Caucasus School of Business

Course:
Instructor:
Time:
Office:
Email:

Valuation
Vakhtang Dolidze
7:00 10:00pm Monday
C61
vdolidze@gpc.ge

Prerequisites: Accounting, Corporate Finance

Course Description: The goal of this course is to master students understanding of valuation principles
and making students capable of building quality financial models. Students will be required to do a
considerable amount of reading as well as demonstrate sound analytical ability.
Course Material: The books for this course are:
1.
2.

Valuation: Measuring and Managing the Value of Companies - Tim Koller, Marc
Goedhart and David Wessels. Fourth edition.
Investment Valuation: Tools and techniques for determining the value of any
asset - Aswath Damodaran. Second edition.

Class Policies:
1.
2.
3.

4.

5.

A portion of your course grade will be based on your participation in classroom discussions
therefore attending class is generally helpful.
You are expected to have prepared all case assignments and read the required chapters
before class. You are also expected to have read any reading material handed out in class
before the following class session.
If you have any question regarding case or project you are welcome to ask me in class or
email your question to me provided that all your classmates are copied (CC). This way, all
questions and answers will be heard/read by the whole class. Personal phone calls or oneon-one questions regarding cases will not be answered.
Presentation is part of the financial analysts job, so try to make everything you bring/send
to me as presentable as possible. I should not spend time to format your excel/word
documents for printing. Do not make excel files so cumbersome that I cannot understand
what you did there. (This will have impact on your grade!)
When sending email to professor, first three letters in the subject line should be CSB!
Otherwise your email is likely to get in junk mail folder.

Grading Scheme:
Course grades for students will be determined as follows:
1 Case Assignments (5x7):
35
2 Mid-term:
25
3 Final (Project):
25
4 Quizzes:
10
5 Current Events:
2
6 Peer Recognition:
2
7 Class Participation:
1
Total

10
0

35.0%
25.0%
25.0%
10.0%
2.0%
2.0%
1.0%
100.0
%

1.) Cases:
You should prepare written answers to any 5 cases of your choice. Two case assignments are due prior to
the mid-term and three after the mid-term. As we move forward, you are expected to learn more and
therefore grading will get stricter. The questions to the cases will be handed out in class (or emailed).
Before the session at which the case is due for discussion a written case analyses should be:
1) Emailed to my email address (electronic copy, see Class Policy - 5) and;
2) Turned in (printed copy) in class.
I need electronic copies to check accuracy of your calculations; however, emails are not always delivered
to the addressee, so make sure to bring the printed copy to class as well.
Written answer (in word document, excluding exhibits) should be no more than one page. Please use Times New Roman, size 12, and line spacing 1.5.
If case asks you to analyze something do not just write what happened but instead tell me what you think.
For example, was a person making decision right or wrong and provide your arguments. Do not spend
too much time reiterating what had been written by case writer.
2.) Mid-term:
Details will be explained in class.
3.) Project:
The project requires you to conduct an in-depth analysis of a current financial issue or a major corporate
transaction. You are allowed a wide degree of latitude in selecting an appropriate project and your final
grade will depend on the complexity of the proposal as well as the final product. Examples of potential
projects are:
Analysis of a Merger/Acquisition, Divestiture or Restructuring.
Analysis of a Bankruptcy or Financial Distress.
Analysis of a Corporate/Group Investment.
In addition, you can also work on a live case study where a group will act as a financial consultant to
a small firm. The idea is to work on a specific finance problem facing a small firm.
The end product of this project is a typewritten report no more than 10 pages in length (Times New
Roman, size 12 and line spacing 1.5), excluding exhibits.
2

It is recommended that you work in groups of 2-3, however individual works are also welcome. From
every group/individual I should have one page with the names of the group members. By late October all
groups/individuals should clear the initial proposal/idea of the project with me.
4.) Quizzes:
There will be short quizzes handed out in class, so you do not overlook the necessity to read all the
materials and learn along the course instead of just trying to get the grade with as minimal efforts as
possible.
5.) Current Events:
Being informed about the world of business and finance is generally very helpful, so during semester I want
each of you to get accustomed to regularly reading business news. For this purpose four times, during the
semester, you should briefly present a current event relating to Finances, Capital Markets or Business. This
current event should come from a current issue of a business journal such as Wall Street Journal, Financial
Times, Fortune Magazine, Business Week or a current Georgian newspaper. Georgian events are
preferable; however feel free to discuss global ones.
To earn credit for each current event, a copy of the article that discusses the event you are presenting
should be handed in with your name and date written on it (one to the instructor and one to each of your
classmates).
Articles that are not current (i.e., within the last week) will result in a loss of points. A poor choice of
article will also decrease your earned score. Primarily, I will be evaluating your ability to draw upon what
we are learning in class to understand the importance of relevant current events.
I will not accept more than one current event during any week from the same student. Get all four current
events turned in before the end of the semester. I will accept a fifth current event to replace the score on a
previously graded current event. (If you want to turn in a 5th event, you are free to do that. I will use the
highest 4 scores.)
6.) Peer Recognition:
You are working towards earning an MBA to become a future leader of an organization and like any good
leader, students in class must become proficient and comfortable with recognizing others contributions in a
work or classroom setting. As such, when you feel that a student has made exceptional contributions to the
classroom experience, complete a Peer Recognition form to recognize the effort and contribution of the
student and forward it to the professor. The Peer Recognition form is attached at the end of this
document. The recognized contributions should be based on comments made in class participation, in
classroom exercises, and general behaviors that enhance your course experience.
Students receiving several valid Peer Recognition forms have the potential to earn points. Students
receiving no Peer Recognition forms have the potential to earn 0 points. Recognition must be worthy. As
such, students preparing invalid recognition forms will have their own evaluation score lowered. Yet,
students who prepare meaningful recognition forms will be rewarded for their effort. Scores will ultimately
be determined by the professor.
3

7.) Class participation:

To encourage in-class participation, the casework in this course requires you to participate in all case
discussions. You will receive points in Class Participation based on your contribution to the case
discussions.

Course Outline and Reading Assignments

KGW: Koller, Goedhart and Wessels; AD: Aswath Damodaran; L: Lecture; C: Case Discussion
1

Date Topic
7/S 1. Introduction

Reading/Case Assignment
C : Caucasus Online

14/S 1. Discounted Cash Flow and Relative Valuation

L: KGW Ch 12
L: AD Ch 17, 20 (18,19 rec)

21/S 1. Creating Value and Measuring it

L: KGW Ch 3, 5 (p. 101-115)

C: Economy Shipping

28/S 1. Project Cash Flows

2. Estimating Growth and Terminal Value

5/O 1. Cost of Capital

12/O 1. Interaction of Investment and Financing: The APV method

2. Free Cash Flow to Equity Discount Model

L: KGW Ch 8, 9
L: AD Ch 11, 12
C: Interco
L: KGW Ch 10
L: AD Ch 8
C: Elite Electronics
L: KGW Ch 5 (p. 119-131)
L: AD Ch 14, 15 (p.416-419)

19/O 1. Capital Structure

26/O

L: KGW Ch 17
C: General Dynamics

Mid-term exam

2/N 1. Real Options

2. Valuing Real Estate

10

9/N 1. Valuing: Banks, Negative Earnings, Start-ups, Distressed

L: KGW Ch 20
L: AD Ch 26, 28, 29
C: Massey Ferguson
L: AD Ch 21, 22, 23, 30

11

16/N 1. Valuing: in Emerging Markets, High Growth Companies,

Cyclical Companies

L: KGW Ch 22, 23, 24

C: Bank of Georgia

12

23/N 1. Mergers, Acquisitions, Takeovers and Divestitures

13

30/N 1. Value Enhancement

L: KGW Ch 15, 16
L: AD Ch 25
C: MRC (A)
L: AD Ch 31, 32
C: Colt Industries

14

7/D Answers to Final Project questions

15

14/D Final project presentations

(time for each presentation = 180min / # of presentations)

PEER RECOGNITION FORM

(This form can be handwritten or typed and handed in or e-mailed to the professor up to one week
following the activity you would like to recognize.)
Name: Students name you are recognizing
Date:

Date of Activity you are recognizing

From: Your Name

Date: The date you are writing the recognition form
Use the space below to provide a brief description of the students activity you would like to recognize.
You should be clear about the activity and why you want to recognize it.
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