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Introduction to Business Valuations and Due Diligence

The purpose of this webinar is to give CIBA members a basic understanding of how to assess the value of a business and carry out due diligence. This knowledge will help attendees make better business decisions or advise others effectively.

2 CPD units January 21, 2025 1 presenter

What will set you apart

By completing this course you will gain the following competencies

  • What Business Valuation Is and Why It Matters
  • Understand the concept of business valuation and its purpose, such as assessing a business’s worth for sales, mergers, or investments.
  • Learn the importance of valuations in making informed business decisions and negotiations.
  • Explore scenarios where valuations are critical, such as funding, restructuring, or legal disputes.
  • Key Steps in Valuing a Business
  • Discover the common approaches to valuation:
  • Income-Based Approach: Estimating value based on future earnings or cash flow.
  • Market-Based Approach: Comparing the business to similar businesses in the market.
  • Asset-Based Approach: Determining value based on assets and liabilities.
  • Learn to analyse financial statements to extract meaningful insights for valuations.
  • Gain an understanding of how external factors (e.g., market conditions, industry trends) impact valuation.
  • What Due Diligence Involves and Why It Is Important
  • Explore the concept of due diligence and why it’s a key step in business transactions.
  • Learn about the different types of due diligence:
  • Financial Due Diligence: Verifying financial data and performance.
  • Operational Due Diligence: Assessing processes, resources, and infrastructure.
  • Legal Due Diligence: Ensuring compliance and identifying potential legal risks.
  • Understand the role of due diligence in identifying risks, uncovering opportunities, and protecting stakeholders.
  • Tools and Techniques to Apply These Skills in Real-Life Scenarios
  • Learn about software, templates, and frameworks that streamline valuations and due diligence.
  • Understand how to structure valuation and due diligence reports to present findings effectively.
  • Participate in a guided walkthrough of a real-world example to see the steps in action.
  • Build confidence in applying these skills to your work or client interactions.

Event breakdown

  • Welcome and Introduction
  • Introduction to the objectives of the webinar: to provide foundational knowledge of business valuations and due diligence.
  • Outline of the agenda and what participants can expect to gain by the end of the session.
  • Explanation of how these skills are relevant across various roles in the business and finance fields.
  • Discussion on the significance of valuations and due diligence in business transactions, such as buying or selling a business, mergers, investments, or legal disputes.
  • Highlighting the consequences of skipping or poorly conducting these processes, such as overpayment, unforeseen liabilities, or missed opportunities.
  • Basics of Business Valuation
  • Definition and purpose of business valuation: understanding the monetary value of a business.
  • Examples of scenarios where valuations are crucial: acquisitions, partnerships, funding rounds, or estate planning.
  • Income-Based Approach: Evaluating the business based on future earnings or cash flows, discounted to present value.
  • Example: How to calculate the discounted cash flow (DCF).
  • Market-Based Approach: Comparing the business to similar companies sold in the market.
  • Example: Using price-to-earnings ratios for comparison.
  • Asset-Based Approach: Valuing the company based on its net assets (assets minus liabilities).
  • Example: Applying this method for asset-heavy industries like manufacturing.
  • Walkthrough of a simple valuation scenario, illustrating the steps and calculations involved.
  • Discussion of how different methods may yield varying results and when each method is most appropriate.
  • Introduction to Due Diligence
  • Definition and purpose: the investigation and verification process to assess the viability and risks of a transaction.
  • Common situations requiring due diligence: acquisitions, partnerships, or investment opportunities.
  • Financial Due Diligence: Reviewing financial statements, cash flows, and debt levels.
  • Operational Due Diligence: Examining business processes, supply chain, and management capabilities.
  • Legal Due Diligence: Checking compliance with laws, contracts, and identifying potential litigation risks.
  • Other Areas: Technology, tax, and market due diligence, depending on the industry and deal.
  • Identifying warning signs such as inconsistencies in financial records, unresolved legal issues, or operational inefficiencies.
  • Strategies to address red flags or mitigate their impact during negotiations.
  • Case Studies and Applications
  • Step-by-step application of a valuation method to a hypothetical business case.
  • Explanation of inputs, calculations, and interpreting the results.
  • Discussion of how valuation findings influence decision-making.
  • Example of a due diligence checklist and how to use it in practice.
  • Reviewing a case where due diligence uncovered critical risks or opportunities.
  • Group discussion or guided Q&A on how attendees would approach the case.
  • Q&A and Wrap-Up
  • Open forum for attendees to ask specific questions about the material covered.
  • Opportunity to address real-world challenges attendees may face in valuations or due diligence.
Category: Financial ReportingType: CPD CourseCPD category: Financial Reporting

Description

This 2-hour webinar introduces the fundamentals of business valuations and due diligence. It is designed to equip participants with practical knowledge and skills to evaluate a business's financial health, risks, and opportunities. Whether you're advising a client, investing in a business, or considering a merger, this session will guide you through the essential steps of valuations and due diligence. 

Presenters

Leana van der Merwe

Leana van der Merwe — Leana: Leana van der Merwe, with 18+ years in accounting and corporate governance, Leana leads technical support at CIBA and is a recognized thought leader in regulatory compliance.

You will earn a certificate

On successful completion you will receive a certificate for 2 CPD units in Financial Reporting.

Requirements

  • Laptop, desktop, or mobile device with internet access
  • Microsoft Edge, Google Chrome, Safari, or Firefox browser