Introduction to Business Valuations and Due Diligence

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.

Description

Presenters

Leana van der Merwe — Leana van der Merwe is a Chartered Accountant and Registered Auditor with over 18 years of experience in business accounting, audit and corporate governance. A former Audit Director and professional-body Technical and Standards Executive, she has guided more than 14,000 professionals through complex regulatory matters. Leana also serves on the PAFA Technical Advisory Group, the IFAC Anti-Money Laundering Committee and the IFRS Foundation SME Implementation Group.

Requirements

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