oxford finance lab - sbs.ox.ac.uk · pdf filea modelling exercise in excel - a lbo finance...

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

3


Introduction to valuation modelling - Comparables

4


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


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


Introduction to valuation modelling - DCF

DCF Valuation: APV

6


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


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


Introduction to valuation modelling - IRR method

Growth Capital

7

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


Challenges – Cases towards Education - Career

Bridgepoint Challenge Jefferies Challenge

8

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


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


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

10

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


Network with Jefferies

* To be confirmed

11

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


C. Challenges

Time schedule Hermes Challenge

Introduction to Challenge by Hermes

Challenge: Report, Finance & Valuation Model

Guidelines and Reports by Hemres

Workshop by Hermes


Network with Hermes

* To be confirmed

11

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


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)


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


Time Schedule - Place

14

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


Time Schedule - Place

15

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


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


Contact details

18

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

17

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.

oxford finance lab - sbs.ox.ac.uk · pdf filea modelling exercise in excel - a lbo finance...

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