To pass this unit the student needs to (1) Achieve an aggregate mark of 50 or more, and; (2) Pass the Final Exam.

CLASSES

Face-to-Face Teaching: Generally 20 hours.

Timetable: Detailed timetable for classes are on the Centre’s website at www.mafc.mq.edu.au

Consultation Times: 

Students who wish to contact any of the teaching staff may do so through:

• Individual consultation with the lecturer by email in the first instance, if necessary; or
• iLearn forums, in relation to general queries (so that all students may benefit).

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: Nil.

Additional Readings:

• Additional readings are included in the unit notes and via the Library and iLearn.
• Students are encouraged to refer to external websites that are provided in the notes.
• Students should assume these readings are examinable unless otherwise advised.

Lecture Notes: Available in printed form and electronically via iLearn.

Useful References: Will be provided as part of the notes.

Calculators: 

• A financial calculator that can handle time value of money calculations, logs and power functions may be of assistance.
• The Hewlett Packard calculator hp17bII+ is recommended.
• In examinations, hand held calculators, mobile phones and computers are not permitted.

Assumed Knowledge:

• Students should look at the web link below to obtain notes on the minimum mathematical and statistical knowledge required to undertake the Master of Applied Finance degree: http://mafcstudents.mq.edu.au/new-to-mafc/pre-course-materials/

Assumed Access:

• Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.
• Email access.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site: 

• Found by logging on to iLearn ilearn.mq.edu.au, then clicking on AFCP860 Applied Business Valuation.
• This is where you will find links to forums, downloadable resources and other important pages.
• The forum allows you to communicate with other students and lecturer(s) and may provide supplementary material.
• You are requested to post your questions to the forum at least 24 hours prior to the assignment submission date or the examination date. Questions posted after that time may not be answered. Please try to not leave your questions to the last few days.

Important Notice: 

• It is important that you familiarise yourself with the unit’s iLearn site. 
• Students should check the unit’s iLearn site regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions.

1. OVERVIEW OF AUSTRALIAN & INTERNATIONAL STANDARDS & REGULATIONS AFFECTING VALUATIONS

We start by looking at the regulatory environment for valuations in Australia. By considering each of the main regulators in turn, we will look at the circumstances where a valuation may be subject to regulation and the different valuation approaches that are prescribed by each regulator.

Key learning outcomes:

• Understand the regulatory environment for valuations in Australia.
• Discuss the role of the International Valuations Standards Council and Accounting Professional & Ethical Standards Board and review relevant standards.
• Understand circumstances where valuations are mandated by regulatory and other authorities including: Australian Securities & Investments Commission, Australian Accounting Standards Board, Australian Taxation Office, Office of State Revenue, and review relevant standards and/or legislation.
• Understand circumstances where valuations may be required in Court.

2. VALUING PRIVATE COMPANIES VS PUBLIC COMPANIES

We review some of the nuances of valuing private companies as opposed to public companies - where information is much more difficult to obtain and generally not of the same quality. We also look at how to deal with the additional risks typically inherent in private companies.

Key learning outcomes:

• Understand the key challenges of valuing private companies and how best to deal with them.
• Understand financial reporting and corporate governance requirements of private companies.
• Normalisation of earnings and review of forecasts.
• Determining appropriate earnings multiples/discount rates, particularly where there are few or no comparable listed companies.
• Review discounts applicable to private company valuations.

3. VALUING PORTFOLIO INTERESTS VS CONTROLLING INTERESTS

We look at the key differences between portfolio interests and controlling interests in companies, and how we account for the differences in value. We also consider empirical evidence on control premiums paid in takeover transactions.

Key learning outcomes:

• Understand the differences between portfolio interests and controlling interests, and why their valuations might be different.
• Understand the different types of portfolio interests.
• Understand how control premiums can be calculated from market data.
• Review and analyse empirical evidence on historical levels of control premiums.
• Understand the interaction between control premiums and synergies.
• Understand how minority discounts can be derived from control premiums.
• How and where to apply control premiums/minority discounts in valuations.

4. VALUATIONS FOR MERGERS & ACQUISITIONS

We discuss valuations in a merger and acquisition context – where they fit into the process and how they might impact on due diligence and the ultimate deal structure.

Key learning outcomes:

• Understand the importance of valuations in mergers & acquisitions.
• Overview of a typical acquisition process.
• Indicative valuations to support non-binding offers.
• Understand how due diligence findings can impact valuations.
• Understand common strategies used to bridge valuation gaps in merger & acquisition transactions.

5. INDEPENDENT EXPERT’S REPORTS

We will discuss the circumstances in which it is advisable to commission Independent Expert’s Reports and review the key requirements of preparing Independent Expert’s Reports. We will review various examples of past Independent Expert’s Reports and undertake an in-depth group case study of a few Independent Expert’s Report.

Key learning outcomes:

• Understand the circumstances in which an Independent Expert’s Report is mandatory or recommended.
• Understand the main requirements of ASIC in the commissioning of experts and the preparation of Independent Expert’s Reports.
• Review of ASIC Regulatory Guide 111.
• Discuss independence requirements of experts.
• Understand the requirements for commissioning third party experts.

6. VALUATIONS FOR FINANCIAL REPORTING

We will discuss the importance of valuations in the context of the global move towards fair value reporting and look at examples of accounting standards that provide specific valuation guidance. We will look at public company annual reports as an example of how valuation information in respect of key balance sheet and income statement items is disclosed.

Key learning outcomes:

• Discuss the concept of fair value reporting.
• Understand the main circumstances where valuations are required in financial reporting.
• Review of specific situations requiring valuations including share based payments, purchase price allocations and impairment reviews.
• Discuss other situations where accounting standards provide valuation guidance.

7. VALUATIONS FOR TAXATION PURPOSES

We will discuss the importance of valuations in tax compliance and review a range of scenarios that may require valuations such as tax restructures, divestments, tax consolidations and employee share schemes. We will look at the Australian Taxation Office’s (ATO) Market Valuation Guidelines on how valuations for taxation purposes should be performed.

Key learning outcomes:

• Understand the types of circumstances in which valuations are required for taxation purposes.
• Understand the main requirements of the ATO in the commissioning of valuations by taxpayers.
• Review of the ATO’s Market Valuation Guidelines.
• Review ATO valuation requirements for employee share schemes.

8. THE VALUER AS AN EXPERT WITNESS

We will look at some of the circumstances that may require a valuer to provide a written expert report for Court or give oral evidence in Court, and practically how these things are done.

Key learning outcomes:

• Understand the role of an expert witness.
• Understand the types of circumstances where a valuer might be called upon to be an expert witness.
• Review the process for appointing experts and receiving instructions.
• Understand the main requirements of written expert reports for Court.
• Understand what is required when giving oral evidence.
• Review relevant case law.

This Unit Guide may be subject to change. Students will be advised, via an "Announcement" on iLearn, if the Unit Guide is changed.

The latest version is available at https://unitguides.mq.edu.au/.

Students should read the Unit Guide carefully at the start of term. It contains important information about the unit. If anything is unclear, please consult one of the unit lecturers.