| CODE | BFI3001 | |||||||||
| TITLE | Foundations of Business Valuations | |||||||||
| UM LEVEL | 03 - Years 2, 3, 4 in Modular Undergraduate Course | |||||||||
| MQF LEVEL | 6 | |||||||||
| ECTS CREDITS | 4 | |||||||||
| DEPARTMENT | Banking, Finance and Investments | |||||||||
| DESCRIPTION | This study-unit will also cover various aspects of valuation and valuation methodologies most typically used by advisors. The study-unit will also cover the key lessons and pitfalls in valuation and will take a very practical approach overall. It is structured over fourteen lectures of two hours each. By offering this credit, the Banking, Finance and Investments Department of the University of Malta is confident that its graduates will be well equipped for an entry level role in the area or to continue studying other more in-depth courses related to Valuations. In the latter part of the study-unit, an added focus is placed on the DCF method as participants build a DCF analysis for an actual business transaction, using each component of the DCF model: projected free cash flows, Weighted Average Cost of Capital (WACC) and terminal value. The study-unit is designed for students who would like to pursue any career in financial services, in particular in Corporate Finance or Advisory. It provides detailed knowledge together with practical skills so that students are able to fulfill their responsibilities more efficiently and effectively once they embark on their profession. By drawing upon international best practice, it helps prepare students to adapt to the modern financial services practitioners’ environment. Study-Unit Aims: The study-unit aims at providing participants with an introductory course on valuations. It covers the different valuation methodologies, namely comparable company valuation, precedent transaction valuation and discounted cash flow (DCF) valuation. Learning Outcomes: 1. Knowledge & Understanding: By the end of the study-unit the student will be able to: 1. Explain the main theories in corporate valuation 2. Recognise and name the various types of valuation methods used in Corporate Finance 3. Explain top-down and bottom-up approaches to business valuation 4. Identify reasons why a certain valuation method is the method of choice for valuing businesses 5. Explain the theoretical and the practical challenges of business valuation 6. Identify why firms use either IPOs or mergers and acquisitions in business. 2. Skills: By the end of the study-unit the student will be able to: 1. Develop an in-depth understanding of capital market behaviour, risk and net present value concepts which lead up to a business valuation. 2. Compute the cost of equity, cost of debt and weighted average cost of capital for a business 3. Apply discounted cash flow valuation models to estimate the equity and enterprise value for a business. 4. Apply relative valuation techniques to estimate market value. 5. Apply different valuation tools and apply sound judgement calls about the value of a business. 6. Justify the rationale of using different financing methods. Main Text/s and any supplementary readings: Main Texts: - Palepu K. G., P. M. Healy, and E. Peek (2022), Business Analysis and Valuation: IFRS Edition (Cengage Learning), 6th edition. - Koller, T., Goedhart, M. and Wessels, D. (2010). Valuation. John Wiley & Sons.- Damodaran, A. (2014). Damodaran on Valuation Security Analysis for Investment and Corporate Finance. New York, NY: John Wiley & Sons. Supplementary Readings: Graham, B., Zweig, J. and Buffett, W.E. (2006). The Intelligent Investor Rev Ed.: The Definitive Book on Value Investing. Subsequent edition ed. [online] Amazon. New York: Harper Business. Rosenbaum and Pearl, Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions (2013), John Wiley & Sons. |
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| STUDY-UNIT TYPE | Lecture and Independent Study | |||||||||
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| LECTURER/S | Patrick Debattista |
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The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints. Units not attracting a sufficient number of registrations may be withdrawn without notice. It should be noted that all the information in the description above applies to study-units available during the academic year 2025/6. It may be subject to change in subsequent years. |
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