BOCQ ADVISORY

You can be a weather forecast analyst in Hawaii, or you can be a weather forecast analyst in Idaho.

Why Hawaii and Idaho? Hawaii has the most predictable weather in the US: Its always sunny.
Idaho? The most unpredictable: Nobody knows.

If you predict the weather in Hawaii, you will always be right. But nobody will care. If you predict the weather in Idaho, youll probably be wrong
a fair amount of times. But whatever small edge you can provide will make you an invaluable source of information and people will turn on their
TV every day to hear what you have to say.

NYU Prof. A. Damodaran

LEARN BEST PRACTICES FROM A SEASONED M&A BANKER

PERSONAL BACKGROUND PREVIOUS EMPLOYERS

Passionate financial modeler eager to share best 3 years of M&A experience across Lazard Paris, RBC
practices with motivated professionals & students London, and Socgen London & NY
Ran 4 modeling workshops at Socgen NY for the benefit
of interns, trainees, and analysts in various investment
banking product groups with strong feedback
Preferred topics: DCF, LBO, 3-Statement, Trading SELECTED TRANSACTION EXPERIENCE
Comps, WACC
Currently following Damodarans online valuation FMC Technologies Suez US Steel Grupo ACS
program through NYU to deeply understand key M erger o f Equals A cquisitio n o f GE Water
$ 1.5 billio n A mended Credit
IP O o f Saeta Yield
Facility
underlying academic concepts
Water
Feel free to contact me for any additional information: USD 13,000m USD 3,415m USD 1,500m EUR 435m
Charles@BocqAdvisory.com Financial A dviso r Financial A dviso r Debt P ro vider Financial A dviso r
M ay 2016 FRA /USA M ar. 2017 FRA /USA Jul. 2015 USA Feb. 2015 SP A

INTERNATIONAL BACKGROUND

Pushkin State Russian Language Institute

Moscow
Socgen and RBC London Summer Classes
M&A Analyst 2013
2014-2015 1 month
12 months
NYU Stern New York
Online Valuation Program Lazard Paris
2017 ESSEC Business School Paris M&A Analyst
3 months BSc & MSc in Business
2014 Fudan MBA Shanghai
2009-2014 6 months
Socgen New York Exchange Program
Berkeley Haas MBA M&A Analyst 2013
Berkeley 2015-2017 5 months
2013 18 months
6 months Champagne Your Business
JKSDA Togo
Hong Kong
Summer volunteer teacher ESSEC Business School Singapore Entrepreneurial Experience
M&A Experience 2008 Exchange Program 2011
1 month 2011
Academic Experience & Other 6 months
6 months
FINANCIAL MODELING WORKSHOP KEY HIGHLIGHTS

PRODUCT OFFERING SELECTED TOPICS

2-hour Demo Workshop DCF modeling

I build a model from scratch in front of the class DCF framework; EqV/EV; Terminal Value check;
and walk them through the key steps sensitivity analyses and Monte Carlo simulations
Class can ask as many questions as they like LBO modeling
4-hour In-Depth Workshop Uses & Sources; Required IRR drives value or value
I build a model from scratch together with the class drives implied IRR; cash sweep & circularity;
and walk them through every step sensitivity to leverage, multiples, etc.
Class can ask as many questions as they like 3-Statement modeling
Class can be in-person or online through Webex Balance Sheet drives Cash Flow statement or Cash
Flow Statement drives Balance Sheet
Up to 50 people/class online
Up to 20 people/class in person Trading Multiples
Identify key drivers of value
100% OF TRAINED CLASSES LIKED IT 95% WOULD DO IT AGAIN

100% 95% 95% 95% 95%

74%

26%
5% 5% 5% 5%

Like it? Learn? Interest in i-Banking? Again? Finance tips? Excel tips?

Low & Very Low Medium High & Very High

The explanations throughout the training were highly interesting. Thank you for leading this workshop.
Shortcut tips are very useful. I did not find it too detailed. It was very helpful and I thoroughly enjoyed the exercises.
I would be highly interested to do another training. Thanks again for your hard work!
Extremely interesting and useful.
Would be very interested in future training.
APPENDIX

EXAMPLES OF THEORETICAL CONCEPTS

 DCF CHECKLIST
What currency are Discount rate in the
NOMINAL your cash flows in? same currency?
NO
Nominal or Real
Cash Flows? REAL Discount rate in real
terms? (no inflation) NO
Unit Consistency Chimera DCF
Discount Rate = NO
CF before or after BEFORE Cost of Capital?
Debt Payments?
AFTER
Discount Rate = NO
Cost of Equity?

High Reinvestment?
HIGH NO
High or Low
DCF TESTS Input Consistency
Growth?
LOW
Low Reinvestment? NO Good Explanation? NO Dissonant DCF
Discount Rate in
line with Growth NO
Assumptions?

Terminal Value
Trojan Horse / Drag
based on a YES
Queen DCF
Multiple?

Narrative Do you have a

YES Plausible Narrative? NO Dreamcast DCF
Consistency Narrative?

NO Trying to Back into

Following Rules? YES a Predetermined YES Kabuki DCF
Value?

NO NO
Mutant DCF Robo DCF
Bocq Advisory based on A. Damodaran
 TERMINAL VALUE CHECKLIST

Terminal Value The tail that wags the dog A. Damodaran

Terminal Value = FCFN+1/(KcPGR) = EBITN+1*(1t)*(1PGR/LT ROIC)/(KcPGR)

COST OF CAPITAL TAX RATE RETURN ON CAPITAL GROWTH RATE

Cost of Capital in Stable Growth Effective Tax in perpetuity < Cost of Capital vs. LT ROIC Growth Rate > Risk Free Rate?
= in High Growth? Marginal Tax Rate?

YES YES YES

ROIC<KC ROIC>KC+5% Will your company

Shouldnt it change Can you defer tax in
really overtake the
with maturity? perpetuity?
economy?

Destroying value Do you have such a

forever... Intentional? sustainable edge?

With t = Tax Rate; Kc = Cost of Capital; PGR = Perpetuity Growth Rate; LT ROIC = Long Term Return on Invested Capital
Based on the idea that:
A/ FCF = EBIT*(1t)*(1Reinvestment Rate) with Reinvestment Rate = Change in WC + Capex D&A / EBIT*(1t)
B/ Reinvestment Rate*Return on Invested Capital = Growth so that in the long term, LT Reinvestment Rate = PGR/LT ROIC

Bocq Advisory based on A. Damodaran

 DRIVERS OF BETA
BETA OF EQUITY (LEVERED BETA)

BETA OF FIRM (UNLEVERED BETA)

NATURE OF PRODUCT/SERVICE OPERATING LEVERAGE FINANCIAL LEVERAGE

The more discretionary the product or Fixed Costs as % of Total Costs The greater the proportion of capital that
service, the higher the beta The greater the proportion of fixed costs, a firm raises from debt, the higher its
the higher the beta equity beta

Implications Implications Implications

Cyclical Companies should have higher Firms with high infrastructure needs and Highly levered firms should have higher
betas than non-cyclical companies rigid cost structures should have higher betas than firms with less debt
Luxury goods firms should have higher betas than firms with flexible cost Levered Beta = Unlev. Beta*(1+(1-t)*(D/E)
betas than basic goods firms structures

High priced goods & services firms Smaller firms should have higher betas
should have higher betas than low prices than larger firms
goods & services firms Young firms should have higher betas
Growth firms should have higher betas than mature firms

If you Many investors are inherently suspicious about beta as a measure of risk, though the reasons for the suspicion vary. If
dont like you dont like betas, use another measure of relative risk. If you dont like betas because
Betas ... they are different in different services: Use sector average or bottom-up betas
... you think you should be measuring total risk vs. market risk: Use relative standard deviation
... they are based upon stock prices and you care about intrinsic value: Use accounting measures (earnings or
balance sheet) to get a measure of relative risk
... they dont bring in qualitative variables such as the quality of management: Those variables are generally
better reflected in your cash flows, but if you insist, use them to come up with qualitative measures of risk

Bocq Advisory based on A. Damodaran