Business Valuation

Bachelor 2020/2021

Type: Elective course (World Economy)

Area of studies: Economics

Delivered by: School of World Economy

Where: Faculty of World Economy and International Affairs

When: 4 year, 3 module

Mode of studies: distance learning

Instructors: Ekaterina A. Makarova

Language: English

ECTS credits: 4

Contact hours: 34

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Abstract

The course “Business valuation” focuses on the main valuation methods and techniques used to determine the real value of a firm. The course is aimed to improve students’ skills to analyze financial statements of a company and to determine its price. It would let students understand how to distinguish value creation from value destruction and how to select the appropriate method of business valuation for any given situation. The course also touches upon the key principles of valuation for insolvency proceedings, for IPO and M&A and cross-country comparison of valuation legislation and standards. The special issue analyzed within the course is Value creation. It covers such questions as fundamentals of corporate and equity valuation; principles of portfolio analysis; corporate real options. Case studies will be the main tool to learn practical applications of various valuation theories and instruments.

Learning Objectives

to provide theoretical overview of key methods applied to value different types of business and assets;
to improve students’ skills to analyze financial statements of a company and to determine its’ price
to understand how to distinguish value creation from value destruction
to understand how to select the appropriate method of business valuation for any given situation

Expected Learning Outcomes

understand key features of the key approaches to valuation and can define the most commonly applied standards of value
Can choose correct methods and instruments for specific valuation cases.
understand specific features of valuation process for different purposes

Course Contents

Business valuation: basic concepts
The purpose and resources for valuing businesses;  Internal reasons and external reasons for valuation  Standards (types) of firm value;  Foundations of value: growth and value creation;  Key methods and approaches to firm valuation.
Using Financial Statements for valuation and analysis
Financial statements: types, elements, principles; Financial statement analysis; Comparison of Generally Accepted Accounting Principles (U.S), Russian and International Financial Reporting Standards.
Valuation approaches and methods
Income approach. Valuing companies by cash flow discounting: main steps, models, and problems; Market approach. Valuing companies using multiples. Industrial coefficients analysis method. Analogues deals method; The role of cost approach in business valuation.
Value creation
Fundamentals of corporate capital valuation; Fundamentals of equities valuation: preferred and common stock; Risk and expected return: principles of portfolio analysis; Valuing corporate strategic opportunities and flexibility: corporate real options; Capital market benchmarking: corporate cost of capital.
Valuation law and standards: cross-country comparison
Legal implications International valuation standards European valuation standards American standard valuation law Russian valuation standards Company valuation: a comparison of economic and legal perspectives
Special valuation issues
Valuing a minority interest in a private company. Value a company’s goodwill and its intangible assets. Valuing intellectual property. Corporate taxes and valuation. Inflation. Foreign Currency. Liquidation value. Premiums and discounts in business valuation (control premium, discount for lack of control, discount for lack of marketability).
Case study analysis
Valuation of start-ups. Sports team valuation. Valuing banks. Valuation in emerging markets. Valuing high-growth companies. Valuing cyclical companies.

Assessment Elements

Midterm quiz
Results achieved in seminars
Final exam
MOOC results
Midterm quiz
Results achieved in seminars
Final exam
MOOC results

Interim Assessment

Interim assessment (3 module)
0.25 * Final exam + 0.25 * Midterm quiz + 0.25 * MOOC results + 0.25 * Results achieved in seminars

Bibliography

Recommended Core Bibliography

Financial analysis: collection of case studies: Учебное пособие / Казакова Н.А., Дун И.Р., Бобкова М.П. - М.:НИЦ ИНФРА-М, 2018. - 54 с.: 60x90 1/16 ISBN 978-5-16-106744-4 - Режим доступа: http://znanium.com/catalog/product/972205

Recommended Additional Bibliography

Mard, M. J., Hyden, S. D., & Hitchner, J. R. (2007). Valuation for Financial Reporting : Fair Value Measurements and Reporting, Intangible Assets, Goodwill and Impairment (Vol. 2nd ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=218516

Course Syllabus