Forecasting Operating Models

Introduction

• Understanding the structure, components and strategies for building time-sensitive and efficient models for your specific purpose
• Fundamentals / best practices for model building

Developing Assumptions – Balance Sheet

• Key items, categories and relevancy for quick analysis
• Current Assets and Liabilities, metrics for analysis
• Non-current Assets, key components
• Operating long term liabilities
• Funding via Debt
• Funding via Equity

Developing Assumptions – Income Statement

• Components and structure
• Understanding Revenue (recognition and cash implications)
• Analysis and metrics

Forecasting

• Income Statement and Balance Sheet
• Cash Flow Statement

Ratios, Analysis and Interpretation of Outputs

• Growth
• Profitability (Margins and returns)
• Asset efficiency and reinvestment analysis
• As-is and normalized metrics

Intrinsic Valuation (DCF)

Introduction

• Quick overview of valuation techniques
• Intrinsic vs Relative Valuation
• Minority and Controlling Stakes
• Strategic vs Financial approaches to valuation
• Enterprise Value

Steps to Intrinsic Valuation

• Determining forecasting period/s
• Calculating free cash flows
• Calculating discount rate
• Calculating the terminal value (TV Multiple vs Perpetual Growth)
• Discounting and calculation of Enterprise Value

Refining Your Intrinsic Valuation

• Sensitizing and cross-checking your outputs
• Perpetual growth assumptions, sanity checks vs reinvestment and asset efficiency
• Enterprise Value calculation refinements

Modeling Financial Acquisitions (LBO)

Introduction

• Overview of key structuring, funding and value generating strategies in the context of financial acquisitions
• KEY financial metrics, strengths and pitfalls (IRR, XIRR, MIRR, MOIC / COC)
• Overview of key entry / exit dynamics / metrics
• Emphasize critical thinking and current market status / trends

LBO Modeling

• Modeling entry / acquisition assumptions
• Build the sources & uses tab
• Funding – deal set up and modeling
• Modeling the shell / holdco and the operating company
• Modeling exit assumptions
• Calculating and sensitizing deal metrics for all stake holders (sponsors, management, combo)
• Critical analysis of outputs and focus on understanding, not just modeling

Modeling Strategic Acquisitions (M&A)

Introduction

• Overview of structuring, funding, forecasting, and calculation of KEY financial metrics
• Emphasize critical thinking about earnings and return impacts, credit consequences, and market perception

M&A Modeling

• Modeling acquisition assumptions
• Modeling the Balance Sheet
• Modeling the Income Sheet
• Modeling the Cash Flow Statement
• Transforming the deal into a multiple / relative valuation for analysis (implications)
• Analysis of key non-EPS metrics (fundamental)