Valuing Start Up and Pre IPO Companies

£1,350.00 +VAT

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This course can also be presented face to face in-house or via live in-house webinar.

Valuing Start up and Pre IPO Companies Course Objectives:

Participant will:

  • Be introduced to valuation approaches including intrinsic, relative, probabilistic and real options valuation.
  • Get an overview of other valuation issues as assessing risk and the economic cycle.
  • Have explained to them how to value start-up companies including the characteristrics of young companies and sectors and a life cycle view of start-up companie
  • Master the valuation of pre IPO companies, including the characteristics of groth company and sectors and the value of equity claims
  • Learn how to value the operating assets through the growth phase

Valuing Start up and Pre IPO Companies Course Content:

Overview of valuation approaches

  • Intrinsic valuation – traditional cash flow techniques
  • Relative valuation – multiple based analysis
  • Probabilistic valuation – scenario analysis, decision trees and simulations
  • Real options valuation – additional value created through optionality

Other valuation issues

  • Assessing risk – the risky risk free rate and other current valuation issues
  • The economic cycle – incorporating macro-economic factors into a valuation

Valuing start-up companies

  • A life cycle view of start-up companies
    • Start-up companies in context
  • Characteristics of young companies and sectors
    • The key challenges with start-up companies
    • Visibility – a key valuation challenge
  • Valuation issues – intrinsic value
    • How to value existing assets in a start-up
    • Cash burn and the effect on existing assets
    • The future of the business – high growth and growth phases
    • Assessing growth rates – the key component of value
    • Adjusting risk for small fast growing businesses
    • Discount rates for pure equity financed businesses
    • When to calculate terminal value
    • Reducing the dependence on terminal value
    • Value of equity claims
      • Assessing equity claims in a early stage business
  • Valuation issues – relative valuation
    • Problems with start-up multiple analysis
    • Determining the starting point – revenue multiples vs profitability multiples
    • Which year? – Determining stability for multiple calculation and techniques for “normalising” multiples vs the sector
  • Valuing a start-up or early stage business in practice
    • Main errors made in valuing early stage businesses
    • Macro vs micro analysis
    • Product success and market share
    • Bottom up approach to a valuation
      • Capacity capability
    • Estimating and using different discount rates
      • The use of phased discount rates
      • Discount rates as maturity approaches
    • Ensuring consistency in a valuation
    • Private and public multiples
    • Option to expand valuation
      • How optionality affects valuation

Valuing pre IPO companies

  • A life cycle view of pre IPO rapid growth companies
    • The rapid growth company in context
  • Characteristics of growth companies and sectors
    • How are growth companies different?
  • Valuation issues – intrinsic value
    • How historic numbers are misleading
    • How asset life may develop in the high growth phase
    • How existing assets differ in a rapid growth business
    • Where the bulk of value is created by a rapid growth company – the growth phase
    • Capital intensity and the rapid growth business
    • The development of risk during the growth phase
    • The stage at which a terminal value should be calculated for a rapid growth business – the path to IPO
  • Value of equity claims
    • The differing equity claims in a rapid growth business
    • Participation by different equity holders
  • Valuation issues – relative valuation
    • Peer groups – private vs public companies
    • Finding similar growth businesses – different sectors?
    • Risk measures – adapting a multiple analysis for risk
  • Valuing a growth business in practice
    • Main errors made in valuing growth businesses
    • Dealing with immature markets
    • Assessing product cycles
    • Ability to execute – the key driver
  • Valuing the operating assets through the growth phase
    • How operating asset lives develop in the high growth phase
    • Ensuring consistency in a valuation
    • Reinvestment and growth
    • Assessing investment requirements – the returns and reinvestment equation
    • Completing the valuation – combining returns and risk in a model

Background of trainer:

The trainer is a qualified chartered accountant, who spent several years in corporate finance post qualification. He then spent 18 years in the investment management industry as an analyst/fund manager with Threadneedle Asset Management, a director and head of UK Equities at Scottish Widows Investment Partnership as European, then Global Head of Equity Research at HSBC Asset Management. He ran various types of retail and wholesale funds and produced research on companies in Europe and on a global basis. He developed valuation and research processes and managed teams of European and global analysts and fund managers.

Since leaving the investment management industry the trainer has managed the investment management and investment banking operations of a UK based training company developing programmes for clients as diverse as HSBC, Morgan Stanley, Deutsche Bank, Citigroup, Allen & Overy, JP Morgan, Barclays Bank, Barclays Wealth, Morgan Stanley Investment Management and Schroders. He has managed major graduate programmes for investment banking and investment management clients, training graduate to managing director level participants and advising clients on their training requirements for accountancy, corporate finance and valuation, investment management and private wealth training.

Valuing Start up and Pre IPO Companies Course Summary:

This advanced valuation and financial modelling course looks at the valuation approaches to be taken to enable participants to value companies which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the development stage at which the company operates.

The course covers companies at the early growth and start up stage, such as technology, biotechnology and any early funding stage business. The key challenges associated with such companies are discussed and the best valuation approach considered.

The course also covers pre IPO companies at the rapidly growing phase of development which, depending on the geographic location, may cover a wide variety of sectors. As well as discussing some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches such as decisions trees, simulations, scenario analysis and real option valuation. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken.

Examples are provided to illustrate each issue.

Participants will be required to bring a laptop to the course.

What Redcliffe clients are saying about the course:
“Good content from an academic viewpoint and well explained with enough room for questions.”

Acquisitions and Divestments, ING

 

“The presenter had depth of experience.”

Head of Equity Capital Markets, BMO

 

“Enjoyed discussions on capital infusion, reinvestment and debt/hybrid structures.”

Managing Director, NIBC

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Discounts

5-6 participants – 20% discount,7-8 participants – 25% discount,Over 9 participants – 30% discount

Select-your-course-date

7-8 November 2018, 25-26 February 2019, 18-19 November 2019