This course can also be presented face to face in-house or via live in-house webinar.
Valuing a Technology Company Course Objectives
- Understand how to define the problem including the differences between corporate & technology valuation and lifecycles and corporate cash flows
- Have explained to them how to apply the DCF model to technology companies
- Evaluating the stable growth stage and calculating terminal value
- Gain an understanding of using multiples in technology valuation including the importance of using EBITDA
- Be taught about how to use the real options approach
Valuing a Technology Company Course Content
Defining the Problems
- Differences between traditional corporate valuation and technology valuation
- Handling data problems that emerge with technology companies
- Lifecycles and corporate cashflows
- Review of DCF valuation techniques and applications to technology businesses
- Valuing early stage development businesses
Applying the DCF Model to Technology Companies
- Estimating cashflows and expenditure patterns
- Evaluating the expected growth rate
- Links to corporate strategic models
- Combining growth rate with investment intensity and return on investment
- Applying the appropriate discount rate and varying the rate over time
- Evaluating the stable growth stage and calculating the terminal value
- Inherent problems of using the DCF model to value technology companies
Using Multiples in Technology Valuation
- Importance of using EBITDA if possible
- Using revenue multiples
- Examining the broad range of possible comparisons
- Using statistical analysis to improve the multiple comparison
- Pitfalls in using multiple approach for technology companies
Using the Real Options Approach
- The problems inherent in using the NPV/DCF approach to valuation
- Defining real options – patent rights, expansion option, abandonment option
- Why real options are more applicable to technology companies
- Basics of real option valuation using binomial trees and a lattice approach
- Financial option pricing (Black Scholes) and the link to real options
- Management options and the value of strategic flexibility
- Using real options approach to improve the understanding of technology valuations
Background of the trainer
The trainer is an experienced finance and banking consultant with practical experience and extensive knowledge of the commercial and banking sector in the UK, much of Europe, Russia, China, the Middle East and the Asian region. His areas of specialist expertise include financial risk management, project finance, corporate finance, asset securitisation, valuation and treasury management.
He previously worked as a risk management consultant at several international banks before becoming managing director of a subsidiary of Union Bank. He is a visiting fellow at Cass Business School and also a visiting lecturer at Duke Business School. He has acted as an adviser to the Overseas Development Administration (UK Foreign Office) and to the EU’s PHARE and TACIS programmes.
Valuing a Technology Company Course Summary
This valuation course ideal for those who are dealing with technology companies and need to gain an appreciation of their worth.
It focuses on the different techniques that can be deployed in assessing these companies, especially the real options approach which has achieved a wide degree of popularity.
The Valuing a Technology Company course is also useful to those who are involved in any type of corporate transaction for technology companies from an advisory perspective. Participants should be familiar with discounted cashflow techniques and have at least a basic understanding of business valuations.
Participants will be required to use a laptop with a CD-Rom or USB connection to the course.