The Art of Company Valuation - Complete course from Udemy

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Learning objectives

Be able to determine the intrinsic / real value of a company using cash flow to the firm & equity methods
Be able to apply the right valuation method depending if you are into startup investing, private equity or public equity investment universe
Understand the main company valuation methods (asset based valuation methods, going concern valuation methods, relative valuation methods)

Understand the difference between absolute & relative valuation methods
Become fluent in executing a discounted cash flow / future earnings valuation
Be able to adjust balance sheet items in order to modify the book value of a company

Be able to determine the intrinsic / real value of a company using cash flow to the firm & equity methods
Be able to apply the right valuation method depending if you are into startup investing, private equity or public equity investment universe
Understand the main company valuation methods (asset based valuation methods, going concern valuation methods, relative valuation methods)
Understand the difference between absolute & relative valuation methods
Become fluent in executing a discounted cash flow / future earnings valuation
Be able to adjust balance sheet items in order to modify the book value of a company

Syllabus

Introduction

This lecture introduces the course content and explains the angle taken in this advanced valuation course.

In this chapter we will lay down the foundation by defining value and also looking how value specifically monetary value is created in the context of business. We will also address how ROIC relates to WACC, risk-free rate and inflation

The main topic of this chapter is about introducing who valuates companies, the purpose of valuation but also a first perspective between buyer & seller side. Last but not least we will also discuss why company valuation will never be perfect and which factors will influence company valuation.

In this final lecture of chapter 1, I will be introducing the various valuation categories and giving a first explanation on the differences between absolute vs relative valuation. This chapter will give you a first overview of the methods we will be using & practicing in chapters 2 to 4.

We will be starting the absolute valuation lectures by introducing the concept of market capitalization and the quick & very interesting cash to market capitalization test.

Book value has been for decades used by value investors to identify undervalued companies. In this lecture, we will explain how book value is calculated and more specifically introduce the price-to-book value test that is often used by value investor amongst other valuation tests to see if the market is undervaluing or overvaluing a company.

Adjusting assets and by that book value of a company requires first of all a general understanding of IFRS vs US GAAP accounting standard differences. In this lecture I will also showing how materiality threshold on assets allows a quick selection of the main assets to revaluate potentially.This lecture is an introduction lecture before going deep into the 3 types of asset classes we will be analysing in the next leture.

This lecture is a pretty long lecture where we will be practicing asset value adjustments on financial instruments, PP&E and trademarks. I will show you at the end of the lecture how the value adjustment of those assets has a direct impact on the book value of the company.

The last lecture in this chapter about asset based valuation is dedicated to calculate the liquidation value of a company. Liquidation may happen when the business owners decide to stop operating or when a fire sales/emergency sales scenario may be required. Similar to the price to book value, I will teach how to interprete price to liquidation value.

Multiple revenue & earnings method are the 2 first methods related to going-concern valuation. In this lecture I will show you how to determine over/undervaluation of a company based on earnings & revenue multiples and where to look for those multiples (DVI, Pepperdine, Aswath Damodaran).

Free Cash Flow to the Firm also commonly known as Discounted Cash Flow is one of the most important tools for determining the intrinsic value of a company. While book or adjusted book value gives you a sense of what the company is worth on its current assets, FCFF/DCF allows to determine the value of a company based on its future earnings. In this lecture we will also be adressing how to determine cost of capital based on industry risk, credit risk spread and country risk spread.

In this last lecture of going-concern valuation, I will be looking at Free Cash Flow to Equity valuation methods starting with Dividend Discount Model & Gordon Growth. We will be finalizing with Total Shareholder Yield which includes share buybacks as buybacks became more & more popular since the early 2000s.

In this lecture I will starting first by explaining under which circumstances relative valuation is interesting. The 2nd part of the lecture will be about Price To Book relative valuation.

Price to Cash Flow is a very similar relative valuation method to Price to Earnings. We will be discussing Price/Operating Cash Flow but also Price/Free Cash Flow and how to interprete the relative valuation calculation.

Price to Earnings ratio (also known as P/E) is one of the most known and commented relative valuation ratios on the market. In this lecture we will be looking at P/E but also explaining Forward & Trailing P/E.

The last price-to relative valuation ratio I will be discussing is Price-to-sales. In this lecture I will be explaining how to interprete P/S and in which narrow scenario P/S may make sense (growth companies).

PEG (Price to Earnings to Growth ratio) is a very similar relative valuation ratio compared to P/E with the advantage that it brings in growth assumptions into the calculation. In this lecture I will explain how to calculate & interprete the PEG ratio.

Entreprise Value relative valuation is used in combination with EBIT, EBITDA and Sales as a relative valuation measure. I will explain in this lecture how EV is calculated, comparing it to market cap, P/E, PEG and establishing EV/EBIT for the 4 companies we are consistently practicing during the course. I will also introduce EV/Sales as a relative valuation measure, similar to multiple-revenue method we saw earlier in this course.

In the first lecture of special valuation situations, I will be introducing the main concepts of merger & acquisitions, which methods are typically used in M&A situations and also explaining the important concept of goodwill (balance sheet asset) in the context of M&A.

This lecture will elaborate on which valuation methods to use depending if you are a VC investor, private equity or public equity investor. We will discuss which valuation methods are used by investing professionals in those 3 areas.

The switch for a company from private equity to public equity happens through Initial Public Offerings (IPO) or Direct Public Offerings (DPO). In this lecture, I will be discussing on the examples of Fitbit, GoPro & ETSY how to look into IPO/DPOs and looking back at the IPO performance for those 3 companies. The lecture will close with an analysis/brainstorm if the IPO performance of those 3 companies could have been predicted.

Banks are a special valuation category. I will explain what is special about banks and how book value & FCFE are better valuation methods for banks vs more traditional FCFF methods.

In this lecture, I will explain how to understand company valuation that have multiple share classes with similar par values and with diverging par values. We will discuss in depth Petrobras & Berkshire Hathaway examples.

This is the closing lecture where I summarize again what we have seen together during the whole course.

Appendix 1 covers the companion datasheet

Traffic lights

Read about what's good

what should give you pause

and possible dealbreakers

Covers asset-based valuation, which is useful for understanding a company's worth based on its tangible assets and liabilities

Explores going concern valuation, which is essential for assessing a company's value based on its future earnings potential

Examines relative valuation, which is helpful for comparing a company's financial metrics to those of its peers in the market

Includes case studies of luxury and tech companies, which provides practical application of valuation methods in different industries

Discusses special valuation situations like VC investments and IPOs, which broadens the scope of valuation knowledge for different investment scenarios

Requires knowledge of IFRS and US GAAP accounting standards, which may pose a challenge for learners without a background in accounting

Reviews summary

Comprehensive company valuation methods

According to learners, this course provides a comprehensive and practical approach to company valuation. Students particularly praise the use of real-world company examples (like Apple, Microsoft, Richemont, Kering) which helps to ground the theoretical concepts in practice. The instructor's explanations are frequently described as clear, making complex topics like DCF and various relative valuation methods understandable. While some older feedback noted certain sections could be more in-depth or the pace could be challenging for complete beginners, recent reviews suggest the course content has been updated and improved, particularly in core areas like Discounted Cash Flow analysis. Overall, it is considered a highly valuable resource for those seeking to apply valuation techniques.

Course content appears updated based on feedback.

"The DCF section seems much clearer now, maybe it was updated?"

"Glad to see the course materials are kept relatively current."

"The improved explanations show the instructor listens to feedback."

Covers a wide range of valuation methods and scenarios.

"This course covers everything from asset-based to DCF and relative valuation."

"I liked that it included special situations like M&A, VC, and bank valuations."

"Provides a solid overview of multiple valuation approaches you can use."

Instructor clarifies complex valuation techniques effectively.

"The instructor explained complex topics in a very understandable way."

"Lectures were clear and concise, making even difficult concepts accessible."

"I finally understood DCF after this course, thanks to the clear explanations."

Applies concepts to real companies for practical learning.

"Using real companies like Apple and Microsoft was incredibly helpful to see concepts applied."

"I really appreciated practicing valuation methods on actual financial data."

"The case studies with real companies made the learning much more concrete and useful."

Pace can be fast for those new to finance/accounting.

"If you're completely new to finance, the pace might feel a bit quick."

"I felt a bit lost at times because I lacked accounting background."

"Requires some basic financial literacy to keep up easily."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in The Art of Company Valuation - Complete course with these activities:

Review Accounting Principles

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Reviewing accounting principles, especially IFRS vs US GAAP differences, will provide a solid foundation for understanding balance sheets and financial statements, which are crucial for company valuation.

Browse courses on Accounting Standards

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Identify key accounting principles.
Review differences between IFRS and US GAAP.
Practice applying these principles to sample financial statements.

Read 'The Intelligent Investor'

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Reading 'The Intelligent Investor' will provide a strong foundation in value investing principles, which are essential for this course.

View Melania on Amazon

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Obtain a copy of 'The Intelligent Investor'.
Read the book, focusing on chapters related to financial statement analysis and valuation.
Take notes on key concepts and principles.

Calculate Free Cash Flow

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Practicing free cash flow calculations will reinforce your understanding of discounted cash flow (DCF) valuation methods.

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Find sample financial statements online.
Calculate free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) using different methods.
Compare your results with available solutions.

Four other activities

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Build a DCF Model

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Building a discounted cash flow (DCF) model will allow you to apply the concepts learned in the course and gain practical experience in company valuation.

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Choose a publicly traded company.
Gather the company's financial statements.
Build a DCF model in a spreadsheet, projecting future cash flows and discounting them back to present value.
Analyze the results and draw conclusions about the company's intrinsic value.

Read 'Damodaran on Valuation'

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Reading 'Damodaran on Valuation' will provide a deeper understanding of valuation techniques and their applications.

View Investment Valuation, University Edition: Tools... on Amazon

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Obtain a copy of 'Damodaran on Valuation'.
Read the book, focusing on chapters related to the valuation methods covered in the course.
Take notes on key concepts and examples.

Analyze a Recent IPO

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Analyzing a recent IPO will allow you to apply the valuation techniques learned in the course to a real-world situation.

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Choose a recent IPO.
Gather information about the company, including its financial statements and prospectus.
Apply the valuation techniques learned in the course to determine the company's intrinsic value.
Compare your valuation to the IPO price and analyze the reasons for any differences.

Write a Valuation Report

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Writing a valuation report will help you consolidate your knowledge and communicate your findings effectively.

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Choose a company to value.
Gather the necessary financial information.
Apply the valuation techniques learned in the course.
Write a report summarizing your findings and recommendations.

Career center

Learners who complete The Art of Company Valuation - Complete course will develop knowledge and skills that may be useful to these careers:

Investment Analyst

An investment analyst researches and analyzes investment opportunities for financial institutions or individual investors. This course is highly relevant for anyone interested in becoming an investment analyst. The core focus of the course is determining a company's intrinsic value using a variety of valuation methods, which is central to the role of an investment analyst. The course covers techniques for valuation in public equity, private equity, and venture capital, which are all important to the work of an investment analyst. This course emphasizes real-company case studies, which provides the practical experience that an investment analyst requires. The in-depth study of various financial ratios and valuation methods in this course further develops the core skills of an investment analyst.

See salaries and explore the career path for Investment Analyst

Financial Analyst

A financial analyst evaluates financial data to advise companies or investors on investment decisions. This course is perfectly suited for aspiring financial analysts, as it provides training in numerous valuation methods, including asset based valuation, discounted cash flow, and relative valuation using multiples. The course focuses on real-world scenarios, using actual companies such as Apple and Microsoft, which mirror the type of analysis a financial analyst would perform. Additionally, this course helps build a foundation in interpreting financial statements, essential for any financial analyst role. This course gives a practical, hands-on approach to valuing companies in different industries, which is crucial for success as a financial analyst.

See salaries and explore the career path for Financial Analyst

Equity Research Analyst

An equity research analyst studies public companies and makes recommendations on their stock to potential investors. This course aligns well with the needs of an equity research analyst, providing a thorough understanding of company valuation techniques. The course teaches how to evaluate companies based on asset values, future cash flows, and relative valuation metrics, all of which are essential for an equity research analyst. Moreover, it covers how to analyze financial statements and adjust balance sheets, which is part of the work of an equity research analyst. This course's approach of using real-world examples, such as luxury and tech companies, is highly beneficial as it mirrors the daily tasks of an equity research analyst.

See salaries and explore the career path for Equity Research Analyst

Business Valuation Specialist

A business valuation specialist determines the economic worth of companies and their assets. This course will help you build the foundational knowledge needed to become a business valuation specialist, as it teaches different valuation methods including asset-based, going concern, and relative valuation techniques. The course's content is highly relevant, as it focuses on determining a company's true value in various contexts, which is core to the work of a business valuation specialist. The in-depth analysis of real companies which this course offers is an excellent opportunity for anyone seeking a role as a business valuation specialist.

See salaries and explore the career path for Business Valuation Specialist

Corporate Finance Analyst

A corporate finance analyst is responsible for financial planning, analysis, and decision-making within a company. This course is extremely useful for a corporate finance analyst because it provides a solid grasp of company valuation methods. The course's broad coverage of asset-based valuation, going concern valuation, and relative valuation is essential for a corporate finance analyst who must also understand how to analyze financial health. The work of a corporate finance analyst also involves the analysis of real companies, which this course does through its use of Apple, Microsoft, and luxury goods companies. This course significantly enhances the financial analysis expertise needed in a corporate finance role.

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Private Equity Analyst

A private equity analyst is dedicated to evaluating and investing in companies not traded publicly. This course is invaluable for an aspiring private equity analyst, as it covers valuation methods for private companies. It provides practice in using various valuation methods including asset-based valuation, going concern valuation, and relative valuation methods, all of which are applicable to private equity. The course also looks at special valuation situations like venture capital investments and IPOs, which are essential to know for a private equity analyst. This course offers practical training using real-company data, which is very useful for the kind of work a private equity analyst performs.

See salaries and explore the career path for Private Equity Analyst

Mergers and Acquisitions Analyst

An mergers and acquisitions analyst works on the valuation and due diligence process for mergers, acquisitions, and divestitures. This course is particularly beneficial for anyone interested in becoming a mergers and acquisitions analyst since it provides comprehensive training in various company valuation methods. The course goes into special situations, such as M&A, and teaches how to compute goodwill and use proper valuation methods for these types of transactions. This course greatly enhances the essential skills in financial analysis and valuation for anyone aiming for a role as a mergers and acquisitions analyst.

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Venture Capital Analyst

A venture capital analyst assesses early-stage companies to determine the viability of investment. This course provides skills that are directly applicable to the work of a venture capital analyst, such as how to value companies in the startup phase, as this course goes into special valuation situations. The course helps one to master different valuation methods, including discounted cash flow and relative valuation, which are essential for a venture capital analyst. This course also covers important considerations for valuation in the venture capital space, such as the valuation of IPOs and DPOs. The course will also assist a venture capital analyst in understanding various key components in valuation, including balance sheet adjustments.

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Hedge Fund Analyst

A hedge fund analyst analyzes investment opportunities to inform the trading and investment strategies of a hedge fund. This course is directly relevant to the work of a hedge fund analyst. The course covers a wide variety of valuation methods, from asset-based valuation to discounted cash flow, that help determine a company's true worth. Because hedge funds engage in different types of investment activities, the course's coverage of public equity, private equity, and venture capital valuation is advantageous for a hedge fund analyst. This course helps refine the analytical skills and practical knowledge needed in a hedge fund environment.

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Portfolio Manager

A portfolio manager is responsible for making investment decisions to meet the specific goals of their clients. The course is relevant for anyone aspiring to become a portfolio manager because it focuses on determining the true value of a company, which is essential when making investment decisions for a portfolio. The course covers valuation methods relevant across different investment strategies, including those for startups, private equity, and public equities. This course also provides a good understanding of how to analyze various valuation ratios, which is key to assessing the attractiveness of a company. This course will help a portfolio manager develop the skills to make informed decisions based on a strong grasp of company valuation.

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Financial Advisor

A financial advisor guides individuals on investment strategies to achieve their financial objectives. This course is useful for a financial advisor, as it helps them understand company valuation methods, which assists with making sound recommendations to clients. A financial advisor needs to know how to judge the value of investments, and this course teaches how to determine the intrinsic value of a company. The course covers different methods, including asset-based valuation and discounted cash flow, which can be useful for a financial advisor. This course may help a financial advisor provide sound advice to investors.

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Credit Analyst

A credit analyst assesses the creditworthiness of individuals and businesses, evaluating their capacity to repay debt. This course may be useful to a credit analyst because the course looks at financial statements and balance sheets, which are important to credit analysis. The course covers topics like asset-based valuation, which can provide insights into a company's strength. However, the course focuses primarily on equity valuation, rather than credit, so other courses may be more appropriate for someone hoping to become a credit analyst. This course may be helpful to a credit analyst.

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Financial Controller

A financial controller is in charge of a company's accounting and financial reporting. This course may be useful for a financial controller, as it covers topics such as balance sheet adjustments and various valuation methods. A financial controller benefits from knowing how to interpret the financial health of the company, which the valuation focus of this course can assist with. This course also features real-world examples, which may be helpful to a financial controller. This course may assist in the professional development of a financial controller.

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Real Estate Analyst

A real estate analyst evaluates real estate investments, providing research and analysis to inform investment decisions. While the course is not focused on real estate, some concepts within, such as valuation methods, may be useful for a real estate analyst. The course discusses asset valuation, which can be applied to tangible assets, including real estate. The course also goes into financial statement analysis, which can provide useful context for a real estate analyst looking at the financials of real estate firms. This course may provide some foundation for an aspiring real estate analyst.

See salaries and explore the career path for Real Estate Analyst

Management Consultant

A management consultant advises organizations on strategies to improve their performance and efficiency. This course may be helpful for a management consultant, as a strong grasp of company valuation can help them in their consulting practice. Management consultants may need to evaluate the financial health of a company, which this course can help with by teaching various valuation techniques. The course also uses real companies in its case studies, which may provide useful data points for a management consultant. This course may provide a small benefit to a management consultant's work.

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Reading list

We've selected two books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in The Art of Company Valuation - Complete course.

Investment Valuation, University Edition

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Comprehensive guide to valuation techniques. It covers a wide range of valuation methods, including discounted cash flow, relative valuation, and option pricing. It is commonly used as a textbook at academic institutions and by industry professionals. This book adds more depth to the existing course.

Investment Valuation, University Edition: Tools and...

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The Art of Company Valuation - Complete course

What's inside

Learning objectives

Syllabus

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Reviews summary

Comprehensive company valuation methods

Activities

Career center

Reading list

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