Corporate Valuation

Course Director: Henrik Nilsson

General characteristics of the course and your acquired skills

Prices are essential as carriers of information on a well-functioning capital market. However, prices are nowadays not only limited to prices on goods and services, but valuing companies are essential for the allocation of capital for example in M&A transaction etc. In order to understand quoted prices or bids on companies a fundamental understanding about the underlying value is necessary. Value may differ from prices when for examples bubbles exist. This course is aimed at developing the crucial tools for determining the fundamental value of a company including issues of forecasting. It is also important to establish a solid link between the fundamental value and the most important company specific source of information, which is the accounting information. This course provides you with such knowledge and skills. We put emphasis on the discounted cash flow model known as the free cash flow model and to this we add the different valuation key ratios, i.e. multiples.

The course provides necessary knowledge for those students who want to pursue a career in investment banking, consulting, within companies of large and medium-size that pursue a growth-by-acquisition strategy, as stock analysts and when working within organizations who act as capital providers using both equity and debt instruments such as original banks.

Purpose

The purpose of the course is to enhance the students theoretical knowledge and practical skills in valuation with a special focus on the discounted free cash flow model and the use of valuation multiples. Further, the course aims at giving the students a good understanding of the implications of using accounting information as the primary company specific information source.

Content

The course focus is on the most widely used valuation model, the free cash flow model. This model is described and analyzed in considerable detail, with a distinct emphasis on its relationship with accounting data. The teaching aims at giving the student a framework which integrates the determination of the free and financial cash flows with the mechanisms of accounting principles (IFRS). This integrated knowledge is then applied on a real-life valuation example of the students' choice.

Moreover, the most commonly used communication and comparative tool in valuation is valuation multiples such as P/e-ratios, market-to-book ratios, Enterprise value/EBIT(A) etc. During the course, the students will learn how to evaluate companies based on these multiples and to be able to identify the driving forces and problems behind the multiples.

Format & Structure

The course is separated into two different parts. Initially, there is a series of lecture to give the students the theoretical knowledge and practical implications of valuation. These lectures are held by the faculty at SSE. The second part of the course is practically oriented. Guest lectures are held in order to provide the students with an insight into the issues and problems facing people working with valuation in different contexts. One of the guest lectures will hold a mandatory case study which is to be completed in the same groups of five students as for the valuation project. This will also provide the students with a basis for the project they do in groups. The lecturers are available for questions and tutoring on a group by group basis. The exam takes place in late November 2026. The project is presented during seminars in January 2027.

Some minor changes in the flow and structure of the course may appear.

Course administrator: Christina.Ekelin@hhs.se

1. To demonstrate analytical knowledge of the structure and the implications of the core valuation multiples
2. To theoretically understand the free cash flow model and its relationship to forecast alternatives
3. To perform a valuation of a real company using the free cash flow model
4. To adjust for and properly analyze the effects of choices of accounting principles in various companies and industries on the discounted free cash flow model and the valuation multiples
5. To evaluate the consistency of forecasts in relation to the structure of the free cash flow technique

Specialization in Accounting and Financial Management or Finance at the Bachelor level or similar

Valuation - Measuring and Managing the Value of Companies; Koller, Tim., Goedhart, Marc., Wessels, David., 8th Edition, John Wiley& Sons Inc, University edition, ISBN 9781394279470.

Free E-book available through the SSE library:

or

Valuation - Measuring and Managing the Value of Companies; Koller, Tim., Goedhart, Marc., Wessels, David., 7th Edition, John Wiley & Sons Inc, ISBN 9781119611868 or 9781119610885

Free E-book available through the SSE library.

Material to be handed out during the lectures.

Examination consists of three parts.

Please note, changes may occur.

1. One mandatory cases held by one of the guest companies (JP Morgan). This part will only render a pass or non-pass.
2. A valuation project which will render 30 % of the final course grade. This part examines ILO 2, 3 and partly ILO 5.
3. A written exam (including bonus points from guest lecture attendance) which is 70 % of the final grade. This part examines ILO 1, 2, 4 and 5.

You must pass each of the three parts individually to obtain a pass grade or higher on the course.

The written exam will take place in November, and the final project presentation is scheduled for January.

Find the course schedule in: TimeEdit

Have you been granted educational support because of a documented disability? If so, please contact the course director as soon as possible so that adequate accommodations can be made.

Contact specialneeds@hhs.se if you have questions about being granted educational support or need a copy of your educational support certificate.

For more information, visit the Specific Educational Needs page on the Student Hub (login required).