M&A: Free Cash Flow (FCF) Modeling

One of the primary functions of a broker-dealer’s M&A; desk is advisory services – consulting clients as they seek to grow through M&A.;

In this course, you will learn to use the Free Cash Flow metric to evaluate acquisition opportunities. You will learn about the components of Free Cash Flow and its relationship with market value. You will also learn about the process of capital budgeting and guidelines to follow.

This course is part of the New York Institute of Finance’s popular Mergers & Acquisitions Professional Certificate program.

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