Firm Valuation

This course provides a step-by-step guide to estimate the financial value of a firm. Firm valuation is an indispensable skill for owners and managers who consider strategic decisions such as mergers and acquisitions, succession planning, executive compensation, or divestitures. 

Useful Tools

In this course, we learn how to build a solid firm valuation framework for any valuation situation:

 

  1. The introductory chapter motivates the topic, explains the fundamental idea behind valuation, and provides a detailed overview of the whole course.
     

  2. Financial Analysis for Managers (available as a separate module) then shows us how to read financial statements and how to quickly assess the financial health of a company.
     

  3. Relative Valuation (available as a separate module) shows us how to conduct valuations using valuation multiples from comparable companies.
     

  4. Financial Planning for Managers (available as a separate module) builds on the knowledge from financial analysis and shows how to estimate cash flows and how to compile a financial plan that summarizes the future financial implications of the firm's strategy. 
     

  5. The Cost of Capital and Valuation (available as a separate module) then addresses the crucial issues of what return the providers of capital expect to earn and how we can use that return to derive the financial value of a firm (or any other asset).
     

  6. Continuing Value (available as a separate module) shows that the market typically assumes a long-term perspective when valuing firms. The module also discusses how to make economically reasonable assumptions about the firm's ability to invest, grow, and create value in the long-run.
     

  7. Coping with Measurement Error provides the most important tools to assess how sensitive the analysis is to potential measurement error.
     

  8. Putting it All Together finally revisits the most important steps in firm valuation and provides a summary of the course. It also provides an overview of a set of more advanced topics that will be covered in other modules.

 

Each section of the course contains a short reading assignment, along with real-life practice examples and review questions. To complete the course successfully, the four individual modules as well as the review questions at the end of each sections must be completed. 

With the course bundle Firm Valuation, you also prepare the grounds for more specialized follow-up modules that deal with topics such as: