NYIF: M&A: Free Cash Flow (FCF) Modeling

• Identify Free Cash Flow from Accounting Data
• Recognize how to compare Free Cash Flow to Net Income
• Recognize the Drivers of Free Cash Flow
• Identify the steps to calculate Cost of Capital
• Identify the steps to use Free Cash Flow for Capital Budgeting Decisions
• Recognize the relationship between Free Cash Flow and Economic Value Added Value Acquisitions using Free Cash Flow
• Recognize how to develop a Free Cash Flow approach to Incentive Compensation

Session 1: Introduction to Free Cash Flow and the Objective of the Firm

• Lesson 1: Need for Free Cash Flow
• Lesson 2: Understanding Free Cash Flow
• Lesson 3: Relationship between Free Cash Flow and Market Value
• Lesson 4: Return on Investment
• Lesson 5: Adjusting Accounting Data to Get to Free Cash Flow
• Lesson 6: Components of Free Cash Flow
• Lesson 7: Show Me
• Lesson 8: Adjustments to Net Investment
• Class Exercise

Session 2: Components of Free Cash Flow

• Lesson 1: Focus on Free Cash Flow
• Lesson 2: Understanding the Components of Free Cash Flow

Session 3: Cost of Capital

• Lesson 1: Understanding Cost of Capital
• Lesson 2: CAPM & WACC
• Class Exercise

Session 4: Capital Budgeting Using Free Cash Flow

• Lesson 1: Capital Budgeting: Overview
• Lesson 2: Guidelines for Capital Budgeting
• Lesson 3: Q&A
• Lesson 4: Caveats

Session 5: Modified Free Cash Flow

• Free Cash Flow and Interim Financial Results

Session 6: Using Free Cash Flow to Evaluate Acquisition Opportunities

• Lesson 1: Overview
• Lesson 2: Acquisition Analysis
• Lesson 3: Objective to add Shareholder Value
• Lesson 4: Synergies and Integration Costs
• Lesson 5: Q&A
• Lesson 6: Other Metrics
• Class Exercise
• Lesson 7: Incentive Compensation

Session 7: Integration of Acquisitions

• Lesson 1: Integration Best Practices
• Lesson 2: Integration Planning

Session 8: Implementation Issues