Finanical modelling training on May 21-22
Dear members,
The Finance Club is currently negotiating with an external provider (Training the Street) the organization of a 2 day financial modelling training at IESE, during the week end of May 21-22 (from 9.30am to 4.30pm). The objective of this course is to develop the participants financial modeling skills and critical thinking through an actual hands-on construction of a 3-statement LBO model. This course will contain some pre-work and aims to prepare students for their Summer internship. Participants will be required to construct a portion of the operating model components independently prior to attending the Workshop. The goal of the course is to give participants a practitioner’s view of LBO modeling by blending accounting, corporate finance and Excel skills. Please see below for a full description of the training.
Although the club will cover some part of the training fee, each participant will be asked to contribute. The training will be organized only if there are more than 30 participants and the price per participant will depend on the number of participants (150 to 200 EUR/participant). We are thus conducting this survey in order to identify students who are seriously interested in attending this training on May 21-22 given the current price information.
Your participation to this survey is key to confirm the feasibility of this training. Please kindly respond by Wednesday 13th of April COB.
Link to survey: http://goo.gl/forms/nGevUC4MRr
Cheers,
The Finance Club
Description of the training:
The completed product will be a dynamic model, containing the following statements and schedules:
· Income statement, balance sheet and cash flow statement ?
· Working capital schedule, depreciation and capital expenditure schedule ?
· Intangibles amortization schedule ?
· Shareholders’ equity schedule ?
· Debt and interest schedule with a “cash sweep” assuming multiple debt tranches ?
· IRR Analysis (Mezzanine and Financial Sponsor) ?This session will be capped off with a comparison of the LBO value against that derived using the Discounted Cash Flow analysis. ?
Pre-work. LBO Model Construction (partial) and application:
Participants will be required to complete select steps of the operating model prior to attending the Workshop. Participants should come to class prepared to discuss any areas or complications encountered.
· Income statement, balance sheet and cash flow statement. This includes making operating projections and efficiently forecasting operating drivers ?
· Operating working capital – with an overview of fundamental accounting ratios including T/R days, inventory days & T/P days. The interlinking of statements includes the impact of working capital on a cash flow statement, and projecting working capital balances on the balance sheet
· Fixed assets - capital expenditure and depreciation. Forecasting CapEx & depreciation, and their respective impact on the cash flow statement & income statement
· Amortisation schedule – includes discussion on definite life vs. indefinite life intangibles (FAS 142 & IFRS 3) ?
· Other long-term items schedule – GW & GW impairment, deferred taxes, minority interest & equity investments ?
Day 1. LBO Model Construction and application:
· Review of task completed as part of pre-work assignment and discuss problem areas and review of key learning points
· LBO conceptual overview and an introduction to LBO math – topic discussed to lay the foundation for completing the transactional aspect of the LBO model
· Begin constructing of the remaining schedules of the LBO model
o Sources and uses of funds
o Opening balance sheet and purchase accounting adjustments (Purchase accounting overview and Creation of goodwill and write-ups, including possible incremental D&A)
o Preparing for the debt and interest schedule ?
o Debt and interest schedule – constructing multiple “cash sweeps”, and building Excel logic to borrow and raise debt when a company has a shortfall of cash, and utilize excess cash to pay down debt ?
o Link remaining balance sheet items most notably debt balances and forecasting the equity account ?
o Complete IRR analysis based either a trade sale or IPO as an exit strategy
Day 2. Advanced Leveraged Buyout Modeling & Discounted Cash Flow Analysis ?
· Advanced LBO Modeling Topics ?
o "Payment in kind" (PIK) instruments ?
o Mezzanine financing with warrants and analyzing returns Advanced Excel Modeling Topics ?
o Understanding and controlling for circular references – controlling for errors (#VALUE, #NUM, #REF, etc.) ?
o Steps to balancing the financial model when not in parity (i.e. A ? L+E) ?
o Integrity and error checking the model drills and exercises ?
o Adding switches and scenarios for sensitivities analysis ?
o Storing cell values using self-referencing IF functions
· Discounted Cash Flow Overview & Mechanics
· Using the information from the LBO model assumptions we will analyze the valuation of the target company using the Discounted Cash Flow approach ?
o Conceptual overview of the Discounted Cash Flow ?
o Calculating unlevered free cash flow ?
o Estimating the terminal value (exit multiple vs. perpetuity growth rate) ?
o Calculation of equity value and equity value per share ?
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