- Welcome and Introduction
Overview of the Session
- 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.
Why Valuations and Due Diligence Are Important
- 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
What Is 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.
Methods of Valuation
- 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.
Practical Examples
- 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
What Is 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.
Key Areas to Focus On
- 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.
Common Red Flags
- 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
Walkthrough of a Simple Business Valuation
- 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.
Discussion of Due Diligence Findings
- 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
Answering Participants’ Questions
- 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.
Recap of Key Points and Next Steps
