to structure a transaction. Post the course participants will receive a number of other PE related models (e.g. how to calculate warrants and ratchets) as well as current review of debt trends in the debt market.


https://redcliffetraining.com/training/financial-modelling-courses/advanced-lbo-and-private-equity-masterclass/


Course Content



BOOK NOW

Course Overview


Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-Class

Continued BOOK NOW

Course Content

Day 1

Introduction to Private Equity: The PE value creation model; PE fund structuresIntroduction & background ■ Overview of the PE market

• Venture capital• PE / leveraged deals

■ The three stages of the deal• Entry, operations & exit

■ The traditional PE value creation model – the 3 key value drivers

■ Techniques for enhancing returns• Capital structure’s impact on value• Using soft exits recaps / refinancings • Equity bridges• Leveraging the fund

Structuring issues & structuring parameters ■ Structuring issues

• Taking security / collateral generally• Security contrasted: UK vs Europe vs

USA• Financial assistance • Ranking & priority of senior vs junior

debt & pari passu loan/bond structures• Tax issues - group tax relief & thin cap• Squeeze-outs

■ Spectrum of financing instruments in LBOs - overview

■ Structuring parameters - creating an ap-propriate financial structure (overview)• Percentage senior, junior and equity in

debt capital structure• EBITDA multiples• Target returns for Private Equity & mez-

zanine funds ■ Deriving the funding structure

• Funding uses • Funding sources

Structure and key terms and trends for Private Equity funds ■ Review of typical (Luxco) fund structure ■ Key terms & conditions ■ Investment period (how long) ■ Preferred return (rate, calculation) ■ Carry (European vs US approach) ■ How Private Equity fund structures optimise

value ■ Hot topics for LPs & GPs

Generating and originating deal flow ■ Why proprietary origination matters ■ Deal sourcing strategies ■ What makes a good originator ■ What motivates intermediaries ■ What motivates target’s / sellers ■ How the “right type” of specialisation

can boost returns ■ Three ways to use networks ■ Identifying “exit signals” from various

sources ■ Why & how social media matters

Case Study: Calculating the entry and exit value, the funding sources, the basic approach to deriving the equity split between PE and management on entry and exit and introduction to estimating the correct capital structure

The Acquisition: adding value & reducing risk at entry

The acquisition - offer structure ■ Offer structure – cash free, debt free with

normalised working capital/net asset value etc

■ Risk matrix - analysis of the five key value drivers / areas for due diligence • Cash & trapped cash• Debt – what’s included?• Working capital (key to the deal?)• Capex• EBITDA (the good news & bad) • Establishing the run rate

■ Value matrix – techniques for mitigating the risks and identifying value

■ SPA structuring - Locked box vs Comple-tion accounts• Pros & cons of each• How it can affect value• Risk in Locked box

Day 2

Case Study: Identifying problematic items in reconciling equity value to enterprise value and the correct approach to calculating the correct level of working capital

Adding value during the operational stage

Selecting the right investment - the 5 critical issues to sponsors ■ Portfolio fit ■ The business model ■ Management - what PEs approach ■ Approach to generating value/returns ■ Exits – hard vs. soft ■ How to avoid the value trap

Case Study: Calculate the exit value and discuss how structuring the PE equity can affect the returns of management

Adding value: operating partner models




Course Content



BOOK NOW

Course Overview


Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-Class

Continued BOOK NOW

Course Content

■ The new value-creation model – 4 key areas ■ Operational improvements – 6 aspects ■ 7 Methods PE can add value via teaming up

with executives ■ The operating partner model (3 approaches) ■ The operating partner model in practice –

“typical” role

Liquidity events ■ Hard exits vs soft exits ■ Exit strategies – using dual or triple track to

enhance value ■ IPOs

• The key ingredients for IPO• What about the management – problem

areas ■ Sale of equity – partial vs complete sale

• Problem areas – trade vs secondary PE deals

■ Soft exits – a useful way of enhancing re-turns• Refinancings & recaps• Other ways of extracting value• Management and other fees

Case Study: Discuss the pros and cons of a dual/triple track exit strategy and the key issues to both the PE and management

Negotiating the deal with management team:

Key issues for Sponsors ■ Structuring the equity

• Structure - loans, preference shares• Typical returns

■ Structuring the payment waterfall• Isses for management• Differences in primary and secondary

deals ■ Equity ratchets

• Rationale, structure • Pros and cons of positive vs. negative,

stepped vs. linear

Key issues for Management ■ Multifaceted role and duties of management

• Issues vis-à-vis role as director, employ-ee, shareholder, warrantor

■ Key documents & terms• Shareholders’ agreement vs articles/ stat-

ues (pros & cons) ■ Critical issues in the investment agreement

• Good vs. bad leaver• Management warranties• Equity – valuation issues pre exit (why

“fair value” is dangerous)• Transfer issues – drag, tag-along rights

■ Critical issues in the service agreement• Restraints• Termination

Financing options for PEs

Introduction & overview of the funding spectrum ■ The spectrum of financing options for borrow-

ers ■ Review of typical debt structures in the mar-

ket for all deals sizes ■ Senior only ■ Senior/ junior structures ■ Pari loan bond structures ■ Loans vs Bonds – whats the difference (main-

tenance vs incurrence covenants)

Senior loans: key facilities & issues ■ “Typical” terms ■ The main facilities ■ RCFs – why they matter & typical pitfalls ■ Capex facilities ■ Margin ratchets

Mezzanine key terms ■ Is there still a market for mezzanine ■ Pros and cons ■ Use an application ■ Rationale of warranted vs. warrant-less ■ “Typical” terms

Unitranche / direct lending financing ■ Review of the various market structures ■ “Typical” terms ■ Pros and cons ■ Use and application – where they work and

where they don’t

Second lien loans ■ “Typical” terms ■ Pros and cons ■ Use and application

PIK loans (making a comeback) ■ “Typical” terms ■ Why has the PIK market spring to life ■ Pros and cons for sponsors ■ Use and application

Day 3

High Yield Notes ■ Spectrum of instruments ■ Pros & cons of high yield and why they appeal

to borrowers ■ Use and application ■ Loans vs bonds compared

• Loans’ maintenance covenants vs Bonds’ Incurrence covenants

Case Study: Reviewing a capital structure and how different instruments can be used to optimise the capital structure, provide more head room and handle capex




Advanced Private Equity & Leverage Buy-

Continued... BOOK NOW

Course Content

Outs: A 5 day Masterclass

Negotiating the optimum debt package - Lender’s vs Borrowers

Negoiating the debt package - The lender’s approach ■ The Lender’s approach to credit decision

• measuring debt capacity• security over assets• exit routes

■ Different types of lenders: Banks vs Alter-native lenders• Whats the difference• How and where it matters

■ Overview of loan documentation and im-pact on deal• Loan as a radar system• Typical structure• Key parties (obligors, borrowers and

guarantors)

Negoiating the debt package - The borrower’s approach ■ The four deal scenarios and the role of due

diligence ■ The key financial ratios / covenants

• Cash flow cover• Leverage• Interest cover• Capex

■ Selecting the appropriate covenant for the deal; borrowers v lenders• Do covenants really matter - if so how,

when & where ■ Step 1: How to identify the borrower’s

objective ■ Step 2: Identifying the key requirements

for the borrower ■ Step 3: Deciding on which type of debt &

lender is most approriate• Loans v bonds• When and where to use junior debt

■ Step 4: Strategies for negotiating with lenders

■ Step 5: Getting what you paid for ■ Inter-creditor issues – review of key issues

Case Study: Calculate the exit value and discuss how structuring the PE equity can affect the returns of management




Course Content



BOOK NOW

Course Overview


Course Content

Bank ValuationDate: 18-19 June 2018, 25-26 Oct 2018


BOOK NOW

Course Objectives

This training allows participants to build a structured approach to the analysis and valuation of banks. Specifically, through a mix of lecture, case studies and Excel modelling of Barclays, the workshop will equip participants to:

Review the accounting and valuation of banks’ financial statements including the loan book, financial instruments and deriva-tives used for hedging purposes;

Further advance participants’ understanding of the latest Basel III developments including MREL, counterparty credit risk and the latest leverage and liquidity ratios (LCR and NSFR);

Understanding the key metrics to value a bank, including performing all the steps of a Dividend Discount Model (DDM) and Multiples Analysis using Excel.

Course Overview

Day 1

Session 1

The aim of this session is to provide participants with an understanding of the financial statements of a bank. The focus is on the banking book and financial instruments. The reporting and valuation of derivatives is also discussed. ■ Banks’ financial statements overview ■ Accounting for loans

• Non-performing loans • Understanding impairments vs. write-off • Incurred losses (IAS 39) has been re-

placed by expected losses (IFRS 9) ■ Accounting for financial instruments

• Lastest IFRS 9 implications: Amortised cost, FVTPL and FVTOCI

• Level 1, 2 and 3 valuations • Impairments of financial instruments

■ Accounting for derivatives • Hedge accounting: fair value, cash flow

and net investment • Netting derivative assets and liabilities

Case study: Barclays Financial Statements

Session 2 Fundamentals of Regulatory Capital Throughout this module, participants review the current regulatory requirements, in particular Tier I and Tier II capital ratios and understand detailed computations. ■ Overview of regulatory framework ■ Overview of Basel I, II and III and latest

Basel IV updates ■ Overview of calculating available and re-

quired capital• Common Equity Tier 1 (CET1), Tier 1,

Tier 2 and Total capital

• Key reconciliation items from IFRS Book Equity to CET1: minority interests, deferred tax, changes to investment portfolio, etc.

■ Overview of calculating risk weighted assets (RWAs): credit risk RWA, counterparty risk, market risk and operating risk with the latest Basel IV requirements

- Standardised floor of 72.5% based on standardized approach - Simultaneous reduction in standardised risk weights for low risk mortgage loans ■ Overview of key capital, liquidity and funding

ratios• Tier 1 and total capital ratios• Leverage ratios• Liquidity coverage ratios (LCR) and Net

stable funding ratios (NSFR)

Case study: Barclays Regulatory Ratios Review

Day Two Session 3 Forecasting and Modelling Banks Based on the financial statements and publicly available regulatory information of Barclays, participants forecast its financial performance based on its historical statements. ■ Modelling and forecasting the balance sheet:

deposit or loan-driven? ■ The loan and trading book ■ Funing requirements and mix: deposit vs.

wholesale funding ■ Growth in funds under management ■ Modelling and forecasting the income state-

ment

This training allows participants to build a structured approach to the analysis and valuation of banks. Specifically, through a mix of lecture, case studies and Excel modelling of Barclays, the workshop will equip participants to: ■ Review the accounting and valuation of banks’ financial statements including the loan book,

financial instruments and derivatives used for hedging purposes; ■ Further advance participants’ understanding of the latest Basel III developments including

MREL, counterparty credit risk and the latest leverage and liquidity ratios (LCR and NSFR); ■ Understanding the key metrics to value a bank, including performing all the steps of a Dividend

Discount Model (DDM) and Multiples Analysis using Excel.


http://redcliffetraining.com/training/corporate-finance-training-courses/bank-valuation/


Course Content



BOOK NOW

Course Overview


Bank ValuationContinued

BOOK NOW

Course Content

■ Understanding the income statement drivers ■ Net interest income and margin ■ Non-interest income ■ Forecasting loan impairment through the

credit cycle ■ Operating costs ■ Tax ■ Modelling and forecasting regulatory capital ■ Risk weighted assets ■ Required and available capital under Basel I,

II or III ■ Liquidity requirements and stable funding

requirements ■ Forecasting dividends (payout ratio and/or

minimum capital requirement) ■ Ratio analysis and key performance ratios

Case study: Financial Modelling of Barclays on Excel

Session 4 Bank Valuation Following the forecasting of the bank’s performance, this session focuses on the Dividend Discount Model (“DDM”) and key multiples of Barclays. ■ Free cash flow to equity mode ■ Present value of future dividends ■ Cost of equity for banks ■ Terminal value: review of potential ap-

proaches (key parameters or RoE) ■ Sensitivity analysis ■ Banking trading multiple

• P/BV and adjustment to BV explained• P/E, dividend yield

Case study: DDM and Multiples of Barclays on Excel


http://redcliffetraining.com/training/corporate-finance-training-courses/bank-valuation/


Course Content



BOOK NOW

Course Overview


Course Content

Valuing A BusinessDate: 17 May 2018, 24 Oct 2018

Location: London Standard Price: £625 +VATMembership Price: £500 +VAT

Course Overview

Valuation of a business, whether in the context of investment or M&A, is central to the negotiation of a transaction. Methods of valuation vary and a fundamental difference exists between the accounting and cash-based approaches.

The course covers the topics of the financial ratios used in comparable company valuation, creative accounting, and the cost of capital, forecasting and discounting free cash flow. Exercises include the use of an Excel spreadsheet as input to valuing a business and, accordingly, attendees are requested to bring a laptop to the course.

Valuation Principles ■ Value to whom? ■ Price and intrinsic value ■ The risk / return trade off ■ Strategic risk

The Accounting Approach ■ Accounting measures of performance and

value ■ Problems of the accounting approach

• Are profits relevant?• GAAP vs IFRS

■ Creative accounting • How to find it • Recent examples

Review: Was the near collapse of Quindell inevitable?

Accounting Valuation Metrics ■ Asset and net asset valuations ■ Dividend-based models

• Dividend yield• Dividend discounting

■ The application and drawbacks of dividend models

■ Earnings-based metrics• Price / earnings ratios • P/E strengths and weaknesses • PEG ratios • Enterprise value

Exercise: Valuation of a business using different metrics

Comparable Company Valuation Issues ■ Is the comparability achievable?

• Accounting principles • Averages, medians, outlines • Listed vs private

■ Sustainability of earnings ■ Business model flexibility

Exercise: Project Oxford, using comparable company techniques to value a company for acquisition

Calculating the Cost of Capital ■ Assessing the cost of debt ■ Calculating the cost of equity

• The risk free rate• Equity premium • Beta

■ The weighted average cost of capital • The flaws in the capital asset pricing model • Alternative approaches

Exercise: Calculating the cost of equity and the weighted average cost of capital

The Cash Flow Approach to Valuation ■ The time value of money ■ Calculating the discount rate ■ Forecasting free cash flow

• Calculating FCF• Identifying value drivers

■ Terminal value

Exercise: Discounting free cash flow to arrive at a value per share

Exercise: Project Media. Using an Excel spreadsheet and given assumptions to arrive at a value of a company that is an acquisition target

Exercise: Project Media II. Varying inputs, in particular the debt / equity mix of the acquisition financing, to consider the maximum price that could be paid for the target

BOOK NOW


http://redcliffetraining.co.uk/training/corporate-finance-training-courses/valuing-a-company/

http://redcliffetraining.co.uk/training/corporate-finance-training-courses/valuing-a-company/

http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-a-business/


Course Content



BOOK NOW

Course Overview


Course Content

Valuing Start Up And Pre IPO CompaniesDate: 7-8 Nov 2018

Location: London Standard Price: £1,350+ VAT Membership Price: £1,080 +VAT

BOOK NOW

Course Overview

This advanced valuation and modelling course looks at the valuation approaches to be taken to enable participants to value companies which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the development stage at which the company operates.

The course covers companies at the early growth and start up stage, such as technology, biotechnology and any early funding stage business. The key challenges associated with such companies are discussed and the best valuation approach considered.

The course also covers pre IPO companies at the rapidly growing phase of development which, depending on the geographic location, may cover a wide variety of sectors. As well as discussing some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches such as decisions trees, simulations, scenario analysis and real option valuation. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken. Examples are provided to illustrate each issue. Participants will be required to bring a laptop to the course.

Overview of valuation approaches ■ Intrinsic valuation – traditional cash flow

techniques ■ Relative valuation – multiple based analysis ■ Probabilistic valuation – scenario analysis,

decision trees and simulations ■ Real options valuation – additional value

created through optionality Other valuation issues ■ Assessing risk – the risky risk free rate and

other current valuation issues ■ The economic cycle – incorporating mac-

ro-economic factors into a valuation

Valuing early stage and start-up companies and sectors ■ A life cycle view of start-up companies

• Start-up companies in context ■ Characteristics of young companies and

sectors• The key challenges with start-up compa-

nies• Visibility – a key valuation challenge

■ Valuation issues – intrinsic value• How to value existing assets in a start-up• Cash burn and the effect on existing as-

sets• The future of the business – high growth

& growth phases• Assessing growth rates - the key compo-

nent of value• Adjusting risk for small fast growing busi-

nesses• Discount rates for pure equity financed

businesses• When to calculate terminal value• Reducing the dependence on terminal

value• Value of equity claims

ӹAssessing equity claims in a early stage business

■ Valuation issues – relative valuation• Problems with start-up multiple analysis• Determining the starting point – revenue

multiples vs profitability multiples• Which year? – Determining stability for

multiple calculation and techniques for “normalising” multiples vs the sector

Valuing a start-up or early stage business in practice ■ Main errors made in valuing early stage busi-

nesses • Macro vs micro analysis• Product success and market share• Bottom up approach to a valuation

ӹCapacity capability• Estimating and using different discount

rates ӹThe use of phased discount rates


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-start-up-and-pre-ipo-companies/

http://redcliffetraining.co.uk/training/corporate-finance-training-courses/valuing-start-up-and-pre-ipo-companies/


Course Content



BOOK NOW

Course Overview


Continued

BOOK NOW

Course Content

ӹDiscount rates as maturity approaches • Ensuring consistency in a valuation• Private and public multiples• Option to expand valuation

ӹHow optionality affects valuation

Valuing pre IPO companies ■ A life cycle view of pre IPO rapid growth

companies• The rapid growth company in context

■ Characteristics of growth companies and sectors• How are growth companies different?

■ Valuation issues – intrinsic value• How historic numbers are misleading• How asset life may develop in the high

growth phase• How existing assets differ in a rapid

growth business• Where the bulk of value is created by

a rapid growth company – the growth phase

• Capital intensity and the rapid growth business

• The development of risk during the growth phase

• The stage at which a terminal value should be calculated for a rapid growth business – the path to IPO

■ Value of equity claims• The differing equity claims in a rapid

growth business• Participation by different equity holders

■ Valuation issues – relative valuationPeer groups – private vs public companies• Finding similar growth businesses – differ-

ent sectors?• Risk measures – adapting a multiple analy-

sis for risk ■ Valuing a growth business in practice

• Main errors made in valuing growth busi-nesses

• Dealing with immature markets• Assessing product cycles• Ability to execute – the key driver

■ Valuing the operating assets through the growth phase• How operating asset lives develop in the

high growth phase• Ensuring consistency in a valuation• Reinvestment and growth• Assessing investment requirements – the

returns and reinvestment equation• Completing the valuation – combining re-

turns and risk in a model

Valuing Start Up And Pre IPO Companies


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-start-up-and-pre-ipo-companies/

http://redcliffetraining.co.uk/training/corporate-finance-training-courses/valuing-start-up-and-pre-ipo-companies/


Course Content



BOOK NOW

Course Overview


Course Content

Valuing A Technology CompanyDate: 12 Nov 2018

Location: London Standard Price: £695 + VATMembership Price: £556 + VAT

BOOK NOW

Course Overview

This course is ideal for those who are dealing with technology companies and need to gain an appreciation of their worth.

It focuses on the different techniques that can be deployed in assessing these companies, especially the real options approach which has achieved a wide degree of popularity. The course is also useful to those who are involved in any type of corporate transaction for technology companies from an advisory perspective.

Participants should be familiar with discounted cashflow techniques and have at least a basic understanding of business valuations.

Participants will be required to bring a laptop with a CD-Rom or USB connection to the course.

Defining the Problems ■ Differences between traditional corporate

valuation and technology valuation

■ Handling data problems that emerge with technology companies

■ Lifecycles and corporate cashflows ■ Review of DCF valuation techniques and

applications to technology businesses

■ Valuing early stage development businesses

Applying the DCF Model to Technology Companies ■ Estimating cashflows and expenditure pat-

terns ■ Evaluating the expected growth rate ■ Links to corporate strategic models ■ Combining growth rate with investment

intensity and return on investment

■ Applying the appropriate discount rate and varying the rate over time

■ Evaluating the stable growth stage and cal-culating the terminal value

■ Inherent problems of using the DCF model to value technology companies

Using Multiples in Technology Valuation ■ Importance of using EBITDA if possible, Us-

ing revenue multiples ■ Examining the broad range of possible com-

parisons ■ Using statistical analysis to improve the

multiple comparison ■ Pitfalls in using multiple approach for technol-

ogy companies

Using the Real Options Approach ■ The problems inherent in using the NPV/DCF

approach to valuation

■ Defining real options – patent rights, expan-sion option, abandonment option

■ Why real options are more applicable to tech-nology companies

■ Basics of real option valuation using binomial trees and a lattice approach

■ Financial option pricing (Black Scholes) and the link to real options

■ Management options and the value of strategic flexibility

■ Using real options approach to improve the un-derstanding of technology valuations

What our clients are saying about the course

“Covers price vs value”

“A proactive course - helped challenge traditional methods & point out common

errors”

“Good discussions regarding the implications of difference techniques”


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-a-technology-company-course/

http://redcliffetraining.co.uk/training/financial-modelling/valuing-a-technology-company-course/


Course Content

Project Finance ModellingDate: 11-12 June 2018, 26-27 November 2018


BOOK NOW

Course OverviewThis training will provide participants with the skills and techniques necessary to understand, analyse and model a project finance project. The session includes a detailed project financial model of a European highway E65/E7 in the south-west of France including construction and operational phases and related financing.

By the end of this course, participants will be able to: ■ Understand the key participants and strategic objectives of project finance; ■ Develop good project finance model structure and design; ■ Master the steps to take to build up the model; ■ Develop the key construction and operational assumptions; ■ Understand the financing structure, key debt covenants and required equity returns.

Case Study: The participants will use a French highway project finance model during the two days, based on publicly available information. Participants will be required to bring a laptop to the course.

Introduction to Project Finance ■ Long-term infrastructure, industrial projects

and public services ■ Non-recourse or limited recourse structure

(Special Purpose Vehicles) ■ Public-Private Partnership (PPP) ■ Key parties involved: promoter, constructor,

off-taker, debt finance, equity sponsor, etc. ■ Debt ratios (Debt Service Coverage Ratio,

Fixed Charge Cover, etc.) ■ Sponsor return criteria (unlevered and lev-

ered Internal Rate of Return, payback peri-od, etc)

Role of Project Finance Model ■ Calculate viability of sponsor return and debt

coverage ratios ■ Review of key contruction assumptions ■ Discussion of operational assumptions ■ Review of main financial assumptions and

debt waterfall

Introduction to the A65/E7 Project ■ Construction of a 150 kilometers highway

in south-west of France (1,490 hectares of land)

■ 55-year concession given by the French gov-ernment to A’lienor • Consortium held at 65% by Eiffage and

35% by Sanef

Overall Model Assumpotions ■ Real growth and inflation: revenues, capex

and expenses ■ Construction phase, operation phase with use

of flag periods

Modelling Construction Phase ■ Project cost: €1.2 billion ■ Construction period: 2 years ■ Capex build-up: maintenance and expansion ■ GAAP straight-line depreciation and tax based

on double-declining balance ■ Operational working capital build-up prior to

operational phase ■ Pre-operational capitalised costs ■ Debt capitalised interests ■ Project delay: how could we design the model

to accommodate delays? ■

Modelling Operation Phase - Revenues ■ Sources of revenue: volume and price ■ Capacity build-up during operational phase ■ 5,000 to 9,000 vehicles per day

• Monthly seasonality to be build-up ■ €19.70 per crossing or €0.133 per kilometer ■ Escalating revenues: pitfalls in escalation

factors

Modelling Operational Phase - Expenses ■ Variable costs: labor and energy costs ■ Fixed costs: management and head office,

sales and marketing


https://redcliffetraining.com/training/banking-courses/project-finance-modelling/


Continued... BOOK NOW

Course Content

■ Escalating expenses; real and nominal growth

Modelling Taxes ■ Effective tax rate based on taxable profits

build-up ■ Net operationing losses and deferred tax

assets until full revenue capacity ■ Deferred tax liabilities as difference be-

tween book and tax depreciation Modelling Capital Structures ■ Sources and uses of funding during con-

struction phase • 20% equity financing by project spon-

sor/infrastructure funds/sovereign wealth funds

• Revolving credit facility to finance Oper-ating Working Capital during construc-tion

• Fees on the deal: interest, commitment fees on undrawn amount,

• PIK interest during construction ■ Mapping out a capital structure during the

operational phase • Mix of bank debt and bonds • Base rate and spread • Amortising tranche and cash sweep

■ Estimating and optimising debt capacity ■ Modelling of Revolving Credit Facility (RCF) ■ Linking to other statements and cash flow

available for debt service (CADS) ■ Key ratios/debt covenants: Debt Service

Coverage Ratio (DSCR), Loan Life Coverage Ratio (LLCR), etc

Project Appraisal ■ Investment appraisal crash course ■ How is DCF calculated in a project model? ■ Why do we discount? ■ How is the discount rate determined? ■ How is NPV calculated? ■ Project/unlevered and equity/levered Inter-

nal Rate of Return (IRR) ■ Sensitize IRR and money multiple to obain

desired returns based on key drivers, phas-ing up front capex within the model

Summary ■ Stress-test the model ■ Develop scenarios ■ Participants to compute various changes

based on revised operational and financial data

Project Finance Modelling


https://redcliffetraining.com/training/banking-courses/project-finance-modelling/


Course Content

Basic Financial Modelling in ExcelDate: 14-15 May 2018

Location: London Price: £1,300 + VAT Membership Price: £1,040 + VAT

BOOK NOW

Course Overview

The course is designed to support accountants and analysts working in corporate and SME businesses in creating financial models on a consistent and focussed basis. Some previous use of Excel is assumed, but delegates will not need an advanced knowledge.

Aims

The principal aim of the course is enable participants to prepare logical and easy-to-use financial models in Excel to support transactions, forecasts and planning for ongoing business streams. The course will review best practice in model structures, calculations and logic, and using tools to highlight areas of risk, particularly in sensitivity analysis.

Methodology

The learning methods used are practical, as practice of newly-learned techniques enables a deeper and more effective building of skills. Each section will be covered briefly as a module in a traditional class style, but the real learning experience will be found in the exercises within each module. The trainer will support delegates during the exercises, answering questions and providing one-on-one help where needed. Suggested solutions to each exercise will be provided and discussed, and participants will be encouraged to review their work independently.

Participants will be required to bring a laptop to the course.

Day One

Introduction & Course Objectives

Overall Model Structure & Design ■ Best financial modelling practice ■ Overall structure of the model ■ Logic flow within the model ■ Separation of inputs, calculations and out-

puts ■ Defining desired outputs ■ Setting-up required inputs ■ Use of switches to allow option selection ■ Use of flags to control timing factors ■ Set-up for flexibility ■ Consistency in the model ■ Accommodating multiple options ■ Building assumptions off term sheets or

other external inputs ■ Using the assumptions sheets as a sign-off

document ■ Restricting ranges of inputs and validation

criteria ■ Version control ■ Use of the corkscrew technique ■ Tracking changes

Exercise – creating a cash flow model with an assumptions / input sheet with built-in flexibility

Modelling Techniques for Forecasting ■ Translating assumptions & inputs into a

model forecast ■ Correct matching of units ■ Treatment of fixed and variable costs ■ Modelling pricing & revenue assumptions ■ Use of lookup functions to change expendi-

ture timings ■ Building in sensitivities into the model

https://redcliffetraining.com/training/financial-modelling-courses/excel-financial-modelling-course/


Basic Financial Modelling in ExcelContinued...

BOOK NOW

Course Content

Exercise – add detailed cost calculations, lookup functions and sensitivities into the previous cash flow model

Inflation / Escalation Factors ■ Creating inflation indices ■ Controlling start time of inflationary pattern ■ Applying multiple rates to different cost &

revenue items ■ Varying inflation rates over life of the model ■ Using exponential formulas for other fore-

casting purposes

Exercise – model multiple, variable rates and analyse a separate set of actual rates to compare to forecast

Day Two

Modelling Taxes ■ Differences between P&L and tax treatment

for costs & revenues ■ Allowing for deductibility and non-deducti-

bility ■ Capital allowances vs depreciation ■ Modelling tax losses and their effect ■ Example - review of an example of tax

modelling for an investment project

Exercise – add tax calculations into the previous cash flow model

Dealing with Circular References ■ Circularity and consequences ■ When does circularity most frequently oc-

cur? ■ Solutions to circularity – advantages and

disadvantages of each

Example – demonstrate various methods to overcome circular references

Cash Flow Modelling ■ Principles of discounting of cash flows ■ Setting the discount rate ■ Modelling for:

• Timing of debt and equity funding• Interest costs, capitalised interest• Debt repayments• Debt refinancing• Dividends and other equity returns

■ NPV, IRR and other DCF measures

Exercise: add debt costs, interest payments, repayment profiles and dividends to the previous cash flow model, and discount the cash flows at an appropriate rate

Comparing a Model to Previous Versions of the Model ■ Separate runs and variation of inputs ■ Comparison of actuals to forecast ■ Comparing results of different versions of

same model ■ Reviewing future implications of variances ■ Example – from different versions of a

modeled forecast, calculate variances and review future assumptions

Sensitivity Analysis ■ Stress-testing the model ■ Varying inputs to assess effect on results ■ Use of built-in sensitivity inputs ■ Use of goal seek & solver ■ Version control to allow comparison of out-

puts ■ Use of Excel tools to support sensitivity

analysis:• data tables• scenario manager• watch window function• scenario tables

Exercise – from a given model of cash flows, P&L and balance sheet, calculate effect of varying inputs to a given degree, and stress-test model to break-even.

Wrap-Up ■ Overall review ■ Key points to re-iterate ■ Brief introduction to further exercises &

reading ■ Final questions and issues to discuss

https://redcliffetraining.com/training/financial-modelling-courses/excel-financial-modelling-course/


Course Content



BOOK NOW

Course Overview

To book this course or find out more, please click the “Enquire Now” button

Course Content

Advanced M&A ModellingIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

This course follows on from the M&A modelling course and develops some of the principles previously covered but moves beyond simple synergy analysis to analyse other options available to an acquirer to extract maximum value post acquisition.

The course looks at more complex M&A transactions post acquisition including different types of disposals, asset sales, carve outs or trade sale/IPO and the process used to determine whether a disposal will enhance the value of an acquired business. Sometimes these disposals will be voluntary and sometimes forced through competition issues.

In each case the participants model the impact of the various types of transaction on a case company and assess the most appropriate transaction for the business. The course then examines the various issues associated with restructuring a business post acquisition as a means to extract value, including when restructuring is the best option and the forms of restructuring that can be considered. Each form of restructuring after an acquisition is again modelled using a case company. This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.

Participants will be led through a comprehensive review of analysis practices, from initial principles through to more advanced techniques that are used in financial modelling.

By the end of this course participants will understand: ■ The decision making process for various types of value extraction post acquisition ■ How to model different types of value maximisation by way of disposal ■ The restructuring process for the capital structure of an acquired business and in which circum-

stances to apply it ■ How to model and assess different restructuring options

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse corporate transactions: ■ Building up from partially-complete models ■ Working with integrated financial statements ■ Running scenarios, iterating and optimising

Each participant should bring a laptop with USB port to the course to facilitate modelling work

Refresher: Accounting for corporate transactions ■ Different types of transaction and how they

are modelled in practice ■ Consolidation accounting under the current

IFRS 3 and IAS 27 ■ Accounting for disposals ■ Partial disposals – creating a NCI ■ Partial disposal – loss of control ■ Recent changes to acquisition accounting

under IFRS

Case study – The participants will model

the initial acquisition transaction that will form the basis for the post acquisition analysis and value the combined business to arrive at a staring valuation Overview of post-acquisition corporate transactions ■ Historic trends in corporate disposals ■ Involuntary disposals vs voluntary disposals ■ Reasons for voluntary disposals ■ Accounting for different types of disposal

• Asset sales• Partial disposal of equity• Full disposal of equity

■ Disposals, spin offs, carve outs and other


http://redcliffetraining.com/training/financial-modelling/adadvanced-ma-modelling/

https://redcliffetraining.com/training/financial-modelling-training-courses/adadvanced-ma-modelling/


Course Content



BOOK NOW

Course Overview


Advanced M&A ModellingContinued

ENQUIRE NOW

Course Content

■ disposal options ■ Restructuring and recapitalisation

Disposal and spin off process ■ Disposal or spin off decision

• Completing the financial analysis ■ Formulation of the restructuring plan

• Relationship between the parent and subsidiary

• Determining the assets and liabilities of the disposal

■ Dealing with shareholders ■ Completing the deal

Financial evaluation of a disposal ■ Estimation of after tax cash flows ■ Determination of the disposal unit’s risk

adjusted discount rate ■ Present value of the disposal related cash

flows ■ Assessing the market value of liabilities ■ Calculating disposal proceeds and value

creation

Modelling asset disposal post- acquisition ■ Asset restructuring and value creation ■ Removing a diversification discount, addi-

tivity in practice ■ Using equity to restructure, share repur-

chases ■ Asset disposals – the decision process and

modelling a transaction

Case study – The participants will model the first approach to value creation post-acquisition transaction by reviewing an operating unit of the acquired business to determine whether to dispose of any of the assets of the unit by way of asset sale to enhance the value of the acquired business. The participants will then analyse the resulting business

Modelling a spin off post- acquisition ■ Trends in spin offs, involuntary spin offs

and defensive spin offs ■ Potential tax issues with spin offs ■ Treatments of warrants and convertible

securities ■ Seller financial assistance ■ Allocation of debt and bond obligations ■ Wealth effect of spins offs in capital mar-

kets

Case study – The participants will review the various subsidiaries of the acquired

business to determine whether to dispose of any of the units by way of spin off to enhance the value of the acquired business. The participants will then model the spin off transaction and analyse the resulting business.

Modelling equity carve outs post- acquisition ■ Background to equity carve out in capital

markets• Characteristics of carve out firms• Use of carve out proceeds• Carve outs vs IPOs• Carve outs vs spin offs

■ Equity carve out or IPO – the decision pro-cess and modelling a transaction

Case study – The participants will review the various subsidiaries of the acquired business to determine whether to dispose of any of the units by way of carve out to enhance the value of the acquired business. The participants will then model the carve out transaction and analyse the resulting business.

Assessing asset restructuring ■ Sum of the parts valuation ■ Assessing restructuring costs and benefits ■ Undertaking a restructuring analysis for a

business• Sum of the parts valuation – multiples• Sum of the parts valuation – free cash

flows• Valuing the effect of cost reduction• Monetising real estate• Share repurchases

■ Other options – voluntary liquidation or bust ups

■ Developing a restructuring plan for disposals

Case study – The participants will complete a series of case studies on various aspects of an asset restructuring. The participants will also analyse and assess the various restructuring options to determine which will create the most value.

Restructuring companies post acquisition ■ Overview of companies that may require re-

structuring post acquisition• Types of business failure• Causes of business failure and options for

dealing with them• Bankruptcy trends• Dealing with financial distress• Framework for recapitalisations


http://redcliffetraining.com/training/financial-modelling/adadvanced-ma-modelling/



COURSE TTILEContinued...

BOOK NOW

Course Content


Advanced M&A ModellingContinued...

ENQUIRE NOW

Course Content

Case study – The participants are introduced to a new transaction between a healthy and distressed company. The participants model the transaction and value the combined business.

Restructuring options post acquisition ■ Out of court workouts and bankruptcy

• Out of court workouts• In court reorganisation• Pre-packaged bankruptcy• Liquidation

■ Reorganisation vs liquidation ■ Reorganisation process – corporate control

and default ■ Accounting treatment

• Troubled debt restructuring• Asset impairment• Fresh start accounting

■ Valuing recapitalisations• Valuing new debt• Valuing equity• Recovery value• Recapitalisation rights and options

Case study – The participants model the various types of distressed company restructuring options and determine which option is preferable. The participants also value different elements of the post- acquisition transactions to assess various recapitalisation options.





Course Content

Project Finance Modelling for Renewable Energy

In-House or via Live Webinar

ENQUIRE NOW

Course Overview

ObjectiveThe course is designed to help analysts to create and use project financial models on a consistent and focussed basis, specifically for the renewable power generation industry.

AimsThe principal aim of the course is enable participants to create, use and analyse a project finance model, specifically for the renewable energy industry. This will be done by reviewing best practice in model structures, and then building up calculations stage-by-stage to create an entire model. We will then use Excel tools to analyse outputs, highlight areas of risk and perform sensitivity analysis.

MethodologyThe learning methods used are practical, as practicing newly-learned techniques builds skills more deeply and more effectively. Each section will be covered briefly as a module in a traditional class style, but the real learning experience will be found in the exercises within each module. Suggested solutions to each stage will be provided and discussed, and participants will be encouraged to review their work independently. Further supporting materials and additional exercises will be available for further post-course learning, with ongoing support from the facilitator.

Practical ExercisesAn entire model will be created from scratch. Starting with basic assumptions and input data, delegates will build a model with financial structures, inflation, cash flow waterfall, balance sheet and P&L, tax and dividends, equity returns and valuations, ratios and cover factors, and sensitivities.

Headlines ■ Learn about using best practice financial modelling in structure and techniques ■ Building flexible models to accommodate change ■ Building funding structures and cash flow waterfalls ■ Integrated modelling with balance sheets and P&L statements ■ Using the outputs of the model – ratios, sensitivity analysis, scenarios ■ Creating and using an entire integrated model for the power generation industry

Participants will require a laptop with a USB port.

Day 1: Creating Models with Inputs & Assumptions Best Practice Modelling ■ Best financial modelling practice ■ Creating flexibility ■ Separation of inputs, calculations and out-

puts ■ Logic flow within the model ■ Use of switches to allow option selection ■ Use of flags to control timing factors ■ Techniques to make modelling easier and

faster ■ Keeping control of versions ■ Making the model robust ■ Common mistakes

Practical: review an existing model to

check for compliance with best practice

Setting-Up a Model for a Power Generation Project ■ Starting position & overall objective(s) ■ Input sheets, calculation areas and output

sheets ■ Key Excel features and techniques ■ Setting up multiple currencies

Practical: producing a model framework for a power generation project using best practice

Electricity Production Forecasts ■ Production sales and volume ■ Offtake agreements ■ Pricing assumptions ■ Building up other operating costs

http://redcliffetraining.com/training/financial-modelling/project-finance-modelling-renewable-energy-3-day-programme/

http://redcliffetraining.co.uk/training/financial-modelling/project-finance-modelling-renewable-energy-3-day-programme/


Project Finance Modelling for Renewable EnergyContinued...

ENQUIRE NOW

Course Content

■ Building in efficiency and availability fac-tors

Practical: adding revenue, production & operating assumptions into the renewable energy model

Capital Expenditure in a Power Generation Project ■ Build-up of construction costs for the gen-

erating assets, grid connections and other capital expenditure

■ Using lookup functions to change capital expenditure timings

■ Building in sensitivities for potential changes in costs

■ Calculating depreciation of the resulting capital assets

Practical: Adding CAPEX and depreciation schedules to the model

Day 2: Project Financing and Cash Flow for an Electricity Project

Financing and Loans ■ Loan finance in a Renewable Energy pro-

ject ■ Interest rates and repayment terms ■ Debt fees ■ Dealing with any circular references:

• consequences in Excel • possible solutions to circular references

■ Project finance debt amortisation sched-ules

■ Debt Service Reserve Accounts (DSRA) in project finance

Practical: Add a loans schedule which will feed into the balance sheet, cash flow and income statement of the model.

Income Statement and Balance Sheet ■ Adding income statements and balance

sheets ■ Model checks on consistency ■ Minority shareholders

Practical: completing and checking the financial statements in the model.

Tax and Dividends ■ Overview of modelling techniques for tax ■ Tax concepts:

• Capital allowances• Tax loss carry-forwards• Disallowed expenditure• Payment of taxes by instalments• Tax shield of interest

■ Modelling cash available for distribution

and dividends arising from the project Practical: adding tax and dividend calculations into the model

Day 3: Deriving Results from the Renewable Energy Model

Ratios ■ Ratios and bank covenants in a power gen-

eration project ■ Mechanics of calculating ratios:

• Debt service cover ratio (DSCR)• Loan life / project life cover ratio (LLCR /

PLCR)• Interest cover ratio (ICR)

■ Using the DSCR to create a sculpted debt repayment profile

Practical: add ratios to the model and adjust the dividend calculations so they are constrained by covenants based on debt ratios.

Cost of Capital ■ Review of cost of capital theory ■ Capital Asset Pricing Model ■ Computing the Weighted Average Cost of

Capital (WACC) for the project ■ Using the WACC to determine a capacity

charge fee for the power generation assetsPractical: add WACC to the model and calculate a capacity charge to meet cost of capital requirements

Discounted Cash Flow ■ Methods of calculating valuations of projects ■ Producing an equity valuation

Practical: create a valuation of the equity in the model

Sensitivity Analysis for a Power Generation Project ■ Meaning of break-even in a project ■ Stress-testing a project finance model ■ Varying inputs to assess effect on results ■ Excel tools to assist with sensitivity analysis:

• Goal seek• Watch window• Data tables• Scenario manager

Exercise: Add break-even calculations, data tables and scenarios to the model.

Management Summary ■ Objectives of a management summary ■ Identifying the users of the model outputs ■ What to include in the summary

http://redcliffetraining.com/training/financial-modelling/project-finance-modelling-renewable-energy-3-day-programme/



Project Finance Modelling for Renewable EnergyContinued...

ENQUIRE NOW

Course Content

■ Use of charts to summarise dataExercise: Add a succinct management summary for decision-makers who will use the model.

Wrap-Up ■ Questions and answers ■ Further reading on the subject


https://redcliffetraining.com/training/financial-modelling-courses/project-finance-modelling-renewable-energy/


Course Content



BOOK NOW

Course Overview


Course Content

Advanced Business Valuation and Modelling


ENQUIRE NOW

Course Overview

This advanced valuation and modelling course builds on basic concepts by developing DCF techniques and taking a fundamental approach to multiple analysis.

Financial forecasting techniques are developed to incorporate more complex forecasting issues including provisions, off balance sheet finance, JV/associates, minorities, tax losses/deferred tax, and stock options.

More advanced analysis techniques are then used to develop a basic DCF approach including APV and EVA analysis, cost of capital for hybrid instruments and calculating a cost of capital for emerging market stocks. Each are explained in relation to the calculation of capital and return and the impact on modelling cash flows from a company.

Examples are provided to illustrate each issue.


The Value Driver Approach to DCF ■ What return is implied by a two stage DCF

model? ■ Developing DCF techniques to cope with

growth and fade ■ Importance of ROCE and key drivers ■ Three stage DCF models with fade, why this

will produce a more accurate valuation Fundamental Multiples ■ Formula’s for fundamental multiples ■ Identifying key drivers of the following mul-

tiples:• EV/EBITDA: ROCE is key• EV/Sales: is margin important?• PEG: misleading numbers?• Price/Book: good or bad predictor of val-

ue?• Price/sales: when is it useful?• Valuation matrix

Developing the cost of capital ■ WACC revisited ■ Leveraged and re-leveraged betas ■ Dealing with hybrids:

• Calculating equity and debt components• The approach to hybrid betas• Calculating the cost of a hybrid

■ Dealing with cost of capital in emerging mar-kets• Calculating the equity risk premium• What is the cost of debt?• Default rate and relative standard devia-

tion approach

Further DCF analysis ■ APV analysis – how much value is created by

leverage? ■ EVA analysis – how much value is created in

the future? ■ Comparison with DCF and conditions for equiva-

lence with DCF

Modelling Course Content:

Modelling more complex DCF analysis ■ Explicit forecast period issues ■ Terminal value issues ■ How adjustments affect valuation ■ Adjusting the cost of capital for hybrids ■ Adjusting the cost of capital in emerging mar-

kets

Modelling APV and EVA ■ APV under static and constant growth ■ APV and DCF equivalence – required conditions ■ Modelling EVA valuation ■ EVA and DCF equivalence – required conditions

Modelling extra’s – dealing with ■ Tax losses and deferred tax ■ Stock options - expenses & dilution ■ JV/Associates: cost or valuation? ■ Dividends ■ Minorities – forthcoming changes to Non-Con-

trolling Interest ■ Provisions


http://redcliffetraining.com/training/financial-modelling/advanced-business-valuation-and-modelling-course/


Course Content

Advanced Excel and Risk Modelling Course


ENQUIRE NOW

Course Overview

A two-day hands-on workshop for developing constructing an advanced risk-based financial model.

Who will benefit? ■ Analysts and other using Excel today are required to use Excel to review, construct, specify or

design complex financial models. Modern financial analysis demands models that are flexible and can deal efficiently with downside risk and sensitivity.

What you can gain ■ Ability to develop financial models using a tried and tested methodology ■ Tools for reviewing, auditing and testing models ■ How to add risk and sensitivity to models to improve analysis and reporting ■ How to quantify downside risk ■ Concise reporting and dashboards

This two day workshop explores: ■ Rules and standards governing model de-

sign and construction ■ Building models while minimising errors ■ Understanding and avoiding common mod-

elling pitfalls ■ Exploration of forecasting techniques ■ Running sensitivities and what-if analysis

to gain information about performance ■ Advanced techniques to quantify risk ■ The workshop is highly practical and in-

volves building a complete model. Dele-gates start with a template and construct a complete model in stages.

Delegates receive a full pack of Excel software and templates for future reference as part of the course materials

Each participant will be required to bring a laptop running Microsoft Office with CD-Rom to the seminar.

Module 1 - Spreadsheet Best Practice ■ Financial modelling objectives ■ Examples of Excel models ■ Useful Excel features and techniques ■ Systematic Excel standards ■ Case outline – introduction

Exercise: reworking existing skeleton model

Module 2 - Auditing and Testing ■ Examples of common spreadsheet errors ■ Essential testing and auditing techniques

Example: testing a financial analysis model

Exercise: debugging and checking an existing financial model

Module 3 - Forecasting Models ■ Review of forecasting methods ■ Linear methods ■ Smoothing and seasonality ■ Macro forecasting and regression ■ Understanding value drivers in cash mod-

els

Exercise: developing forecast free cash flow and ratios

Exercise: producing a forecast with time series analysis

Module 4 - Risk and Sensitivity ■ Risk and multiple answers ■ Different scenario techniques ■ Advanced financial functions

Exercise: adding sensitivity to the case model

Module 5 – Quantifying Risk ■ Review of downside risk

http://redcliffetraining.com/training/financial-modelling/advanced-excel-and-risk-modelling-course/


Advanced Excel and Risk Modelling CourseContinued...

ENQUIRE NOW

Course Content

The Value Driver Approach to DCF ■ What return is implied by a two stage

DCF model? ■ Developing DCF techniques to cope with

growth and fade ■ Importance of ROCE and key drivers ■ Three stage DCF models with fade, why

this will produce a more accurate valua-tion

Fundamental Multiples ■ Formula’s for fundamental multiples ■ Identifying key drivers of the following

multiples:• EV/EBITDA: ROCE is key

■ Quantifying risk – tornado and spider methods

Example: quantifying risk in the case model

Module 6 –Simulation Techniques ■ Elements and building blocks of a simula-

tion model ■ Monte Carlo simulation methods in Excel

Example: using simulation in the case model Module 7 - Optimisation and Targeting ■ Overview of optimisation and targeting ■ Goal seek and Solver methods

Example: targeting and optimisation

Module 8 - Management Reporting ■ Dashboard techniques ■ Management summaries ■ Model completion

Exercise: producing a management report

http://redcliffetraining.com/training/financial-modelling/advanced-excel-and-risk-modelling-course/



Applied Financial Mathematics in Excel Training


ENQUIRE NOW

Course Overview

This workshop focusses on the underlying mathematics techniques which underpin project finance, energy, leasing and other analysis models. Rather than using a financial calculator such as an HP12C, the workshop demonstrates how to apply financial mathematics to Excel effectively.

Starting with a review of model design, the workshop introduces present and future values and shows how these basic concepts can be used to solve a range of financial mathematics problems. The workshop ranges over complex cash flows, depreciation, structured amortisation, fixed income, derivatives and data analysis.

Workshop ObjectivesThis one-day workshop explores:

■ Financial concepts underpinning a range of models ■ Model design standards ■ Cash flow methods ■ Fixed income models ■ Derivative concepts ■ Basic statistics

The workshop is highly practical and each session begins with a discussion of each technique followed by practical exercises. At the end of the workshop, delegates will understand how to apply financial mathematics to Excel spreadsheets.

Workshop Teaching MethodThe programme is taught using formal lectures combined with practical and interactive case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on delegates gaining practical, hands-on experience of building financial models in Excel.

Comprehensive product notes and modelling software will be provided for future reference. Delegates receive a full pack of Excel software and templates for future reference as part of the course materials.

Delegate ProfileThis is a course for analysts and practitioners who want to use Excel as a tool to assist with the decision making process. Senior financial professionals using Excel spreadsheets who should attend include:

■ Financial analysts ■ CFO's ■ Financial controllers ■ Analysts ■ Accountants ■ Credit managers ■ Treasury managers ■ Risk managers ■ Middle office staff ■ Mergers, acquisitions and buyout specialists and corporate finance staff

Delegate LevelDelegates will be expected to have finance knowledge and a working knowledge of Excel, including:

• Opening and closing Excel files • Excel screen menu and standard toolbar • Auto fill • Moving around a worksheet • Moving around the sheets in a workbook • Creating files

http://redcliffetraining.com/training/financial-modelling/applied-financial-mathematics-in-excel/


Course Content

Applied Financial Mathematics in Excel Training

Continued...

ENQUIRE NOW

Course Overview

• Deleting files and individual sheets • Changing column width and row height • Entering simple formulas • Entering labels • Cell referencing • Centring titles and merging cells • Simple cell formatting • Number formats • Changing font sizes and colours • Copy, cut and pasting cell contents • Inserting graphic objects • Custom views ■ Previewing worksheets ■ Printing documents and ranges

Basic Model Design ■ Model design refresher ■ Importance of layout, colours and organi-

sation ■ Useful Excel techniques and shortcuts

Exercise: reconstructing a model

Single Cash Flows ■ Basic concepts ■ Time value of money ■ Available Excel functions ■ Simple and compound interest ■ Nominal and effective rates ■ Effect of compounding ■ Conversions and comparisons ■ Effect of changing interest rates on annui-

ties ■ Amortisation methods

Exercise: calculating payments and amortisation for structured loans

Multiple Cash Flows ■ Basic concepts ■ Common NPV/IRR mistakes ■ Effect of changing interest rates

Exercise: constructing and valuing a complex cash flow with multiple rates

Depreciation ■ Depreciation methods ■ Available functions

Exercise: depreciating assets and comparing results

Fixed Income ■ Bond cash flows refresher ■ Yield calculations ■ Relationship between yield and price ■ Clean and dirty prices with accrued interest ■ Modelling duration and modified duration ■ Convexity ■ Uses of duration and convexity ■ Zero coupons ■ Coupon days

Exercise: modelling bond risks

Options ■ Options pricing ■ Components of options price ■ Payoffs ■ Generating pricing models (Binomial, Black

Scholes etc.) ■ Put call parity ■ Greeks

Exercise: constructing a binomial and a Black Scholes model

Basic Statistics ■ Useful statistical functions ■ Descriptive statistics ■ Distribution shapes ■ Sampling ■ Variance and standard deviation ■ Statistics add-in ■ Analysing a dataset

Exercise: reviewing a dataset and presenting conclusions

http://redcliffetraining.com/training/financial-modelling/applied-financial-mathematics-in-excel/


Course Content

Bank Analysis and Modelling Training CourseIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

This course covers the key elements of modelling the activities of a commercial bank, including retail banking, consumer lending and credit cards, commercial banking, investment banking and asset / wealth management operations.

Participants will be introduced to the broad regulatory themes and challenges facing the financial services industry and an overview of the banking system the regulatory environment. The course will allow participants to understand the role of credit rating agencies and how the Basel II compliance requirements effect bank regulation, including minimum capital requirements, the supervisory review process and the market discipline elements of Basel II.

The course will allow participants to calculate risk-weighted assets, tier one and tier two capital and to model a bank income statement using the balance sheet as a driver.

Participants will build an integrated financial statement forecast model, projecting asset and liability balances, interest rates and spreads for key assets and liabilities, using industry best practices. Real-world case studies and financial filings will be used to extract key information. Participants will learn industry-specific forecast methodologies and apply them in a financial model.

Case Study: The participants will use a variety of case studies and exercises during the two days, based on publically quoted and generic companies.

Participants will be required to bring a laptop and a calculator to the course.

Commercial banks and the regulatory framework ■ Overview & of the banking system & regu-

lation ■ Understanding the role of credit rating

agencies ■ Basel II compliance and its effect on bank

regulation a) Pillar I: minimum capital requirements b) Pillar 2: supervisory review process c) Pillar 3: market discipline ■ Bank’s internal rating systems ■ Calculating risk-weighted assets ■ Calculating tier one and tier two capital

Case Study I: Participants model risk-weighted assets and tier one and tier capital for a case company

Building a financial institution forecast model ■ Sourcing information – historic and fore-

cast data ■ Key elements of a bank model

• The balance sheet as a driver• Key elements of the income statement• Determining economic drivers for different

types of banks

Case Study II: Participants are introduced to the bank forecasting model and review its structure, linking up the balance sheet and income statement

Modelling different banking activities ■ Overview of the key activities in a commer-

cial bank ■ Modelling the core activites: determining the

key drivers• Retail banking• Consumer lending and credit cards• Commercial banking• Investment banking• Asset / wealth management

■ Incorporating core activities into the income statement and balance sheet

http://redcliffetraining.com/training/financial-modelling/bank-analysis-and-modelling/


Course Content

Bank Analysis and Modelling Training Course

Continued...

ENQUIRE NOW

Case Study III: Participants build out the case company model incorporating the various core activities into the model

Further issue to consider in a bank model ■ Debt service and income as operating or

financing expense ■ Regulatory constraints on reinvestment

and implications on growth ■ Projecting cash flows ■ Incorporating regulatory constraints into

the model ■ Dealing with regulatory capital ratios ■ Calculating minimum capital adequacy

Case Study IV: Participants complete the case company model incorporating a cash flow forecast and various regulatory ratios

Auditing the model and further analysis ■ Balancing the model and checking for ac-

curacy ■ Error-proofing techniques & sensitivity

analysis ■ Ratio analysis – the key efficiency, operat-

ing and financial ratios for a bank

Case Study V: Participants build error proofing techniques into the case company model and produce efficiency, operating and financial ratios for the case company

http://redcliffetraining.com/training/financial-modelling/bank-analysis-and-modelling/


Course Content



BOOK NOW

Course Overview


Course Content

Emerging Market Bank Modelling & ValuationIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

This course covers the key elements of modelling and valuing the activities of an emerging market commercial bank, including the main elements of retail and commercial banking.

After an overview of the key elements of bank analysis, participants will build an integrated financial statement forecast model, projecting asset and liability balances, interest rates and spreads for key assets and liabilities, using industry best practices.

A real-world emerging market case study and financial filings will be used to extract key information. Participants will learn industry-specific forecast methodologies and apply them in a financial model.

The course will allow participants to understanding how the Basel II, 2.5 and III compliance requirements effect bank regulation, including minimum capital requirements, the supervisory review process and disclosure. The course will allow participants to calculate risk-weighted assets, tier one and tier two capital and to model a bank income statement using the balance sheet as a driver.

Once the participants have built a financial model, they will use this to value the case study bank using cash flow based and multiple based valuation techniques.

The participants will consider the type of cash flow model to be used for each case study bank, the various cash flow models that could be used and how issue such as terminal value should be treated.

The interaction with the regulatory capital requirements and how the upcoming Basel III regulations will affect capital requirements will be considered.

Case Study: The participants will use a variety of case studies and exercises during the three days, based on emerging market case study company.


■

The fundamentals of bank analysis

■ Banking in context and corporate structure ■ Examine the components of the balance

sheet • Liquid items – cash and deposits • Trading items, derivatives and other short

term items • Loans and advances • Equity and reserves • Off balance sheet items • Accounting and valuation issues – impact

of different valuation approaches on the capital base and income statement

Case Study I: Participants analyse the liquidity and maturity of a case study balance sheet

Analysing the components of the income statement

• Interest income • Fees and commissions • Income from affiliates

■ Performance analysis - explain the impor-tance of key ratios: profitability, operational, and risk ratios

■ The CAMELs approach to bank analysis

Case Study II: Participants analyse the income statement of a case study company and calculate various key ratios for the business


http://redcliffetraining.com/training/banking-training-courses/emerging-market-bank-modelling-valuation/


http://redcliffetraining.com/training/asset-management-courses/fixed-income-portfolio-asset-allocation/


Course Content



BOOK NOW

Course Overview


Emerging Market Bank Modelling & ValuationContinued...

ENQUIRE NOW

Course Content

Building a financial institution forecast model

■ Overview of bank accounting & regulation ■ Key elements of a bank model

• The balance sheet as a driver • Key elements of the income statement • Determining economic drivers for different

types of banks

Case Study III: Participants are introduced to the bank forecasting model and review its structure, linking up the balance sheet and income statement

Modelling different banking activities

■ Overview of the key activities in a commer-cial bank

■ Modelling the core activities: determining the key drivers • Retail banking • Consumer lending and credit cards • Commercial banking • Investment banking • Asset / wealth management

■ Incorporating core activities into the income statement and balance sheet

Case Study IV: Participants build out the case company model incorporating the various core activities into the model

Commercial banks and the regulatory framework

■ Basel II compliance and its effect on bank regulation • Pillar I: minimum capital requirements • Pillar 2: supervisory review process • Pillar 3: market discipline

■ Basel III and the effect on capital ratios ■ Calculating risk-weighted assets ■ Calculating tier one and tier two capital

Case Study V: Participants model risk-weighted assets and tier one and tier capital for a case company

Further issues to consider in a bank model ■ Debt service and income as operating or

financing expense ■ Regulatory constraints on reinvestment and

implications on growth ■ Projecting cash flows ■ Incorporating regulatory constraints into the

model ■ Dealing with regulatory capital ratios ■ Calculating minimum capital adequacy

Case Study VI: Participants complete the case company model incorporating a cash flow forecast and various regulatory ratios

Auditing the model and sensitivity/scenario analysis

■ Balancing the model and checking for accuracy ■ Error-proofing techniques & sensitivity analysis ■ Ratio analysis – the key efficiency, operating

and financial ratios for a bank ■ Building scenarios – the key drivers ■ Sensitivity analysis - flexing financials and

capital structure including the implications of Basel III on capital requirements

Case Study VII: Participants build error proofing techniques and scenario/sensitivity analysis into the case company model and produce efficiency, operating and financial ratios for the case company

Case Study VII: Participants build error proofing techniques and scenario/sensitivity analysis into the case company model and produce efficiency, operating and financial ratios for the case company

Valuing a bank

■ Valuation issues – getting to intrinsic value in a bank valuation• Issues with a bank business model• Key accounting issues in the bank sector• The valuation issues surrounding regulatory

capital ■ Valuation issues – relative valuation tools used

in a bank valuation• The key multiples used• Deriving multiples from fundamentals

■ Valuation approaches for a bank – building a dividend discount model• Determining the number of stages to be

used• Calculating the discount rate• Maturity phase and terminal value assump-

tions




http://redcliffetraining.com/training/asset-management-courses/fund-portfolio-management/


Course Content



BOOK NOW

Course Overview


Emerging Market Bank Modelling & ValuationContinued...

ENQUIRE NOW

Course Content

Case study VIII: Participants build a dividend discount valuation for the case company

■ Valuation approaches for a bank – building a residual income model• Determining the number of stages to be

used• Calculating the discount rate• Maturity phase and terminal value as-

sumptions

Case study IX: Participants build a residual income valuation for the case company

■ Valuation approaches for a bank – building a cash flow to equity model• Determining the number of stages to be

used• Calculating the discount rate• Maturity phase and terminal value as-

sumptions• Implication of changing capital require-

ments including Basel II I capital ratios

Case study X: Participants build a cash flow to equity valuation for the case company






Course Content



BOOK NOW

Course Overview


Excel Auditing WorkshopIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

Spreadsheets are used throughout financial institutions for financial calculations, budgeting, forecasting, projects and data analysis. Many institutions do not establish a formal review process for operational spreadsheets and it is assumed that the analysts check their own work. Yet there are many recorded instances of spreadsheet failures and the costs and losses involved.

This workshop aims to show delegates a number of tried and tested techniques in a practical one-day workshop that will immediately prove useful and offer rapid payback. It does not matter whether the delegates are involved in accounting or project finance, the techniques in the workshop can be applied to all kinds of spreadsheets. Anybody using Excel to make financial decisions should be confident about the accuracy of their models and this workshop will certainly improve delegates modelling expertise.

Workshop Objectives

This one-day workshop explores:

■ Aims and outlines governing model design and construction ■ Designing and building in accuracy ■ Internal and external auditing techniques ■ Planning a model review and audit

The workshop is highly practical and each session begins with a discussion of each technique followed by practical exercises. The models become more complex during the day culminating with a final case study to include all the elements.

Workshop Teaching Method

The programme is taught using formal lectures combined with practical and interactive case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on delegates gaining practical, hands-on experience of the design and auditing of financial models in Excel.Comprehensive product notes and modelling software will be provided for future reference. Delegates receive a full pack of Excel software and templates for future reference as part of the course materials.

Delegate Profile

This is a course for analysts and practitioners who want to use Excel as a tool to assist with the decision making process. Senior financial professionals using Excel spreadsheets who should attend include:

■ Financial analysts ■ CFO's ■ Financial controllers ■ Analysts ■ Accountants ■ Credit managers ■ Treasury managers ■ Risk managers ■ Middle office staff ■ Mergers, acquisitions and buyout specialists and corporate finance staff


http://redcliffetraining.com/training/financial-modelling/excel-auditing-workshop/

https://redcliffetraining.com/training/financial-modelling-courses/excel-auditing-workshop/



Course Content



BOOK NOW

Course Overview


Excel Auditing WorkshopContinued...

ENQUIRE NOW

Course Content

Delegate LevelDelegates will be expected to have finance knowledge and a working knowledge of Excel, including:

■ Opening and closing Excel files ■ Excel screen menu and standard toolbar ■ Auto fill ■ Moving around a worksheet ■ Moving around the sheets in a workbook ■ Creating files ■ Deleting files and individual sheets ■ Changing column width and row height ■ Entering simple formulas ■ Entering labels ■ Cell referencing ■ Centring titles and merging cells ■ Simple cell formatting ■ Number formats ■ Changing font sizes and colours ■ Copy, cut and pasting cell contents ■ Inserting graphic objects ■ Custom views ■ Previewing worksheets ■ Printing documents and ranges

Common Spreadsheet Errors ■ Reasons for model auditing ■ Assessing potential financial losses ■ Links to operational risk framework ■ Basis of spreadsheet design to reduce

errors ■ Excel internal methods

Exercise: reconstructing a model

Auditing Framework ■ Controls, risks, control activities, informa-

tion, communication ■ Internal and IT controls ■ Database of available spreadsheet types ■ Reporting, regulatory compliance and

operations ■ Defining spreadsheet types ■ Scoping necessary controls ■ Split of responsibilities ■ Developing a project plan ■ Identifying and classifying deficiencies

Exercise: reviewing spreadsheet types and planning an audit

Internal Auditing Techniques ■ Consistency checks ■ Built-in Excel techniques ■ Dealing with links and circular references ■ Improving spreadsheets to allow for internal

auditing techniques

Exercise: checking a multi-page spreadsheet

External Auditing Techniques ■ Matching and consistency checks ■ External techniques and methods ■ Creating an auditing checklist

Exercise: finding errors in multiple spreadsheets

Auditing Macros ■ How to audit macros ■ Minimum required documentation ■ Understanding macro functionality

Exercise: auditing macros in existing model

Software ■ Third party software available ■ Advantages and disadvantages ■ Auditing using software

Exercise: using software for auditing

Auditing Practical ■ Review of a complete model ■ Listing weaknesses and errors

Exercise: presenting full audit and report

Workshop Summary ■ Future Planning ■ Developing a plan for future spreadsheet

projects ■ Design improvements ■ Monitoring ■ Documentation ■ On-going testing


http://redcliffetraining.com/training/financial-modelling/excel-auditing-workshop/

https://redcliffetraining.com/training/financial-modelling-courses/excel-auditing-workshop/



Course Content



BOOK NOW

Course Overview


Lease Modelling in Excel Training CourseIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

When looking at any leasing opportunity, the ability to perform accurate and realistic analysis is imperative. In today's ever-changing business environment, the capability to write simple spreadsheets is not enough: you have to be able to produce accurate tools for analysis. With this in mind, a well-structured financial model can facilitate and improve the reliability and quality of your decision-making.

This workshop is designed for professionals involved in lease structuring and controlling, who would like to utilize the powerful features of Excel more effectively. New accounting standards have been announced and the workshop objective is to develop and build a comprehensive model incorporating pricing, latest accounting, evaluation and asset management.

Lease Modelling Training Objectives This two-day workshop explores: ■ Aims and outlines governing model design and construction ■ Designing and building accurate financial models ■ Lease accounting standards ■ Evaluation and pricing methods in Excel

The workshop is highly practical and involves building a complete leasing model from a skeleton starter model.

Workshop Teaching MethodThis course is both practical and interactive. It has been designed to be immediately relevant to professionals involved in the structuring of a lease transaction and for professionals involved in determining the method of finance for a particular asset or asset class. Through a series of formal lectures, practical and interactive case studies and worked examples, you will understand how and why a particular technique is used. Emphasis is placed on delegates gaining practical hands-on experience of the design and construction of lease models.

Delegates receive a full pack of Excel software and templates for future reference as part of the course materials.

Benefits of Attending ■ Understand the scope and techniques of modelling to help improve the pricing, structuring

and profitability of lease transactions ■ Evaluate latest accounting standards applied to leasing ■ Build and develop specialized lease evaluation models ■ Incorporate risk and sensitivity analysis to your lease models ■ Add asset management to cash models

Delegate Level for Attendees

Delegates will be expected to have finance knowledge and a working knowledge of Excel, including: ■ Opening and closing Excel files ■ Excel screen menu and standard toolbar ■ Auto fill ■ Moving around a worksheet ■ Moving around the sheets in a workbook ■ Creating files ■ Deleting files and individual sheets ■ Changing column width and row height ■ Entering simple formulas ■ Entering labels ■ Cell referencing ■ Centring titles and merging cells ■ Simple cell formatting ■ Number formats


http://redcliffetraining.com/training/financial-modelling/lease-modelling-in-excel-training-course/

https://redcliffetraining.com/training/financial-modelling-courses/lease-modelling-in-excel-training-course/



Course Content



BOOK NOW

Course Overview


Lease Modelling in Excel Training CourseContinued...

ENQUIRE NOW

Course Content

■ Changing font sizes and colours ■ Copy, cut and pasting cell contents ■ Inserting graphic objects ■ Custom views ■ Previewing worksheets ■ Printing documents and ranges

Basic Excel functions and the ability to insert functions: ■ Basic financial functions - NPV, IRR, NPER, RATE, PV, PMT, FV ■ Logic functions - IF, AND, OR

In addition, attendees need some basic finance knowledge for the modelling workshops such as: ■ Present value ■ Future value ■ Nominal and compound interest rates ■ Net present value ■ Internal rate of return

Day One - Lease Modelling Techniques

Introduction and Overview ■ Review of current leasing industry changes

and accounting standards ■ Refresher key terms and types of leases ■ Outline of financial modelling for leasing ■ Examples of Excel financial models ■ Concepts of spreadsheet best practice ■ Common modelling errors

Exercise: analysing examples of modelling techniques

Lease Model Design ■ Model design and structure – key steps ■ Exercise: Defining a model plan for a finan-

cial calculator ■ Useful Excel techniques and methods

Exercise: starting the workshop case model

Pricing and Structuring ■ Review of lease pricing theory ■ Generating lease cash flows ■ Calculating model NPV and IRR ■ Merged cost of capital derivation ■ Lessor return measures

Exercise: building and valuing cash flows

Risk Techniques ■ Risk and multiple answers ■ Built-in scenario techniques ■ Advanced financial functions

Exercise: layering risk techniques on to the course model

Day Two - Lease Modelling Techniques

Lease Accounting for the Lessee ■ Review of accounting standards e.g. IAS 17,

SSAP 21, SFAS 13, FASB Model and IFRS 16 ■ Useful Excel functions ■ Modelling requirements for the income and

balance sheet ■ Suggested schedule layout

Exercise: adding leasing accounting to the course model

Lessor Lease Accounting ■ Lessor accounting under current and new

standards ■ Accounting methods explained

Exercise: adding leasing accounting to the course model






Course Content



BOOK NOW

Course Overview


Lease Modelling in Excel Training CourseContinued...

ENQUIRE NOW

Course Content

Tax-based Lease Evaluation ■ Actuarial methods applied to Excel ■ Overview of evaluation methods ■ Optimisation and targeting ■ Goal seek and Solver methods

Exercise: targeting returns using the course model

Asset Management ■ Asset management issues ■ Risk assessment by asset class ■ Determining asset risk profile ■ Upgrading, settlements and additions

Exercise: calculating risk profiles on course model

Model Completion ■ Model review ■ Final model check






Course Content



BOOK NOW

Course Overview


Modelling for Credit Risk TrainingIn-House or via Live Webinar

ENQUIRE NOWCourse Overview

For banks and financial institutions a sea of changes has occurred in the past few years as a response to the credit crisis. A new capital adequacy framework, strengthened and specific credit risk regulations under Basel II / III, and recent innovations in the credit derivative arena are all highlighting the increasing scrutiny on credit issues.

More than ever before, financial institutions and large corporates will therefore have to be able to assess, calculate and model the embedded credit risk of assets as well as the risk generated by the use of counterparties for hedging or trading purposes.

This course is designed to provide professionals with a broad understanding of modern credit risk modelling techniques. During this training programme, participants will look in details at some of the more important models used for the pricing of default risk inherent to holding assets or embedded within credit derivatives.

The focus of the course together with the choice of exercises and examples will enable participants to understand the different stepping stones used in the design of the models in an easy way and the reasons why the models can be validated. Delegates will examine how different risk elements, such as interest rate, default and recovery values intertwine in those models.

Participants will be able to appreciate the credit models commonly used to calculate EAD (Exposure at Default), PD (Probabilities of Default) and LGD (Loss Given Default) as well as counterparty risk assessment models based on potential future exposure at default. We examine recent modelling issues of funding and market liquidity, basis risk and counterparty risk, and learn the meaning and use of the different value adjustments and notions such as wrong-way risk and liquidity issues.

Methodology:

This course is highly interactive with presentations, exercises, examples, workshops and discussions. It is supported by a range of computer-based exercises to help delegates put the concepts covered into practice.

Who could benefit from this training programme?

■ Credit Portfolio and Asset Managers ■ Auditors ■ Risk Analysts ■ Credit Managers ■ Financial Industry Regulators ■ Financial Risk Managers



http://redcliffetraining.com/training/banking-training-courses/modelling-for-credit-risk-training-course/




Course Content



BOOK NOW

Course Overview

To book this course or find out more, please click the Enquire Now” button

Modelling for Credit Risk TrainingContinued...

ENQUIRE NOW

Course Content

Day one

Definitions of parameters used for modelling credit risk

■ Introduction to credit risk models and their parameters

■ Credit event definition and exercise ■ Loss-Given Default (LGD), Expected Loss

(EL) and probability of Default (PD) ■ Calibration of default probabilities to actual

ratings ■ Exposure at default (EAD) ■ Relationship between PD, EAD, LGD ■ Unexpected Loss (UL) ■ Economic capital ■ Loss distribution ■ Monte Carlo simulation of losses ■ Recovery rate (recovery payments)

Workshop: Computation of theoretical credit spread for an amortizing asset with given LGD, PD and EAD at different maturity stages

Market based methods

■ CDS cash flows and default risk • Unbundling a risky bond into default and

other components• Isolating underlying default risk using a

single instrument ■ Adding floating LIBOR-based payments

• Credit spread over swap rate • Default-free money market deposit –

Floating Rate Note (FRN)• Final adjustment to compensate coupon

reduction – Synthetic portfolio of cash flows

■ Real world complications and hedging diffi-culties

■ Counterparty default risk and liquidity

Exercise: Assessment of the credit spread value for an asset given the market perception of the underlying credit risk and CDS / bond market information

Concept of synthetic Credit Default Swap (CDS): Basis Trades

■ Hedging / arbitraging CDS: positive and neg-ative basis trades• Bond and structured finance issuance

■ CDS “Fair Price”: asset swap “par” spread implications

■ CDS key issues: • Over the counter (OTC) shortcomings

Exercise and discussion: Using an asset swap to uncover market credit risk spreads. Unbundling the different risk component of an asset and using CDS to mitigate risks.

Day two

Structural Firm Asset Volatility Models

■ Black & Scholes / Merton Option Pricing Ap-proach

■ Key credit risk concepts ■ Credit (default) risk as put option

Merton / KMV Model (Firm Asset Volatility Model)

■ Hybrid corporate securities. Options in corpo-rate finance

■ Credit risk: asymmetric information and agency costs

■ Structural asset volatility (Black-Scholes / Merton) models

■ Structural asset volatility (Moody’s-KMV) models

■ Embedded complexities of interim cash flows

Workshop: How to use various financial instruments to replicate an option (Black & Scholes) synthetically. How to derive Credit Spreads from a practical point of view.

Black-Scholes / Merton KMV Option Pricing Approach

■ Credit risk as a function of equity value ■ Cost of hedging credit default risk ■ Term structure of credit default risk spread ■ Distance-to-default (DD) ■ Probability of loss-given-default (PD)

Exercise and discussion: How to price a Credit Default Swap with the use of a structural model by looking at both the premium value and protection legs.

REDUCED-FORM MODELS (BASED ON INTENSITY OR TRANSITION) Part 1Jarrow-Turnbull (JT) Reduced-Form Intensity Model: Applying Term Structure Models

■ Stochastic term structure of default-free in-






Course Content



BOOK NOW

Course Overview


Modelling for Credit Risk TrainingContinued...

ENQUIRE NOW

Course Contentterest rates:

■ Markov process for credit ratings ■ Stochastic maturity specific credit-risk

spread ■ Implementing a discrete-time Markov mod-

el: • Pricing risky bonds • Pricing options on risky bonds • Credit default swaps

Exercise: How to price a Credit Default Swap with the use of a reduced-form approach model such as JLT and appreciate the implications of credit ratings

Day three

REDUCED-FORM MODELS (BASED ON INTENSITY OR TRANSITION) Part 2Jarrow-Lando-Turnbull (JLT) Rating-Based Transition Matrix Technology

■ Applying Jarrow-Lando-Turnbull model • Arbitrage-free restrictions of the model • A discrete-time model in a two-period

economy ■ Credit ratings and default probabilities:

mathematics underlying the JLT model

Workshop: How to use a reduced-form transition matrix model based spreadsheet for pricing credit derivatives.

Pricing Derivatives Contracts Under Collateral Agreements in Credit Support Annex (CSA), Credit Value Adjustment (CVA) Debt Value Adjustment (DVA), Liquidity / Funding Value Adjustments (LVA, FVA)

■ Collateral agreements • Collateral (initial margin) • Variation margin • Maintenance margin

■ CSA contract agreements, aggregated base, netting set, Net Present Value (NPV)

CSA Pricing: Discrete Setting

■ Cox-Ross-Rubinstein binomial risk-neutral option pricing • Non-collateralised contingent claims,

collateralised claims, and liquidity value adjustment (LVA)

■ Liquidity value adjustment LVA: discounted NPV between risk-free rate and collateral rate

Exercise: How to assess the cost of replicating collateral account at predefined asset’s path

Counterparty Credit Risk: Wrong Way Risk, CVA, FVA, & Liquidity Issues

■ Counterparty contract risk exposure ■ Wrong / right-way risk: CVA adjustment ■ Wrong-way risk theoretical framework

• Expected positive exposure (EPE) • Default intensity (PD)

■ Credit value adjustment (CVA) of OTC deriv-atives • CDS spread (PD, LGD), EPE

■ Risk management: counterparty credit VaR ■ Credit VaR and exposure:

• Current exposure (CE) • Potential future exposure (PFE) • Credit limits – Expected exposure (EE)• Exposure-at-default (EAD)

Workshop: Analysing the various elements of Counterparty Risk with a practical example and the hedge with a contingent credit default swaps (CCDS)

Final discussion and conclusions






Course Content



BOOK NOW

Course Overview


Course Content

Modelling Service-based BusinessesIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

Financial modelling for service businesses has long been a relatively neglected area in the academic and workplace training environments. A possible reason is that as such businesses are relatively sparing in their capex requirements, they do not face such obviously life-threatening financial risks as, say, a utility that passes a point of no return in the construction of a multimillion-pound power plant before discovering that it has seriously overestimated long-term demand for the plant’s output, or underestimated the risk that the plant’s basic technology could become obsolete.

It is also undoubtedly the case that it is less problematic to model projects whose cash outflows occur predominantly at the outset and whose future cash flows are overwhelmingly positive, than projects whose cash flows principally comprise incremental changes to future operating inflows and outflows. Despite the fact that the strategic financial decisions made by managers of service-based businesses might be less eye-catching than those made by their counterparts in the capital-intensive industries, their decisions are no less complex and no less critical to their firms’ long-term health and even to their survival.

And whereas it might be true that a nuclear power station cannot economically be converted to coal-burning, it is certainly not true that supposedly ‘soft’ human resources are infinitely adaptable - or freely exchangeable in a supposedly efficient market for highly skilled labour. This course is designed for senior managers of service businesses as well as for their financial and strategy advisers. It will enable them to contribute more positively to the strategic decision making process, not only by refining and formalising their modelling skills which in many cases might have been ‘picked up on the job’, but also by enhancing their ability to communicate financial data, projections and arguments more effectively and persuasively.

The course aims to strike an optimum balance between theoretical rigour and practical utility. On the first day, the more didactic segments are lavishly illustrated with real-world examples, and are frequently interspersed with group exercises (mostly computer-based) and with less formally structured discussions.

On the second day, participants work collaboratively and continuously on a major Excel-based valuation of two real-world service companies or projects, and the course ends with presentations of their findings by two or more of the groups, for critical analysis and discussion by the entire class.

Day 1

Basics of financial modelling ■ Establishing the objectives of the modelling

exercise, e.g.• Improving risk-adjusted returns from an

existing business• Optimising the deployment of one or

more existing non-financial scarce re-sources

• Repositioning an existing business• Disposal of an existing business• Acquisition of another business or as-

sets, as (i) an extension of the existing business or (ii) a complement to the existing business or (iii) diversification

• Financial planning (e.g. capital structure, liquidity management, debt covenant renegotiation)

■ Specifying the desired outputs, e.g.• Net Present Value or Internal Rate of

Return of an internal project• Enterprise or Equity Value, or key perfor-

mance metrics of an existing business or of a potential acquisition

• Forecast of positive or negative headroom within existing / proposed debt limits

• Forecast of compliance or non-compliance with other financial covenants

■ Specifying the necessary inputs, e.g.• Historic financial statements (adjusted as

necessary to conform to the preparer’s own accounting policies)

• External assumptions to support projec-tions

• Component elements in cost of capitalThe modelling process ■ Identifying the drivers of profit and cash flow

• Identify and specify historic relationships between variables in costs and revenues

• Estimate expected changes to historic driv-ers in light of management action (i.e. the project) and external developments

• Identify and specify drivers for new lines of


http://redcliffetraining.com/training/financial-modelling/modelling-service-based-businesses/

https://redcliffetraining.com/training/financial-modelling-courses/modelling-service-based-businesses/



Course Content



BOOK NOW

Course Overview


Modelling Service-based BusinessesContinued...

ENQUIRE NOW

Course Content

■business

• Identifying key risks and their likely evo-lution and impact, e.g. differential infla-tion rates for specific inputs and outputs, unforeseen action by government

■ Steps in preparation of future financial statements• Focus on line items that have been or are

expected to become key and /or material• Use drivers to roll forward from historic to

future financial statements• Sense-check output from future values of

cash, debt, equity and working capital ■ Five steps in an NPV-based analysis (project

appraisal)• Estimate time horizon (economic useful

life)• Estimate relevant (i.e. incremental,

non-financing, after tax) cash flows• Estimate cost of capital (CAPM or divi-

dend model?)• Calculate NPV• Interrogate result via sensitivity and sce-

nario analysisJustify positive NPV, qualitatively and quantitatively, by independent reference to identifiable source of competitive advantage, or to the creation of valuable options

Special points to watch ■ Accounting issues:

• Consistency of accounting policies gener-ally

• Revenue recognition principles and prac-tice

• Recording and valuation of non-physical work-in-progress

• Deferred income and expense• Provisions, e.g. for returns, warranties,

after-sales service• Finance versus operating leases• Longer-term contracts: timing mismatch-

es between (a) revenue and cost recogni-tion, and (b) cash flow

• Foreign currency differences• Deferred taxation• Treatment of intangible assets generally,

and specifically: ӹCapitalisation of eligible development expense ӹGoodwill ӹAmortisation and impairment

■ Sources of forecasting error, and possible remedies, for instance:• Optimism bias, either in amount, tim-

ing and/or amount of future cash flows (compensate by adjusting hurdle rate of return, or converting expected cash flows to certainty equivalents)

• Failure to identify how management ac-tions and inactions can create, destroy or exercise potentially valuable options, possibly in apparently unrelated business areas (explore outcomes of simple deci-sion-tree analysis)

• Miscalculate economic life of project (‘people projects’, unlike power stations, can transition imperceptibly into activities that are different from what management intended)

Basic tips and tricks for constructing an Excel-based valuation that is at once comprehensive, coherent, consistent and flexible

■ The template must be appropriate to the purpose of the exercise

■ Line and column descriptions must indicate relationship between values: “Go and look at the formulae” is no way to treat grown-up readers

■ Assumptions (and variations of assumptions) must be highlighted

■ Sources and relative reliability of different data inputs must be highlighted

■ Top-level results must be summarised on front sheet, and indicate not only a point value but a range of values, as well as an indication of the principle parameters for the range

Day Two

Extended exercise in comparative valuation of two companies in the same or similar service industries, e.g. IT software and support, facilities management, profes-sional services.

The day will start with a plenary brainstorming session to identify the principal points of interest in the exercise, ranging from the strategic and intangible issues to the down-to-earth practicalities of sourcing data, formulating assumptions and processing the data into a coherent presentation.

Throughout the day, the trainer will be on hand to give individual support as required, and to act as a channel to share individuals’ insights and experiences with the group as a whole.

In the last session of the day, two or more groups will be invited to present their work to the class as a whole, for discussion and critical analysis.

Finally, the trainer will hand out his own ‘model model’, in two contrasting formats, for the participants to compare with their own work.


http://redcliffetraining.com/training/financial-modelling/modelling-service-based-businesses/

https://redcliffetraining.com/training/financial-modelling-courses/modelling-service-based-businesses/



Course Content

Modelling for Debt Restructuring Course


ENQUIRE NOW

Course Overview

This two-day workshop explores:

■ Spreadsheet best practice ■ Building a flexible model in stages ■ Forecasts and financial analysis ■ Restructuring debt ■ Adding management reporting

The programme is taught using a mixture of instruction, demonstrations and practical exercises. The workshop emphasis concentrates on the application of financial theory to Excel to produce a flexible and informative model.

Each session consists of theory, demonstrations and a practical exercise as participants develop the model in stages. The template for each session acts shows the solution to the previous session.

Comprehensive product notes will be provided to all participants. Participants receive a full pack of Excel software and templates for future reference as part of the course materials.

What participants will gain:

■ Principles of spreadsheet best practice ■ Application of best practice principles to a restructuring model ■ How to understand the financial reports ■ Methods to forecast and restructure debt ■ How to report and use the model

Each participant will be required to bring a laptop with an available USB running Microsoft Office to the seminar.

Day One

Case Study Outline ■ Analysis framework ■ Reasons for financial distress ■ Current data ■ Case study outline ■ Model objectives ■ Systematic Design Method ■ Basics of spreadsheet design ■ Modelling ‘rules’ ■ Common spreadsheet errors

Exercise: starting a model template

Historic Statements ■ Modelling initial accounts ■ Income and balance sheet ■ Generating cash flow

Exercise: adding and checking accounting statements

Historic Analysis ■ Identifying existing debt ■ Calculating forward debt repayments and

current balance ■ Calculating debt and other ratios ■ Bankruptcy ratios and scores

Exercise: adding loan sheets and calculating ratios

Forecast Accounts ■ Forecast accounts ■ Time lines and flags ■ Sales growth ■ Cost base ■ CAPEX requirements ■ Working capital – stock, receivables, paya-

bles

http://redcliffetraining.com/training/corporate-restructuring-training-courses/debt-restructuring-course/


Course Content

Modelling for Debt Restructuring Course

Continued...

ENQUIRE NOW

■ Integrity checks ■ Circular references

Exercise: completing initial forecast statements

Day Two

New Loans ■ Excel functions ■ Calculating new loans ■ Rate, profile and timing ■ Amortisation profiles ■ Incorporating scenarios

Exercise: calculating new loans and repayment profiles

Completing Forecast Accounts ■ Incorporating new loans ■ Balancing the accounts ■ Checking on requirements for further cap-

ital ■ Recalculating forward ratios ■ Computing forward default scores ■ Integrity checks on results

Exercise: adding loans to forecast statements and checking cash position

Model Stress Testing ■ Constructing forward scenarios ■ What-if and downside analysis ■ Optimising the model results ■ Assessing the importance of individual

factors

Exercise: layering stress testing on the initial model

Model Completion ■ Version control ■ Documentation ■ Chart output ■ Dynamic dashboards ■ Management summaries

Exercise: model completion and final checks

http://redcliffetraining.com/training/corporate-restructuring-training-courses/debt-restructuring-course/


Course Content

VBA and Macros


ENQUIRE NOW

Basics

■ Excel VBA overview ■ Understanding macro steps ■ Exercise: writing simple macro to format

a sheet and set up print areas ■ Modifying macro steps ■ Storing values in variables ■ Adding comments ■ Stepping through macros ■ Exercise: stepping and controlling files

with automation macros ■ Getting help on macros ■ Exercise: setting up best practice macro

template ■ Debugging macros ■ Exercise: find errors in existing macros ■ Objects, properties and methods

Range Object

■ Selection property ■ Range property ■ Exercise: setting sheet and workbook

properties ■ Targeting cells ■ Counting the cells in a selection ■ Exercise: counting cells in a range ■ Using the Offset statement ■ Retrieving the value of a cell ■ Retrieving a formula from a cell ■ Setting the value of cells ■ Exercise: setting values and properties ■ Exercise: set up audit tool

Using Visual Basic

■ Language structure ■ Using variables ■ Declaring variables ■ Data types ■ Exercise: retrieving data types ■ Making decisions ■ Exercise: including error code ■ If statements ■ For and while statements ■ Looping structures ■ Exercise: circular references macro ■ Exercise: Fibonacci sequence macro

Interactivity ■ Assigning a macro to a menu ■ Exercise: headers and footers macro

assigned to a menu ■ Assigning a macro to a toolbar ■ Assigning macros to other objects ■ Exercise: dynamic menu macro ■ VBA toolbox ■ Working with events ■ Exercise: Auto_Open/Close macro ■ Built-in dialogue boxes ■ Using form controls ■ Exercise: set up disclaimer form

http://redcliffetraining.com/training/financial-modelling/vba-macros/


Course Content



BOOK NOW

Course Overview


Course Content

Valuing Commodity Companies and Sectors


ENQUIRE NOW

Course Overview

This advanced valuation and modelling course looks at the valuation approaches to be taken to enable participants to value sectors which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the sector in which the company operates.

The course covers commodity companies, identifying the issues with sectors such as resources, energy and chemicals companies. As well as discussed some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken.

Examples are provided to illustrate each issue.


Overview of valuation approaches

■ Intrinsic valuation – traditional cash flow techniques

■ Relative valuation – multiple based analysis ■ Probabilistic valuation – scenario analysis,

decision trees and simulations ■ Real options valuation – additional value cre-

ated through optionality

Other valuation issues

■ Assessing risk – the risky risk free rate and other current valuation issues

■ The economic cycle – incorporating mac-ro-economic factors into a valuation

Valuing commodity companies and sectors

• The demand and supply fundamentals• The macro point of view

■ Valuing a commodity business in practice• Normalised valuations

■ Taking the cycle out of the equation• The adaptive growth approach• Probabilistic approaches

■ Using probabilities to reduce forecasting limitations• Normalised earnings multiples

■ Back to mid cycle…..• Adaptive fundamentals• Real options for underdeveloped resources

■ The extraction/development decision and its value• Valuing a natural resource firm


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-commodity-companies-and-sectors/


Course Content



BOOK NOW

Course Overview


Course Content

Valuing Emerging Market Companies

ENQUIRE NOW

Course Overview

This programme has been designed to develop the participants’ understanding of the key issues facing Finance professionals valuing Emerging Market (EM) companies.

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

■ Understand the key challenges arising from EM companies, namely currency volatility and coun-try risk premium;

■ Compute a Discounted Cash Flows (DCF) and trading multiples valuation of EM companies; ■ Analyse and choose appropriate currency in cash flow forecast and discount rate; ■ Decide on appropriate risk free rate, beta and country risk premium to be used in the discount

rate; ■ Perform a two-stage Terminal Value for high-growth EM companies; ■ Decide on sensible use of trading multiples in EM.

Case Study: The participants will use a variety of EM case studies and exercises during the training


Introduction ■ How does EM differ from developed markets

• Family-owned business• Inflation and growth rate• Country risks• Commodity risks• Lack of transparency• Corporate governance• Access to data

■ Are local trading multiples available? ■ Should DCF be the main source of value? ■ Key valuation issues to consider

• Choice of currency in forecast and dis-count rate

• Discount rate and country risk premium• Two-stage Terminal Value for high growth

with use of fades• Valuation discount necessary?

Information Gap and Accounting Standards ■ Access to data/financial statements ■ IFRS reporting or local GAAP? ■ Inflation accounting use in hyperinflation

countries

Currency Issues ■ EM country currency systems

• Pegged vs. floating exchange rate ■ Nominal or real cash flows ■ Currency volatility

• Exchange rate• Own purchaing power (inflation)

■ Choice of currency in valuation• Currency consistency - same currency in

forecasts as per discount rate ■ Local EM currency vs. standard (i.e, US$)

• Standard currency and use of Forward rates for foreign exchange conversion

Case Study I: Participants compute the Free Cash Flows of Tata Motors

Discount Rate - Cost of Debt ■ Risk free rate

• Any public traded bonds outstanding?

• Local currency or US$• Use of default spread with synthetic rating

■ Sovereign default rating ■ Pitfall of double-couting or triple-counting

risks

Discount Rate - Cost of Equity ■ Beta

• Beta reliable and liquid?• Use of ADR or GDR betas?• Choice of well-diversified global index

■ Country risk premium methods • Sovereign default spread method• Relative equity market volatility method• Composite method

Case Study II: Participants calculate betas and cost of equity for Gerdau Steel

Two-stage Terminal Value ■ Entire value in Terminal Value highly sensi-

tive to perpetuity growth rate and WAC ■ Alternative terminal value approach: value

driver• Disaggregating return on invested capital

- profitability and efficiency ■ Building a two-stage terminal value model

using separate annuity and perpetuity rates

Case Study II: Participants compute a two-stage Terminal Value of EM corporate

Trading Multiples in EM ■ Size of sample: less than a handful real

comparables? ■ Considering other EM regions ? ■ Using discount to developed markets trading

range

Overall Valuation Discounts ■ Significant risk from nationalization or ex-

propriation ■ Subjective discount or scientific method? ■ Use of decision trees and probability weight-

ing



https://redcliffetraining.com/training/corporate-finance-training-courses/valuing-emerging-market-companies/


Course Content



BOOK NOW

Course Overview

To book this course or find out more, please click the “ENQUIRE Now” button

Course Content

Valuing a Pharmaceutical Company


ENQUIRE NOW

Course Overview

If the business model of the modern pharmaceutical industry did not already exist, management consultants and business schools would surely have invented it as a fictional basis for exploring the challenges posed by a perfect storm of every conceivable risk and uncertainty.

It is perhaps doubtful whether investors, managers and analysts would have believed that any business model embodying such a perfect storm would be sustainable and therefore worth studying at all – were it not for the fact that in the pharmaceutical industry, real life really is stranger than fiction.

Nowhere are all the risks and uncertainties confronting the pharmaceutical industry more clearly or comprehensively exposed to view than in the process of valuation.

This one-day intensive workshop begins with an in-depth analysis of the pharma business model itself, and then explores in detail the theoretical and practical barriers to the application of the most widely employed valuation metrics and methods.

It locates common pitfalls, and shows how a judicious selection of ‘horses for courses’ can help us to establish at least a conditional range for possible valuations in different contexts.

The course is ‘intensive’ rather than ‘advanced’, in the sense that it is strongly interactive in tone and structure (Excel-based exercises figure prominently, especially in the second half), yet it assumes no more than a basic understanding of financial statements and of a few of the most widely used measures of financial performance and condition, such as return on capital and p/e ratio.

As the participants are being asked to ‘unlearn’ much of their previously unchallenged conventional wisdom, those who come to the table with less ‘inherited baggage’ might even have an advantage!

Review of the pharma business model, with copious illustrations ■ Long, unpredictable and variable life-cycles of

individual products, from discovery, through pre-clinical and clinical development, to launch and eventual patent expiry

■ Low correlation in timing and amount of costs and revenues

■ Imperfect diversification of product portfolios (in terms of product numbers, sizes, types, and stag-es in life-cycle)

■ Exposure to a wide range of long-term uncon-trollable factors – demographic, epidemiological, scientific (‘looking for needles in haystacks’), political, geopolitical and economic

■ Uncomfortably close and unusually complex relationship with government (healthcare policy and priorities, regulation, pricing regime, overall demand)

■ High risk of unforeseen technical failure, and costly and protracted lawsuits

■ Little freedom to plan for long term, in face of constant threat from opportunistic predators

Overview of conventional models: their general strengths and weaknesses, when they work best – and when they work least well ■ Primary models

• NPV based on Free Cash Flow (FCF)• Comparables and benchmarking• Book-based models• Market multiples

■ Secondary refinements• Sensitivity and scenario analysis• Decision tree analysis and real options• Monte Carlo analysis

How conventional valuation models are challenged by the pharma model, as for instance: ■ Data samples and populations (e.g. on overall

amounts and timings of costs and revenues) too small, heterogeneous and idiosyncratically distrib-uted to be statistically useful

■ Conventional measures of mean and dispersion inoperable

■ Genuine comparability, between companies, be-tween deals, and between therapies, unduly elusive in practice

■ Conventional modelling techniques unable to ac


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-a-pharmaceutical-company/


Course Content



BOOK NOW

Course Overview

To book this course or find out more, please click the “ENQUIRE Now” button

Course Content

Valuing a Pharmaceutical Company

Continued

ENQUIRE NOW

Review of the pharma business model, with copious illustrations ■ Long, unpredictable and variable life-cycles of

individual products, from discovery, through pre-clinical and clinical development, to launch and eventual patent expiry

■ Low correlation in timing and amount of costs and revenues

■ Imperfect diversification of product portfolios (in terms of product numbers, sizes, types, and stages in life-cycle)

■ Exposure to a wide range of long-term un-controllable factors – demographic, epidemio-logical, scientific (‘looking for needles in hay-stacks’), political, geopolitical and economic

■ Uncomfortably close and unusually complex relationship with government (healthcare policy and priorities, regulation, pricing regime, over-all demand)

■ High risk of unforeseen technical failure, and costly and protracted lawsuits

■ Little freedom to plan for long term, in face of constant threat from opportunistic predators

Overview of conventional models: their general strengths and weaknesses, when they work best – and when they work least well ■ Primary models

• NPV based on Free Cash Flow (FCF)• Comparables and benchmarking• Book-based models• Market multiples

■ Secondary refinements• Sensitivity and scenario analysis• Decision tree analysis and real options• Monte Carlo analysis

How conventional valuation models are challenged by the pharma model, as for instance: ■ Data samples and populations (e.g. on overall

amounts and timings of costs and revenues) too small, heterogeneous and idiosyncratically distributed to be statistically useful

■ Conventional measures of mean and dispersion inoperable

■ Genuine comparability, between companies, between deals, and between therapies, unduly elusive in practice

■ Conventional modelling techniques unable to accommodate shifting levels of risk through the product life-cycle: inapplicability of standard CAPM and dividend-based model of expected returns

■ Lack of informed market consensus on criteria for analysis

■ Chronic tendency towards optimism in manage-ment commentary, e.g. on value of pipeline,

stage of development, timing of launch and subse-quent success in market

■ Shortcomings of the accounting regime in:• capturing relevant costs and accommodat-

ing mismatch in timing of costs and reve-nues

• reaching consensus on intangible assets• resolving problems of business combina-

tions Finding a way forward ■ General principle: do as much work as possible

before confining one’s brain in the fixed confines of an Excel spreadsheet!

■ Strategic analysis of the relative strengths and weaknesses of the business to be valued and of the sector(s) in which it operates, using a standard framework such as Porter’s Five Forces

■ Bottom-up approach: refining institutional FCF into product-specific FCFs, using• Bottom-up estimates of revenue and costs

based on demographic, epidemiological and other factors:

• Product-specific rNPVs (risk-adjusted NPVs), instead of entity-wide NPV, with individu-al discount factors calibrated according to (i) costs, (ii) revenues and (iii) risks appropriate to individual major product characteristics at each stage of its life-cycle

■ Top-down approach: sense-checking the difference between (a) market EV and (b) sum of the product rNPVs from the bottom-up approach, by seeking possible reasons for• positive differences (e.g. pipeline, well-struck

balance between diversification and internal synergy, bargaining power in M&A market)

• negative difference (e.g. accident-prone man-agement, above-average vulnerability to com-petitors, predators and government)

Bringing it all together – 1: Working with Excel

Basic tips and tricks for constructing an Excel-based valuation that is at once comprehensive, coherent, consistent and flexible ■ The template must be appropriate to the case,

facilitating comparison with comparable cases and highlighting differences with contrasting cases

■ Line and column descriptions must indicate re-lationship between values: “Go and look at the formulae” is no way to treat grown-up readers

■ Assumptions (and variations of assumptions) must be highlighted

■ Sources and relative reliability of different data inputs must be highlighted

■ Top-level results must be summarised on front sheet, and indicate not only a point value but a range of values, as well as an indication of the principle parameters for the range


http://redcliffetraining.co.uk/training/featured/pharmaceutical-company-valuation-training-course/

https://redcliffetraining.com/training/corporate-finance-training-courses/valuing-a-pharmaceutical-company/

http://redcliffetraining.co.uk/training/featured/pharmaceutical-company-valuation-training-course/


Course Content



BOOK NOW

Course Overview


Course Content

Agribusiness Investment Modelling


ENQUIRE NOW

Course Overview

Agribusiness is globalising and attracting more private investment. The importance of land valuation, professional management of farmland, and the requirements of capital investment are the key drivers of investment success. Effective investment, however, requires proper modelling, and this course is the key to understanding how to use Excel to optimise the value of an agribusiness investment. Covering the crucial areas of Excel techniques, model structure, forecasting and risk assessment, delegates build and eventually take away from this course with a fully-functioning agribusiness model, as well as a host of other case studies, examples of models, and model-building skills.

Day 1 Agribusiness Modelling using Excel 1. Using Excel for modelling ■ Worksheet organization ■ Data input, management and verification ■ Use of colour/add-ins ■ Naming of cells ■ Location of input variables ■ Review of Excel functions and their use ■ Macros and their use ■ Goal seeking ■ Optimisation ■ Circularity and how to resolve it ■ Working with range names ■ Graphs and charts ■ What is needed from Excel and what is

superfluous ■ Principles of spreadsheets and workbooks

Case Study: Evaluating good and bad Excel financial models 2. Bank and PE House perspectives ■ DSCR and other critical bank ratios and

how to model them ■ Equity NPV/ IRR and project IRR and how

to model them ■ Modelling cash flow and ratios: ■ Allowing for accountancy - depreciation, tax

and capital allowances

Case Study: Examples of Excel project modelling

Day 2 3. Building an agribusiness investment model Delegates will construct and use an agribusiness investment model. This group exercise will include: ■ Creating model inputs from management and

legal documentation ■ Using Excel Scenario Manager to analyse alter-

native investment strategies ■ Forecasting operating revenues and costs ■ Loan assessment criteria ■ Modelling loan amortization ■ IRR NPV and other valuation analysis ■ Methods of handling risk ■ Using @RISK to analyse the risks of the model

(Monte Carlo) Course Conclusion – where now for agribusiness investment?


https://redcliffetraining.com/training/banking-courses/agribusiness-investment-modelling/

https://redcliffetraining.com/training/banking-courses/agribusiness-investment-modelling/https://redcliffetraining.com/training/banking-courses/agribusiness-investment-modelling/


Course Content

Real Estate ModellingIn-House or via Live Webinar

ENQUIRE NOW

Course Overview

Course Methodology

This course will teach you all the available techniques and how to practically apply them through the use of Excel and Argus/Estatemaster. An extensive use of case studies will be adopted to illustrate the principles covered. Ultimately delegates will get practical tips on layout and style in building and analysing user-friendly models which are available as additional benefits of the course.

Who Should AttendThis course is designed for delegates who are seeking to improve their technical real estate modelling skills in Excel.

■ Bankers and financiers involved in real estate ■ Directors and business development executives from corporates, equity sponsors and consultan-

cies

Day 1: Building Blocks of Real Estate Modelling

1. Using Excel for modelling

■ Worksheet organization ■ Data input, management and verification ■ Use of colour/add-ins ■ Naming of cells ■ Location of input variables ■ Review of Excel functions and their use ■ Macros and their use ■ Goal seeking ■ Optimisation ■ Circularity and how to resolve it ■ Working with range names ■ Graphs and charts ■ What is needed from Excel and what is

superfluous ■ Principles of spreadsheets and workbooks

Case Study: Evaluating good and bad Excel financial models

2. Equity valuation

■ Equity NPV/ IRR and project IRR ■ XNPV, XIRR, MIRR ■ Modelling cash flow and ratios: ■ Allowing for accountancy in real estate

models:• Depreciation• Tax

• SPV accounting• Capital allowances

Case Study: Valuation and Cash Flow models

3. Fundamentals of Real Estate Models

■ Objectives of real estate models ■ Structure of real estate model design ■ Dealing with escalation/inflation ■ Monthly, quarterly and annual modelling ■ Design, testing and feedback ■ Model sensitivity and auditing ■ Revenue and cost modelling ■ Cash adequacy, recourse, standby and li-

quidity ■ Financial coverage ratios and the bank per-

spective ■ What are the software choices for real estate

development? ■ Estatemaster vs Argus vs Excel

Demonstrations: Argus/Estatemaster

4. Real Estate development modelling issues

■ Architects, planners and real estate develop-ment

■ Concept and objectives of Construct and Sell (CS) models

■ Assumptions required for CS models ■ Development cashflow corkscrews ■ Sales prices and taxes

http://redcliffetraining.com/training/banking-training-courses/real-estate-modelling/


Real Estate ModellingContinued

ENQUIRE NOW

■ Valuation and risk analysis of real estate development models

Case Study: Examples of real estate development models

5. Real Estate investment modelling issues

■ Limited recourse and loan terms and cove-nants in real estate lending

■ Structuring and financing solutions ■ Real estate investment finance experience

worldwide ■ Objectives of real estate investment models ■ Buy and Let (BL) discounted cash flow

modelling issues ■ Risk analysis for real estate investment

models

Case Study: Review of several real estate investment models and their decision-making input

6. Building a Construct and Sell (CS) Model

Based on a real example, provided by an equity investor in a real estate trans-action, delegates will review and test a model for the transaction. The exercise will include:

■ Project Review ■ Analysing the inputs ■ Costing construction ■ Dealing with input priorities ■ Data plausibility ■ Modelling loan drawdown ■ Sales price projections and cap rates ■ Establishing value from a construct and sale

transaction

Day 2: Building a Discounted Cash Flow Model (DCF) model

Delegates will continue with the real ex-ample from Day 2 to construct a model based on the assumptions of construction, with revised assumptions, and leasing out.

■ Revising construction inputs ■ Loan assessment criteria ■ PGI, EGI and NOI in the model ■ Forecasting NOI and operating expenses ■ Modelling loan amortization

■ IRR NPV and other valuation analysis

Monte Carlo and real estate modelling

■ Methods of handling risk ■ What is Monte Carlo analysis? ■ Worked examples of Monte Carlo analysis ■ Applying Crystal Ball to CS and CL Models ■ Analysing the results ■ Presentation of Monte Carlo results to senior

management

Course Conclusion

http://redcliffetraining.com/training/banking-training-courses/real-estate-modelling/

The specialist in highly technical, market-driven banking and corporate finance training

web: redliffetraining.com email: [email protected] phone: +44 (0)20 7387 4484

financial modelling courses - redcliffetraining.com · the specialist in highly technical,...

Documents