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Oxford Finance Lab
Offered to
Oxford Master in Financial Economics
Master in Law & Finance
Master in Business Administration (focus in finance)
by
• Oxford SBS Careers
• Oxford SBS Finance Faculty Group
• Oxford Private Equity Institute
© designed , developed and offered by Andreas T. Angelopoulos
© 2008 - 2011, Andreas T. Angelopoulos, All rights reserved. No part of this publication may
be reproduced, stored in any system or posted in a web site, used in a spreadsheet, or
transmitted in any form or by any means – electronic, mechanical, photocopying, recording or
otherwise – without the prior written permission of the author.
30.11.14 update
Oxford Finance Lab
Introduction
Students will have the opportunity to understand the main theoretical concepts, instruments and models required for their finance courses, electives
and interviews. They will acquire the execution skills required for entry investment banking and investment level positions in: M &A,
Leverage Finance, Project & Infrastructure Finance, Distress & Restructuring, Valuation, Equity Research, Capital Markets, Asset Management,
Private Equity (Growth Capital, LBO, Distress, Infrastructure). The Lab will cover:
A. Finance & Valuation Modelling
• Debt, Q-Equity and Equity Finance Instruments
• Understand the concepts of Enterprise Value , Equity Value, IRR
• The Cycle of the Business, Operational Assumptions & Model
• Financial Statements & Links
• Valuation
• Comparables (Transaction and Trading)
• IRR method (LBO and Growth Capital)
• DCF (APV and WACC)
• Football Field, Risk & Sensitivity Analysis
B. Challenges:
Bridgepoint Private Equity Challenge
Hermes Private Markets Challenge
Jefferies Challenge
C. Education (Cases) – Network
• Investment banks: Goldman Sachs, Rothschild, Houlihan Lockey, Societe Generale, Jefferies, Morgan Stanley, Commerzbank
• Private Equity Funds: Advent, Bridgepoint, Bayside, Carlyle, CDC, Denham, Oak Tree Capital, Terra Firma, Hermes 1
© Andreas T. Angelopoulos 2011
A. Finance modelling
Introduction to finance instruments & main concepts
Number of Shares = (EqV / Share Price)
STEP B - LOOKING THE ENTRY
EqV CO Post MV = 37.5 / (1+50%)ˆ5 = 4.9
EqV CO Pre MV = Post MV - I = 4.9 -3.5 = 1.4
Entry Net Income, Multiple
Debt and Quasi Equity, Equity Finance Instruments
Introduction
Debt or Equity
Sources & Types of Finance
The finance instruments
Debt Finance instruments (Loans)
Senior - model
Junior - model
Mezzanine - model
PIK - model
Capex - model
RCF - model
Debt Finance instruments (Bonds)
High Yield Bonds - model
PIK Bonds
Corporate bonds
Self Issued bonds
Quasi Equity & Equity Finance instruments
Quasi Equity
Convertible Bond (public or private company)
Shareholder Loan - model
Preference Shares
Equity
Preferred Ordinary shares
Ordinary Shares
Enterprise Value, Equity Value, IRR
EV
Equity Value
IRR
A modelliing exercise in excel understanding the various instruments.
Enterprise Value, Equity Value, IRR concepts
2 © Andreas T. Angelopoulos 2011
Introduction to operational model & financial statements
Operational Model - Financial Statements
The Cycle of Business
The Financial Statements
The main Links
A modelling exercise in excel - how to build the :
Operating assumptions
Operational model (history, projections, key figures, net WC)
Financial Statements
Income Statement
Cash Flow
Balance Sheet
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© Andreas T. Angelopoulos 2011
Introduction to valuation modelling - Comparables
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A modelling exercise in excel - how to build the :
Select the comparable companies (public and private)
Identify the required financial information
Define the period taking into account economic cyclicality and
volatility
Calculate the statistics, ratios and multiples
Benchmark the comparables
Determine valuation
Databases to use: Thomson IB and Capital IQ
Comparables Valuation
© Andreas T. Angelopoulos 2011
Introduction to valuation modelling - IRR method
LBO Valuation - simple model
LBO - advanced model
A modelling exercise in excel - a LBO finance advanced model
Determine the sources and uses of funds
Define the assumptions of the model
Define the debt schedule and pricing
Calculate the debt schedule and the SHL repayment
Forecast the income statement
Calculate the cash flow & cash balance
Calculate the cash sweep
Adjust the Balance Sheet
Forecast the Balance Sheet
Calculate the credit statistics
Calculate the IRR and sensitivity analysis
Debt and Investment graph analysis
A modelling exercise in excel - a LBO finance model
Determine the sources and uses of funds
Define the assumptions of the model
Define the debt schedule and pricing
Calculate the debt schedule
Forecast the income statement
Calculate the cash flow & cash balance
Calculate the credit statistics
Calculate the IRR and sensitivity analysis
5 © Andreas T. Angelopoulos 2011
Introduction to valuation modelling - DCF
DCF Valuation: APV
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A modelling exercise in excel - how to build the :
Key growth drivers and income statement
Calculate the discount rate, used to discount the CF and
Terminal Value (TV) to the present using the unlevered cost of
equity (CAPM)
Project the target’s Cash Flows ignoring the capital structure
and discount them with the cost of equity
Determine the Terminal Value (TV), to quantify the remaining
value of the target after the projection period
Calculate the tax benefits associated with the capital structure
Determine the Valuation: a) the PV of FCF, PV of TV and PV
of Tax shields b) Enterprise (EV)
Implement a Sensitivity Analysis on the discount rate and Exit
Multiple of Terminal Value
A modelling exercise in excel - how to build the :
Key growth drivers and income statement
Project target’s un-levered FCF
Calculate the WACC (using capital structure and cost of equity
CAPM)
Determine the Terminal Value
Calculate the PV and Valuation
Sensitivity analysis
DCF Valuation: WACC
© Andreas T. Angelopoulos 2011
Introduction to valuation modelling - IRR method
Growth Capital
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Capital increase or Shareholder Liquidity
Financial Structuring - Key considerations
The concept of Pre Money and Post Money valuation
IRR method, EQV/NI, no dilution, no share options
IRR method, EV/EBITDA, no dilution, no share options
A modelling exercise using a simple IRR model
Antidilution protection (Full and weighted average ratchet)
A short case on antidilution
Liquidation preference (simple and participating)
A short case on liquidation preference
Financial Modeling & Valuation methodology
A modelling case - a Growth Capital model using convertible
shareholder loan
© Andreas T. Angelopoulos 2011
Challenges – Cases towards Education - Career
Bridgepoint Challenge Jefferies Challenge
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Investment Banking
M & A
Financial Sponsors
Leverage Finance
Private Equity
Growth Capital
LBO
Capital Markets (Equity)
Asset Management
Equity Research
Valuation
Private Wealth Management
Investment Banking
M & A
Capital Markets
Distress & Restructuring
Leverage, Project & Infrastructure Finance
Cases by Banks and Funds
Private Equity
Growth Capital
LBO
Distress
Infrastructure
© Andreas T. Angelopoulos 2011
Hermes Challenge
Asset Management
Private Equity
Pension Fund
Family Offices
Co investments
Funds of Funds
A. Challenges
Bridgepoint Challenge Jefferies Challenge*
Introduction to Challenge by Jefferies
Challenge: Research report, Finance & Valuation
Model
Cases, Guidelines and Reports by Jefferies
Mentor allocated by Jefferies
Awards in London (internship)
Network with Jefferies
* To be confirmed
Introduction to Challenge by Bridgepoint
Challenge: Investment proposal, Finance &
Valuation Model
Seminar by Bridgepoint
Case by Bridgepoint
Awards in Oxford (Cash award)
One Day @ Bridgepoint
Network with Bridgepoint
9 © Andreas T. Angelopoulos 2011
A. Challenges
Bridgepoint Challenge Time Schedule
Introduction to Challenge by Bridgepoint
Challenge: Investment Proposal, Finance &
Valuation Model
Seminar by Bridgepoint
Case by Bridgepoint
Awards in Oxford (Cash award)
One Day @ Bridgepoint
‘ Keeping in Touch ‘ - Network with Bridgepoint
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13th October, 2014: Introduction to Private Equity, Bridgepoint and the
Bridgepoint Challenge
7th November, 2014 : Registration closes (group members)
14th of November, 2014: Deadline for submission of questions to be
covered at 24th November seminar
24th November, 2014: Bridgepoint Seminar on “Shaping an Investment
Case” to include examples, tips on writing the final presentation,
answering questions submitted in advance
16th January, 2015: Deadline for submission of draft presentation &
model, and questions to be covered at 26th January seminar
[Date TBC] Bridgepoint Seminar on "Leveraged Finance from a Private
Equity Perspective’’
"26th January, 2015: Pets at Home Bridgepoint Case Study, Wrap-Up
Seminar , answering questions submitted in advance
9th February, 2015: Deadline for submission of entries
11th February, 2015: Top 10 best groups review by Bridgepoint/AA
23rd February, 2015: Awards Dinner to announce winners - ‘Keeping in
Touch’
[Date TBC] ‘One day @ Bridgepoint’ (3 winning teams in London) © Andreas T. Angelopoulos 2011
B. Challenges
Time schedule Jefferies Challenge*
Introduction to Challenge by Jefferies
Challenge: Research report, Finance & Valuation
Model
Cases, Guidelines and Reports by Jefferies
Mentor allocated by Jefferies
Workshop in Oxford by Jefferies
Awards in London (internship)
Network with Jefferies
* To be confirmed
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15th October, 2014: Introduction to Asset
Management, Capital Markets & Equity Research ,
Jefferies and the Jefferies Challenge
29th October, 2014 : Registration is closing (CV & CL)
4th November, 2014: Jefferies announces the final
participants, sectors and their mentors
1 December, 2014: Jefferies workshop, last year winner
12th January, 2015: Deadline for submission of the
interim report and valuation model to Jefferies (A)
23rd February, 2015: Deadline for final report and
valuation model to AA & Jefferies (B)
3rd March , 2015: Awards Dinner to announce winners –
internship
© Andreas T. Angelopoulos 2011
C. Challenges
Time schedule Hermes Challenge
Introduction to Challenge by Hermes
Challenge: Report, Finance & Valuation Model
Guidelines and Reports by Hemres
Workshop by Hermes
Awards in London (internship)
Network with Hermes
* To be confirmed
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26th November, 2014: Introduction to Asset
Management, and Private Equity allocation, Hermes and
the Hermes Challenge
8th December, 2014 : Registration is closing (CV &
CL)
[26th January], 2015: Hermes workshop
27rd February, 2015: Deadline for final report and
model to Oxford & Hermes
[4th March] , 2015: Awards Dinner to announce winners
– internship
© Andreas T. Angelopoulos 2011
D. Education (Cases) - Network
Investment Banks Private Equity Funds / Asset Management
Bridgepoint (LBO)
Bayside (Distress)
Oak Tree Capital (Distress)
Carlyle (Growth Capital)
Terra Firma (Alternative energy)
Denham (Infrastructure)
CDC (Emerging markets)
Advent (Private Equity)
Hermes (Asset Management)
Houlihan Lockey (Distress & Restructuring)
Goldman Sachs (Mergers & Acquisitions)
Rothschild (Mergers & Acquisitions)
Societe Generale (Leverage Finance)
Jefferies (Equity Research/Asset Management)
Morgan Stanley ( Distress, Capital Markets)
Commerzbank (IPO, Capital Markets)
12 © Andreas T. Angelopoulos 2011
E. Workshops
by Thomson IB, S & P Capital IQ and Bloomberg
A Workshop by Thomson IB A Workshop by S & P Capital IQ
An exercise how you can analyse investment targets using
Capital IQ:
macro economic conditions
sector analysis
company information
market- competition
financials, projections - equity research
comparables (private and public)
valuation (beta etc)
debt capital markets (instruments, volumes and pricing)
A exercise how you can analyse investment targets using
Datastream and Thomson one (Thomson IB):
macro economic conditions
sector analysis
company information
market- competition
financials, projections - equity research
comparables (private and public)
valuation (beta etc)
debt capital markets (instruments, volumes and pricing)
An addirtional Bloomberg workshop will be be organized by
Library and Careers
13 © Andreas T. Angelopoulos 2011
Time Schedule - Place
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Lab Introduction 17 September 2014 - 30 Sept 2014 – 06 Oct 2014
Application Opens Sept 30 Closes Oct 6 10-Oct-14
Term 1 ( Modelling/Challenges: 17.00 - 19.00 and Cases/Network: 19.00 - 21.00) @ Rhodes Trust
13.11 Lab 1 - Introduction – Bridgepoint Challenge – (network cocktail)
14.10 Lab 2 - Modelling – Modelling
15.10 Lab 3 - Modelling - Jefferies Challenge – (network cocktail)
20.10 Lab 4 - Modelling – Rothschild – (network cocktail)
21.10 Lab 5 - Modelling – Houlihan Lokey – (network cocktail)
22.10 Lab 6 - Modelling – Goldman Sachs – (network cocktail)
04.11 Lab 7 - Modelling – Bayside
05.11 Lab 8 - Modelling – Societe Generale – (network cocktail)
18.11 Lab 9 - Modelling – Carlyle
19.11 Lab 10 - Modelling – Oak Tree Capital (tbc)
Term 1
© Andreas T. Angelopoulos 2011
Time Schedule - Place
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Term 1
24.11 Lab 11 - Bridgepoint Seminar 1 and 2 – (network cocktail)
25.11 Lab 12 – Hermes Challenge
01.12 Lab - Jefferies Workshop
02.12 Lab 13 – Morgan Stanley (from 18:00 – 20:00) – (network cocktail)
08.12 Lab 14 - Advent International (from 18.00 -20.00)
Term 2 ( Modelling/Challenges: 17.00 - 19.00 and Cases/Network: 19.00 - 21.00) @ ES LT
19.01 Lab 15 – Modelling
26.01 Lab 15 - Modelling - Bridgepoint Case (network cocktail)
02.02 Lab 16 - Terra Firma - CDC
16.02 Lab 17 - Modelling – Denham
23.02 Lab 18 - Bridgepoint Challenge awards and dinner in Oxford
02.03 Lab 19 – Commerzbank
03.03 Lab 20 - Jefferies Challenge awards and dinner in London
TBC.03 Lab 20 – Hermes Challenge award and dinner in London
Term 1 and 2
© Andreas T. Angelopoulos 2011
Terms & Conditions
Oxford Finance Lab
To be admitted : Up to 120 students
Application process and selection run by Careers
Application information and deadlines will be provided by
Careers
Participate in at least one Challenge (HR)
Challenge participation can NOT be dropped after Nov 7.
Cases attendance will be open to non Lab students (upon
availability and registration by Careers)
A ‘’Finance & Valuation Modelling Certificate’’ by Oxford will
be provided subject to attend the 80% of modelling sessions
(bold) and participate at least in one challenge
16 © Andreas T. Angelopoulos 2011
Contact details
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Andreas T. Angelopoulos
Executive Director
Private Equity Institute
Programme Director
Oxford Chicago Valuation Programme
Director
Oxford Finance Lab
University of Oxford
Said Business School
Park End Street, Oxford OX1 1HP
United Kingdom
'δῶς μοι πᾶ στῶ καὶ τὰν γᾶν κινάσω' Ἀρχιμήδης
http://www.sbs.oxford.edu/ideas-impact/privateequity
http://www.sbs.ox.ac.uk/programmes/execed/ocvp
For any further questions please contact:
Adila Khan
Career Advisor- Finance
Associate Director
Oxford Finance Lab
University of Oxford
Said Business School
Park End Street, Oxford OX1 1HP
United Kingdom
T +44 (0)1865 288529
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Note
© 2008 - 2011 Andreas Angelopoulos all rights reserved. The distribution or reproduction is prohibited without author’s further written permission. All materials are available only for the registered students in Oxford Finance Lab. Every effort has been made to ensure the accuracy of the contents and calculations. These materials are not intended as a substitute of any professional advise or to be used for professional purposes without the advise and review of an expert. Speakers and copyrights owner have developed these materials strictly for class discussion. Numbers, names and assumptions are not representing the real companies or cases. The materials should not be used for commercial use, sold, traded or lent, hired out, copied, presented or circulated, stored and emailed all or parts without the prior written consent of Andreas Angelopoulos who retain sole ownership of these materials.