Peter C. Freeman Adjunct Faculty Ageno School of Business GOLDEN GATE UNIVERSITY
Contact Information Email: [email protected] Telephone: 510.465.3710 Office Hours: San Francisco campus, TBD.
First Day of class: May 7, 2011 Last Day of class: August 18, 2011
Class meeting: San Francisco campus, Th 6:50‐9:30 p.m.
Prerequisites: FI 300
Introduction This syllabus identifies the course objectives, method of instruction, grading policies, and assignments.
1. Course Description
One of the common stated objectives for business managers is to add value to their companies or enterprises. Also, determining the valuation of a business is a necessary activity for many purposes, including security analysis, mergers and acquisitions, and a wide variety of other situations. The course covers all major topics for valuing businesses, analytical methodologies, and practical applications both for transactions and business management.
2. Course Objectives and Expected Learning Outcome This course is designed for business students with prior knowledge of accounting who are seeking practical methods to enhance their ability to report and analyze financial information. Students will gain ability to evaluate a company’s current financial position, assess operating performance, and identify alternate courses of action.
The course will help those of you who are going to be involved with the management of a business acquire some knowledge of financial statement analysis, and business analysts ability to effectively assess the results and prospects for a business and make practical decisions.
Upon the completion of this course, you should be able to:
. Understand and be able to apply methods of valuing any type of company, using discounted cash flow models and other commonly used methods.
. Apply the theories learned to real world financial applications.
3. Required & Optional Materials
. Valuation – Measuring and Managing the Value of Companies, by T. Koller, M. Goedhart, and D. Wessels. Wiley, 5th edition.
. Optional Material: All supplements and study guide. You may wish to buy a copy of the study guide and the CD‐ROM to accompany the text, although we will not use them in the class, but they may help you to clarify and reinforce the key concepts and analytical techniques presented in the text.
Bookstore: To purchase course books and materials from eFollett, GGUʹs official online bookstore, please see the “Important Info” section of this course.
University Library:
There are several databases available through the Golden Gate University Library for students to conduct research on various topics. Remote (off campus) access to the databases requires your last name and student ID # (located on the front of your ID card). Be sure to type in ALL 7 digits, including the starting 0. Example: 0123456. You may access the library from GGU’s homepage at http://www.ggu.edu.
4. Contacting the instructor Email is the best way to contact me, initially, at [email protected]. If necessary, we can arrange a time and place to follow up in person or by phone. The website established for the course will also be used extensively to distribute additional information and as a medium of communication.
5. Course Requirements & Student Responsibilities
See section 6 below, Course Evaluation, for details how to be a successful student. The primary objective is of the course is to facilitate a thorough understanding of the subject and ability to apply the concepts to relevant business situations. I provide a wide range of resources and alternate modes of learning. Students need to be able to demonstrate their understanding, which is done by successfully completing homework problems, exams, class participation, and the financial statement project.
Each student is expected to read each chapter before the lecture, complete homework assignments after the lecture, and be prepared to discuss them in class. I expect students to apply at least as much if not more time outside of class in reviewing the material and completing the assignments. I anticipate that much of the information in the textbook will be familiar to students, from prior courses in accounting, finance, or investments, and I do not intend to devote much time to reviews. Also, I will typically not assign homework or test students on this material. The problems and exercises assigned call for the student to apply the practices and methods of the course content, and thus provide what I consider the best way to gain mastery of the subject or course content.
Attendance is strongly encouraged, but not mandatory. Class participation is important, as it allows collaboration and feedback within the class. Sharing experiences and knowledge will enhance both the instructor’s and students’ learning. Be prepared to participate in class discussions, answering questions, solving problems, and reviewing the homework. I set up the blog function on the course website:
http://ggucybercampus.org/ to facilitate participation, collaboration, and feedback. Lecture notes are posted there for your use.
Student Code of Conduct:
Students are bound by the Code of Student Conduct to uphold high standards of conduct. This code requires students to act respectfully towards others and to adhere to the honor system. Any student who engages in academic dishonesty (such as plagiarism or cheating on exams) will not pass the course. If you have any questions in this area, please discuss them with me.
6. Course Evaluations
My course evaluation policy is to assign grades based on cumulative points earned over the semester. Points are earned for homework assignments, the exams, financial statement project, and class participation. I offer alternative assignments and problems in homework and exams, allowing students to be selective in choosing topics and learning opportunities that are most relevant to their interests, career goals, and learning objectives. One size does not fit all cases.
Exams:
. Students must take one midterm and a final exam covering specific chapters. Each exam only covers the material since the preceding one. The midterm and the final will be a combination of multiple choice, short essay, problem solving questions, and take‐home exercises. . Make‐up exam policy: Students must take the exams as scheduled. I will make reasonable accommodations for alternate methods for a make‐up in the event of emergencies. . Partial Credit is awarded on exams for problems (not multiple choice) when the computations are shown. Show all work on problems for maximum partial credit.
Project Presentations:
. Students will prepare a research project or case study on a subject of their choice, to apply the principles covered in the course. This can be done individually or in small groups, with presentations made to the class in the next to the last session. Additional details will be distributed later.
Grading Policy Midterm Exam 20% Attendance and Participation 10% Homework 40% Financial Statement Analysis Project 20% Final exam 10%
Letter grades will be given based on the following scaling, although I reserve the right to modify this depending on students’ results. The points may change, but the percentages will apply to the grades earned or received: Grading Points Percentage A 230 96% A‐ 210 93 B+ 190 90 B 170 87 B‐ 150 84 C+ 130 80 C 110 77 C‐ 100 74 D+ 90 70 D 80 65 D‐ 70 60 F 50 59
Class participation will be assessed using the following:
Grade Skills A Contributions are prompt, timely, relevant, self‐initiated; remarks are raised freely on all assignments throughout the course; there is no attempt to dominate conversation. B Student generally keeps up with the discussion. Needs some prompting to contribute. C Participation is spotty; picks and chooses topics to get involved. Demonstrates little initiative. D Some participation, makes relevant remarks F No participation
7. Course Outline
The plan for the course is as follows. Chapter references for the various sessions relate to the textbook. If any changes should be made to this schedule, it will be announced in class or via email notices.
Introduction, Ch. 1‐2, Foundations of value and Session 1 May 4 fundamental principles of value creation. Ch. 3‐4. Expectations and return on invested capital Session 2 May 11 Overview of Financial Statement Analysis. Session 3 May 18 Ch. 5‐6 . Growth, and core valuation frameworks. Ch. 7‐8 Financial statement analysis, performance Session 4 May 25 evaluation. Ch. 9, 10,11. Forecasting performance, estimating Session 5 June 1 continuing value and the cost of capital Ch. 12, 13, 14. Enterprise value, interpreting results, Session 6 June 8 and using multiples. Session 7 June 15 Midterm, Ch. 1‐14
Session 8 June 22 Ch. 15‐16. Market value, form and substance.
Session 9 June 29 Ch. 17‐18. Market efficiency Open week, TBD or to allow for extra time for other Session 10 July 6 unit. Ch. 19, 20, 21. Corporate portfolio strategy, Session 11 July 13 performance management, and mergers and acquisitions Ch. 22, 23, 24. Divestitures, capital structure, and Session 12 July 20 investor communications. Ch. 25‐30. Advanced valuation issues. TBD, depending Session 13 July 27 on the interests of the class. August Ch. 32‐35. Special situations, including valuing Session 14 3 flexibility and the application of Real Options methods. August Project Presentations Review for Final Session 15 10 August Session 16 Final Exam, Ch. 15‐35 17
8. Instructor Biography
Peter C. Freeman has over 30 years experience in financial management, creating financial infrastructure and raising capital for established, startup, and turnaround companies. He serves as Chief Financial Officer, developing business plans, identifying operational improvements, rebuilding balance sheets, and upgrading financial control systems. He has arranged financings with a total value exceeding $1 billion, including private equity, real estate loans, revolving lines of credit, asset‐backed loans for equipment and receivables, and wide range of project financings.
Peter works with large and small companies in a variety of industries, including construction, real estate development, software, manufacturing, transportation, power, financial services, non‐profits, and government agencies. Assignments for early stage companies include Inktomi, Amarantus Theraeutics, Cortexion, Selena Pharmaceuticals, and By‐the‐Bay Baking. He also held senior financial management positions with Dillingham Construction Corporation, Homestake Mining, British Petroleum, Intel, and Wells Fargo Bank. Peter is the former Treasurer of Dillingham Construction Corporation, a $1.3 billion global engineering and construction company, where he navigated through cyclical downturns and assisted in planning and implementing a management buyout, including private equity and employee ownership.
Peter created the Treasury Department for Dillingham and has developed financial control systems for numerous companies. Peter received an MBA in Finance at the University of Chicago and a BA degree in Economics from Amherst College. He is an Adjunct Professor of Finance at Golden Gate University and previously taught accounting at Merritt College. He is former President San Francisco Bay Area Financial Executive Networking Group (FENG), active in community organizations and trade associations such as the Turnaround Management Association, and served two terms on the Advisory Council to the US Export‐Import Bank.
My webpage, www.cfi-partners.com, has additional background information.