Business Value Management

Syllabus

Thematic definition of lectures: 1. Subject and dimensions of the business value management Basic information about the importance of the company value management to assess its future growth and stability, object and subject of evaluation. Identification the company value management system with a focus on defining the rationale, principles and procedures of valuation. 2. Strategy analysis to estimate the future business value of the company Defining the business valuation process and identifying generators of the company value. The process of determining the value of a company. Strategic analysis of the company revenue potential. Assessment of the prospective business development through the market attractiveness and the company inner strength. 3. Investment and their impact on the company value Demonstrate the impact of the investment on the future expected growth of the business. Investment strategies evaluation in terms of the objective to be achieved and the risk. Assess investment decision-making in the context of scenarios of the company future value development. Analyzing investment projects primarily in terms of their economic value and importance for ensuring sustainable growth of the business. 4. FCF planning Procedures and methods for forecasting future free cash flows depending on the length of the probability of the company's duration (limited or unlimited time). The content, components and assumptions of the FCF plan for different lengths of time in relation to the company value generators. 5. Asset-based valuation methods Analysis of the state company variables, which are objectivized to market value in the valuation process. Substantive, liquidation and accounting methods. Quantification of the company value by applying these methods. Advantages and disadvantages applied methods in the process of the company value management. 6. Revenue-based valuation methods I Analysis of the company flow variables in relation to the future value creation. Valuation is based on the applied methods based on discounted free cash flow (DCF), dividend-based methods and methods based on economic value added (EVA). The procedure, advantages and disadvantages applied methods in the process of the company value management. 7. Revenue-based valuation methods II Identification and comparison the differences between two- and three-phase models for quantifying the revenue potential of the company. An in-depth perspective of view at the revenue methods of quantifying company value, with a focus on DCF equity and DCF APV methods. 8. Discount rate Description and identification of possible approaches to quantify the discount rate. Demonstration of the impact of the discount rate at the different stages of determining the revenue potential of a company. 9. Sustainable growth rate Description, identification and impact of the sustainable growth rate parameter on the final company value. Demonstration of the importance of going concern value, on the total company value quantified by revenue methods. Identification and description the differentiated approaches to the determining the sustainable growth rate parameter. 10. Other methods applicable in the valuation the future business value of the company Description and application of the specific methods for company valuation. Combined methods, methods based on the EVA indicator and methods based on market analysis. 11. Human capital importance in the business value management Identification of the importance and impact of the human capital quality for managing value of the company in the present and the future time. Human capital as a significant source of value creation. Assessing the capabilities, skills and knowledge of executive and managerial employees to create future value of the company. 12. Human capital quantification methods Human capital – specified form of the company asset. Description of the human capital valuation methods based on the cost, revenue and market. 13. Value calculation of the specific type enterprises Description of the basic parameters and differences of value management of enterprises with specific status in comparison with other commercial enterprises. Procedures and specifics of quantifying the value of financial sector entities, third sector, public enterprises and enterprises with mixed ownership structure. Thematic definition of exercises: 1. Basic information Definition of the basic requirements and content of the exercises on subject of the course. Students are introduced to the target focus of the course and its orientation towards the acquisition of key competences in the field of business valuation. Identification of different types of value and assessment of their differences and relevance to the company valuation. 2. Identification of information resources for business valuation of the company Description and definition information resources for the purpose of the company valuation. Defining the usability, advantages and disadvantages of the selected information sources to determine the value of the company. Assignment of a team project term paper. 3. Information basis definition for strategic analysis of the company Evaluation and processing of information on the macroeconomic development of the business environment and the object of a semester case study. Information about the company are processed from internal company materials and publicly available sources. 4. Creating different models to identify and quantify a company's value generators. Using different tools (regression statistics, mathematical simulation, etc.) to create alternative scenarios for the future consumption of the company's product portfolio. Elaboration of the external and internal potential of the analyzed company in relation to the forecast of value generators. 5. Investment planning as a basis for the development of a company's financial plan. Assessment of the impact and significance of a company's investment activity on its production capacity. Use of computer technology, creation of variant investment scenarios, evaluation of economic return, profitability and riskiness of individual investment strategies. 6. Developing a FCF plan I Preparation of the FCF plan of the company on the basis of the analysis of historical development and assumptions about the future development of business activities. Processing retrospectively oriented financial-economic analysis and prediction-oriented analysis (Creditworthiness index, Quick test, Altman's Z-score, Credit-Banking models, etc.) 7. Developing a FCF plan II Creation a FCF plan of the company for a 5-year period using one of the financial planning tool. In particular, the following methods are used: % of sales, index method, global method, regression method, BEP analysis, etc. 8. Quantifying the value of a company at a certain stage of its life cycle Company value calculation in the terminal phase of its life cycle. Accounting, substantive and liquidation methods are applied. 9. Discount rate calculation Calculation of the discount rate, to quantify the revenue potential of the company. The discount rate is calculated using the average cost of capital (WACC). Description the differentiated approaches to quantifying the cost of equity and the debt. 10. Going concern parameter calculation Quantification of the going concern value parameter (g) at indefinite life. Presentation of different approaches to the determination of this parameter and its impact on the company value. Calculation company value at indefinite and finite life. 11. Revenue and cost models for quantifying human capital Calculation of the company human capital value by analyzing expenditures on its maintenance and development, or by means of revenue methods reflecting the employee's potential to contribute to the creation of the company's value. 12. Specific models for quantifying human capital Definition and description of methods that determining the value of human capital of the company oriented to the use of experience and knowledge (expert methods) and to the use of market parameters. Calculation of the company human capital value using several approaches and models, e.g. Morse model. 13. Mid-term test Testing a student's comprehensive ability to think and work analytically and independently. Verification of the knowledge acquired in the previous exercises is carried out in written form.