BV202-OOO - Introduction to Business Valuation - Income Approach

Registration

Please see the "Upcoming Classes" tab for class offerings and registration information.

Course Description

BV202 was designed to build upon the learning outcomes achieved in BV 201 by adding the income approach to the student's skill set/ toolbox. This course places heavy emphasis on the three key variables of a valuation (regardless of whether the valuation is concerning fair value for financial reporting, fair market value for litigation or tax-related valuations):

• Benefit Streams;
• Risks (i.e., discount rate); and
• Growth.

Students will be provided with the core concepts necessary for them to immediately apply the income approach without regard to the specific standard of value or purpose for the valuation. 

Instructional Methods

Methods include lectures, discussions and individual/ group exercises and assignments.  Laptops or mobile devices are necessary for this course as you will receive eHandouts throughout the class.

Course Audience

BV202 is one of four Principles of Valuation (POV) courses required for those seeking a credentuial with ASA.  In addition, this course is also of interest to accountants, attorneys, business brokers, investment bankers, Internal Revenue Service staff and the appraisal community at large who are involved or interested in the valuation of businesses.

NASBA and Continuing Professional Education (CPE) Credit

The American Society of Appraisers is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors.  State boards of accountancy have the final authority on the acceptance of individual courses for CPE credit.  Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website www.learningmarket.org.

CPE Credit: Up to thirty (30) CPE credits in Specialized Knowledge
Program Level: Fundamental
Delivery Method: Only group-live courses are approved for CPE
Prerequisites: None
Advanced Preparation: None
Policies: ASA's Refund and Cancellation Policy and ASA's Complaint Resolution Policy

Agenda

Day 1 - Morning
8:00-8:45 Teacher and student introductions
8:45-9:00 Course Introduction
9:00-9:15 Chapter 1: Introduction to BV 202
9:15-9:45 Chapter 2: Overview of Income Approach
9:45-10:15 Chapter 3: Economic Benefits
10:15-10:30 Break
10:30-12:00 Chapter 3: Economic Benefits (continued)
12:00-1:15 Lunch

Afternoon
1:15-3:15 Chapter 4: Forecasting Financial Statements
3:15-3:30 Break
3:30-5:30 Chapter 4: Forecasting Financial Statements (continued)

Day 2 - Morning
8:00-9:15 Chapter 5: Capitalization of Benefits Method
9:15-10:15 Chapter 6: Discounted Future Benefits Method
10:15-10:30 Break
10:30-11:30 Chapter 6: Discounted Future Benefits Method (continued)
11:30-12:00 Chapter 7: Introduction to Discount Rates
12:00-1:15 Lunch

Afternoon
1:15-3:15 Chapter 8: Developing the Equity Discount Rate
3:15-3:30 Break
3:30-5:30 Chapter 8: Developing the Equity Discount Rate (continued)

Day 3 - Morning
8:00-9:45 Chapter 9: The Capital Asset Pricing Model
9:45-10:15 Chapter 10: Weighted Average Cost of Capital
10:15-10:30 Break
10:30-12:00 Chapter 10: Weighted Average Cost of Capital (continued)
12:00-1:15 Lunch

Afternoon
1:15-2:45 Chapter 10: Weighted Average Cost of Capital (continued)
2:45-3:15 Chapter 11 – Pulling it All Together
3:15-3:30 Break
3:30-4:00 Chapter 12: The Levels of Value
4:00-5:30 Course review

Day 4 - Morning
8:00-11:00 Exam

Learning Outcomes

Upon completion of this course, students will be able to:

• Assess the applicability of different Income Approach methods to a specific assignment;
• Define, explain, and assess the applicability of alternative benefit streams;
• Determine and make necessary normalization and control adjustments to financial statements;
• Evaluate management projections; perform independent financial projections if necessary;
• Differentiate and apply the capitalization of benefits and discounted future benefits methods of valuation under the income approach;
• Develop equity and invested capital discount rates;
• Apply and reconcile the results of the build-up and modified capital asset pricing models;
• Develop estimates of the risk free rate, the equity risk premium, beta, the industry risk premium, and the size premium from recognized sources;
• Identify and evaluate unsystematic risk (company specific risk);
• Summarize the derivation and use of data from Morningstar’s Stocks, Bonds, Bills, and Inflation and the Duff & Phelps Risk Premium Report;
• Discuss controversies involved in key discount rate components, the equity risk premium and the company specific risk premium;
• Identify the principles behind an asset approach;
• Describe circumstances where the application of and reliance on the asset approach might be appropriate;
• List the hierarchy of assets and returns on those assets;
• Apply asset approach valuation methods;
• Explain the concepts behind the excess earnings model and their relevance to specific valuation assignments;
• Communicate the difference between the traditional excess earnings method and the multiple period excess earnings method related to valuing intangibles;
• Perform an asset approach valuation using the net asset value with the excess earnings method; and
• Determine the level of value resulting from the use of each income method and each asset method.