Evening Essentials

• Analyzing a company’s income statement, balance sheet and cash flow statement
• Why bankers stress the importance of EBIT and EBITDA
• Calculation and decoding of financial ratios
• Normalizing for non-recurring items
• Calculating margins, growth rates, credit ratios
• Interpreting footnotes and management discussions & analysis

Public Comparables Analysis:

• Choosing a peer group and gathering public information (sources and SEC documents overview)
• Spreading comparables – calculating Market and Enterprise Value, normalizing for non-recurring items, inputting the numbers, LTM, calculating multiples

Acquisition Comparables Analysis:

• Choosing a deal list
• Concept of control premiums and synergies
• Sample transaction list

Discounted Cash Flow Analysis:

• Strengths and considerations of a DCF analysis
• Deriving a weighted average cost of capital (WACC)
• Discounting unlevered free cash flows
• Estimating the terminal value (exit multiple vs. perpetuity growth rate approach)
• Determining the valuation range

• Establishing modeling standards of consistency, efficiency and clarity
• Introduction to short-cut keys and other Excel settings for efficiency
• Creating flexible formulas, calculations and projections
• Auditing financial models

Building an Integrated Financial Model:

• Setting up and road mapping the modeling process
• Efficiencies with entering and analyzing historical financials
• Projecting revenues and operating performance
• Constructing the balance sheet and cash flow statement
• Forecasting operating/working capital

• Projecting PP&E and intangible assets
• Calculating cash flow from investing activities
• Forecasting other long-term items
• Building a detailed equity & shares schedule
• Understanding the core accounting relationships when building an integrated model
• Debt & interest schedule
• Setting up a “cash sweep” for excess cash and building complex deficit financing options

Trouble Shooting Your Model:

• Controlling for circular references, balancing models, and making the model “deal ready”
• Constructing and utilizing data tables to perform sensitivity analysis
• Using your model in a “real world” deal situation including a DCF application

• Overview of purchase accounting
• Allocating the purchase price and creation of goodwill
• Sample merger consequences impact: transaction assumptions, sources and uses, opening balance sheet, pro-forma income statement
• M&A transaction considerations (stock vs. cash, social issues, etc.) and their impact on the financial statements
• Break-even synergies and PE analysis
• Key concepts and analysis: accretion / dilution, pro forma leverage and coverage ratios

Leveraged Buyout Analysis:

• Concept of an LBO and de-leveraging
• LBO math
• Capital structure determination
• Utilizing a revolving credit facility and cash sweep
• The characteristics of the different debt instruments
• Differing viewpoints for LBO constituents
• Internal rate of return analysis
• Mechanics of constructing an LBO model