Corporate Valuation

This course covers business valuation and equity valuation. The goal of the course is to provide students with a deep understanding of the core corporate finance concepts, and with practical tools and methods to value a broad range of assets. While the course is designed first and foremost to be very practical, the tools and methods covered in this course are presented in the framework of generally accepted financial theory. The course starts with a broad overview and discussion of valuation techniques. Following the overview of valuation techniques, we start with methods for calculating the discount rate used in cash flow valuation methods and the valuation effects of a firm’s capital structure. We then cover cash flow valuation techniques used to value businesses and equity. We start with the discounted cash flow method (DCF), which is the most widely used cash flow valuation method. Cash flow valuation methods include many uncertain inputs, and sensitivity analysis help reveal the effects of varying the major inputs of the valuation. Following the DCF work, we will cover the use of relative valuation multiples (e.g., EV/EBITDA, P/E) and work through an HBS case on the use of valuation multiples in determining firm and equity value. We conclude the course with a discussion of other valuation techniques, control premiums and liquidity discounts, and a look at valuation in both LBO and M&A contexts.