2019-2020 / FINA0065-1

Advanced Corporate Finance and Modeling

Duration

30h Th

Number of credits

 Master in economics : general (120 ECTS)5 crédits  
 Master in management (120 ECTS)5 crédits  
 Master in business engineering (120 ECTS)5 crédits  

Lecturer

Marie Lambert

Language(s) of instruction

English language

Organisation and examination

Teaching in the first semester, review in January

Schedule

Schedule online

Units courses prerequisite and corequisite

Prerequisite or corequisite units are presented within each program

Learning unit contents

The course provides students with a comprehensive understanding of the key capabilities CFOs need to acquire in order to create a successful finance function: How to perform diagnostics on company's operating performance? How to lever on the key value drivers and improve its performance ? How to design value creating investment, financing or distribution strategies? How to generate external growth inside the company and structure a buyout (due diligence, buyout process and debt-quasi equity financing)?
The course also introduces students to equity research and fundamental analysis (sector, industry and company) with all its applications in portfolio management and company acquisitions (private deals).


 
Especially, the course provides 










  • students with modeling tools and advanced techniques for capital budgeting and firm and equity valuation;
  • students with tools to conduct a fundamental analysis (due diligence) about one company;
  • students with an opportunity to develop a thorough understanding of how financing as well as the firm's dividend policy could affect the market value of the firm and distort investment decisions;
  • students with tools to design sound corporate strategies at each point of the firm financing cycle (leveraged recapitalization, leveraged buyout, management buyout);
  • students with financing tools (senior versus junior debt, bullet debt, mezzanine financing, debt push down mechanism, paid-in-kind and cash interests, club deals and syndication);
  • students with modeling tools to structure a private equity deal.
 
 
The course is structured as follows:
 
Advanced Corporate Finance topics: key questions
 
Part I: Fundamental analysis and equity research
Financial analysis (ratio analysis, vertical and horizontal common-size statements) and review of firm valuation techniques 
Fundamental equity analysis and equity research: sector, industry, company due diligence, private equity and leveraged buyout. Alternatives to the Free Cash Flow to the Firm approach (Free cash flow to the Equity) and Residual Income Approach (with applications for impairment tests).
 
Part II: Advanced techniques in Valuation and Capital Budgeting (NPV and sensitivity analysis, Monte Carlo simulation, decision trees, real options, ...). 
 
Part III: Corporate decisions and firm value (capital structure and inefficiency costs, dividend policy and stock repurchases, corporate governance - agency theory and compensation package)
 

Learning outcomes of the learning unit

Consistent with the Key Learning Outcomes, students will acquire the following capacities at the end of the Advanced Corporate Finance and Modeling course:










  • They will strengthen their knowledge and understanding in firm performance management and corporate finance and use modeling tools to design creative solutions to value an investment project or to structure the acquisition of a firm/the financing of one specific project;
  • They will develop their ability to professionally team work and their critical sense for implementing solutions to a selection of key corporate finance challenges for managers;
  • They will use modeling tools and their managerial knowledge to execute the solution;
  • They will adapt their managerial practice to the economic context and to the transversal nature of management problems by integrating autonomously researched information
  • They will professionally communicate and defend, in groups or individually and in English, their transversal view of real financial management problems.

Prerequisite knowledge and skills

The course will extend students' knowledge in corporate finance acquired during an initial bachelor's degree and/or the first year of the master in management. Basics of corporate finance are prerequisites for the course.
 
Students who need to acquire the prerequisites are invited to read the following chapters:
- Accounting statements and cash flows: working knowledge of key financial statements, i.e. income statement, balance sheet and cash flow statement  Please read Chapters 2 and 3 - Ross, Westerfield and Jaffe. 2008. Corporate Finance. New York: McGraw-Hill, 8th edition;
- Basics in capital budgeting: working knowledge of discounting/compounding, of Net Present Value (NPV) and Internal Rate of Return (IRR) concepts Please read Chapters 4 to 7 - Ross, Westerfield and Jaffe. 2008. Corporate Finance. New York: McGraw-Hill, 8th edition;
- Mean-variance analysis: working knowledge of the Capital Asset Pricing Model (CAPM) Please read Chapter 5 - Hillier, Grinblatt and Titman. 2012. Financial Markets and Corporate Strategy. New York: McGraw-Hill, 2nd European edition.

Planned learning activities and teaching methods

Modules will be sequenced with lectures and discussions on a selection of case studies illustrating corporate financial decisions.

Lectures will introduce the theoretical concepts and modeling/analytical tools, while case study analyses will enable students to use these tools to solve complex management problems.

Workshops with professionals in corporate finance (Private Equity, Banking and/or Corporate Finance Advisory) will provide students with the market reality of their local economic region.

Mode of delivery (face-to-face ; distance-learning)

The course is composed of face-to-face lectures, exercise sessions and case discussions. In addition, registration for the course involves participation in the acquisition case organised on the afternoon of 24 October 2019 (half a day) co-organised by Deloitte Private and the junior enterprise HEC Advisory. This case will serve as an introduction to the group project. 
Working sessions with professionals from global equity research, private equity and banking sectors will be organized (within the framework of the final course project - Leveraged Buyout Case).
 
Exercise sessions and case study analyses will be prepared through distance learning.

Recommended or required readings

Mandatory readings (course material) 

 






  • The course material (slides, references to case studies and exercises) will be available on the course web page on lol@: http://lola.hec.ulg.ac.be
 






 






  • Book chapters: Ludovic Phalippou (Professor, Oxford), Private Equity Laid Bare (Chapters 1 to 4)
Recommended readings from the following books will be assigned during the class:









  • Grinblatt and Titman, Financial Markets and Corporate Strategy, McGraw-Hill, International Edition
  • Real Options: Managerial Flexibility and Strategy in Resource Allocation, Lenos Trigeorgis
  • Equity Asset Valuation Workbook, 3rd Edition by Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe November 2015, Paperback
  • Damodaran, Investment valuation
Students are highly encouraged to refer to these books to improve their understanding of the key concepts and modelling tools used throughout the class. 

Assessment methods and criteria

Student's final grade for the course of "Advanced Corporate Finance and Modeling" is a weighted average of a collective evaluation of the buyout project, of student's  personal contribution to the buyout project, of its active participation to computer labs as well as of an individual written exam:














  • (1) Buyout project - group evaluation (40%);
  • (2) Student's active participation to buyout computer labs (15%);
  • (3) Student's individual contribution to the buyout project and contribution to project presentation (15%);
  • (4) Final written exam (30%).
    Relative weighting of individual assessment is thus 60%((2) + (3) + (4)).

Remark:






























  • Students who fail the first session exam or do not present themselves at the exam will have to (re)take the exam in the second session organized in August/September. There is no intermediary session.
  • Participation to the buyout case is mandatory, students who do not participate to the case will not be able to present the exam in January. In addition, they will receive 0/20 for their ability to work in group during the 2nd session (written exam graded for 80%).
     

Work placement(s)

none

Organizational remarks

Students have the opportunity to ask questions on the material during the class or at the end of each session. Upon request, one Questions and Answers session with the tutors might be organized.
Several tutorials are organized for the group project. Students must first use these sessions in case of questions regarding to the group project. Specific instructions on how (and what) to prepare for the tutoring sessions will be provided to students at the beginning of the course and will be available on the online platform.
Students are invited to regularly check the lol@ platform for announcements regarding the course.

Contacts

Professor:
Marie Lambert - marie.lambert@uliege.be
Tutors:
Joachim Davoli - joachim.davoli@uliege.be
Maxime Ledent - maxime.ledent@uliege.be


 

Adaptation of teaching commitments following the COVID-19 pandemic for the May-June 2020 session

Teaching methods implemented : distance-learning

Assessment subjects

Assessment methods

Contacts

Adaptation of teaching commitments following the COVID-19 pandemic for the Aug-Sept 2020 session

Assessment subjects

All learning content units and course material are subject to examination.

Assessment methods

August 2020 retake exam.














  • Oral examination with 20 minutes preparation time and 15 minutes discussion time. You will receive two questions to prepare. Preparation time will take place online (on collaborate) in the presence of the professor. Oral examination will discuss these questions and related sub-questions.
  • Platform: individual links will be generated from the tool collaborate on e-campus. Your individual link as well as time schedule will be sent by email upon registration to the exam. A link to register to the exam is available on the course page on lol@: http://lola.hec.uliege.be/course/view.php?id=60. You will be asked to connect at least 20 minutes before your time schedule to test your video/micro. Any problem should be reported in due time and before the exam actually starts so that the exam can start on time.
  • The group work and individual evaluation you have done during the year will be taken into account into your grade. However, students who have not participated to the course group work and to the continuous evaluation (which constitute a big part of the evaluation) are allowed to take the oral exam but their exam will count for 80% of their grade and they will receive a 0 (which counts for 20% of their grade) for their ability to work in group.
 

Contacts

Professor: Marie Lambert
Assistant: Alexandre Scivoletto
Any technical issue during the exam should be reported directly to the following number: 04 232 72 11. If during the exams, students have questions on its content, they should report it to the same number.