Level III – Advanced Business Valuation
The purpose of this course is to elaborate on that foundational knowledge and to strengthen your awareness of business valuation theory. By the end of this course, you will have an understanding of more sophisticated valuations techniques and have the skills to apply those methods to real life cases.
Module 1 addresses the valuation of various classes of shares. In this module, you will gain knowledge of allocation of value between shares, valuation approaches for preferred shares, and the rights and characteristics of individual shares or share classes. You will also develop your understanding of public versus private preferred shares.
By the end of Module 1, you will be able to:
- Perform professional and technically correct calculations with respect to the allocation of value, under both a direct and indirect approach, and assess the reasonability of such calculations.
- Discuss the diﬀerences between diﬀerent classes of common and preferred shares, including rights and characteristics, and approaches to value.
The approaches CBVs use to value ﬁnancial instruments, namely debt and options, are covered in Module 2. In this module, you will learn about warranties, covenants and credit ratings, while you gain a sound understanding of various categories of debt. You will also study the various methods CBVs use to value derivative instruments, speciﬁcally simple forms of options, and apply your skill to exercises included within the module.
By the end of Module 2, you will be able to:
- Explain the purpose and features of various ﬁnancial instruments (including debt, bonds, derivatives, and options), and explain how such features aﬀect value.
- Perform professional and technically correct calculations of ﬁnancial instruments using various approaches, and explain the eﬀect on overall value calculations.
Module 3 is designed to improve your understanding of some of the issues associated with the valuation of startup, high-tech, and ﬁnancially distressed companies. You will gain a sophisticated understanding of the process of valuing companies at various stages of growth, and the methods used to do so, including discounted cash ﬂow (DCF), Black-Scholes, the venture capital approach, and the market approach.
By the end of Module 3, you will be able to:
- Discuss the characteristics of early stage, high-tech, and ﬁnancially distressed companies.
- Discuss the special considerations that must be made in valuing early stage, high-tech and ﬁnancially distressed companies.
- Understand and discuss unique valuation approaches to valuing early stage and ﬁnancially distressed companies.
An introduction to the measurement of fair value in accordance with international ﬁnancial reporting standards (“IFRS”) is covered extensively in Module 4. The module also contains an introduction to some of the approaches commonly used to value intangible assets on a standalone basis, both in a notional context and for ﬁnancial reporting purposes.
By the end of Module 4, you will be able to:
- Discuss the purpose of fair value measurement, in the context of valuation for ﬁnancial reporting.
- Describe the content in IFRS 3 (Purchase Price Allocations), IFRS 13 (Fair Value Measurement), and IAS 36 (Impairment Testing for Goodwill and Intangible Assets).
- Describe (and provide reasonable calculations under) the various methods for valuing identiﬁable intangible assets, including the the Cost, Income, With and Without, Multi- period Excess Earnings and, Relief from Royalty, Approaches.
Module 5 is designed to improve your understanding of the valuation concerns associated with contingent consideration, tax loss carry forwards, real property (land and buildings) and equipment.
By the end of Module 5, you will be able to:
- Describe diﬀerent forms of contingent and non-cash consideration, including when and how speciﬁc types of contingent consideration may be used in a transaction.
- Perform a professional and technically correct calculation of an earn-out using a probability- weighted average approach.
- Discuss how various types of income tax losses, undeducted scientiﬁc research and experimental development expenditures, and undeducted investment tax credits arise (including how such items aﬀect value).
- Perform a professional and technically correct calculation of the implied value of non- capital losses.
- Discuss how real estate and equipment is valued, including the valuation methodologies used, and the factors which aﬀect value.
The several assignments found at the end of this course will provide you with an important opportunity to apply your newly acquired knowledge to realistic cases, while reinforcing your practical skills. You are strongly encouraged to complete these assignments and to check your solutions against the ones that we provide.
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