INDIAN INSTITUTE OF MANAGEMENT JAMMU

Master of Business Administration

Business Valuation
Term IV

Course Rationale:
Probably the greatest of all Gifts is the Power to Estimate Things at Their True Worth. A good business
is absolutely the best investment vehicle one can ever have, provided he/she understands the underlying
value and does not overpay for it. Arriving at the value of a business or a group of business assets
requires analysis and weighing of all the drivers of value. This course initially aims to lay a strong
foundation of the concept of ‘Business Valuation’ and then deep dives into various methods of ‘Business
Valuation’ & issues in their applications to the corporate restructuring situations.

Learning Outcomes:
After completing this course a participant would be able to:
1. Appreciate the concept of ‘Business Valuation’.
2. Apply the suitable method(s) of business valuation in varied corporate restructuring situations.

Prerequisite(s):
The regular reading of financial newspapers like Mint, The Hindu Business Line, Economic Times,
Financial Express, Business Standard, Wall Street Journal, The Economist, Financial Times, Bloomberg
Markets etc., is essential to discuss contemporary issues in the classroom.

Pedagogy:
A mix of pedagogy, comprising a fair mix of articles, cases, and practice problems, assignments and
group projects would be adopted to cover the course content. Conceptual inputs will be given through
short lectures. The extent & quality of learning will depend on the quality & depth of discussion in the
class, which in turn depends on the pre-class preparation and post-class revision by the participants.
Readings, Assignments and Numerical problems, whenever given, are a means of focusing on
central issues, concepts and knowledge.

Textbook:
• Damodaran, A. (2006). Damodaran on Valuation: Security Analysis for Investment and Corporate
Finance.2nd Edition, John Wiley & Sons. [AD]

Reference Books:
• Kumar V., Sharma P. (2019) An Insight into Mergers and Acquisitions. Palgrave Macmillan,
Singapore (KS)
• DePamphilis, D. (2019). Mergers, acquisitions, and other restructuring activities: An integrated
approach to process, tools, cases, and solutions. Academic Press. (DDP)
• Stowell, D. P. (2018). Investment banks, hedge funds, and private equity. Academic Press. (DS)
• Pratap Giri S. (2017). Investment Banking, TMH, 3rd edition. (PG)
• Koller, T., Goedhart, M., & Wessels, D. (2020). Valuation: Measuring and managing the value of
companies, 7th Edition. John Wiley & Sons. (KGW)
Journals:
• Advances in Mergers & Acquisitions
• The Wall Street Journal, Financial Times. New York Times
• The Economic Times
 Links to websites:
• Musingsonmarkets: aswathdamodaran.blogspot.com
• Damodaran Online: http://pages.stern.nyu.edu/~adamodar/
• SEBI: https://www.sebi.gov.in/
• Moneycontrol: http://www.moneycontrol.com/
• NSE: https://www.nseindia.com/
• BSE: http://www.bseindia.com/

Evaluation Scheme:
• Group Presentations 15%
• Group Assignments/Quizzes 10%
• Project Work (Group) 15%
• Mid-term 25 %
• Term-End Exam 35 %
Total 100 %

Session Plan:
Session Topic (including Learning Outcomes Pedagogical Tool1 Textbook Chapters
subtopics) & Readings
1-2 Valuing Business Describe the valuation Class Discussion & Chapter 1, 18 [AD]
– Introduction and process and provide an Lecture
Chapter 7 [PG]
Overview of overview of alternate
Analytical business valuation
Approaches approaches
ICAI - The Institute of
Chartered
Accountants of India
ICAI Registered
Valuers Organisation
(icairvo.in)
3-6 DCF Valuation Case:
Develop expected cash Chapters 3,4&5
(Intrinsic Value): Hypothetical Resorts Ltd.
flows from projection of
Measuring & [AD]
revenue and expenses
Forecasting Cash
(pro forma financial
Flows
statements)

7-8 DCF Valuation Midland Energy (4129, by

Evaluate companies for Chapter 2
(Intrinsic Value): Timothy A.
comparability in selecting
Discount Rate Luehrman, Joel L. [AD]
a discount rate.
Heilprin)
Compute costs of capital
through un-levering of
equity betas

1Provide the details of Pedagogical tool viz., Title & source of Case/ Nature of Simulation Exercise/
Role Play/ Lecture/Class Discussion etc.
9-10 DCF Valuation Case:
Terminal value Chapters 4 and 5
(Intrinsic Value): Mercury Athletic
calculation [AD]
Terminal value Footwear (4050 by
and Growth Rate Growth Rate Estimation Timothy A Luehrman and
Joel L Heilprin)
11-12 Alternate DCF Dividend Discount Model Case: "RJR Nabisco."
Chapters 5 and 6
Valuation FCFE Model Harvard Business School
[AD]
(Intrinsic Value) WACC/FCFF Model Case 289-056, May 1989.
Models APV Model, Excess (Revised August 2006.)
return models
13-14 Relative Cases:
Understanding Chapters 7, 8 and 9
Valuation
transaction and trading Health Development [AD]
Methods
multiples for valuation Corporation (9-200-049
by Richard S Ruback)
Appreciating the relation
between Multiple and Magna International, Inc
NPV approach (A) (9-211-044 by
Timothy A Luehrman and
Identifying key
Yuhai Xuan)
assumptions and value
drivers in valuation
15-17 The Contingent Case:
Valuing Flexibilities & Chapter 12 [AD],
Claim (Real Arundel Partners: The
Real Options: Option to Chapter 8 [DDP]
Option) Approach sequel Project (9-292-140
expand, abandon
to Valuation by W A Techiner, C M
Williams Timothy A
Luehrman)

18-20 Value Creation Examine the Corporate Case: Monmouth Inc Chapter 31
through Corporate Restructuring as a conduit # 4226-PDF-ENG [KGW]
Restructuring for the Value Creation Published 2010
e