FIN 420 – Investment Banking and Capital Markets


Name: Marisa Palmer
SCID: Wisconsin School of Business
Department: Finance
Course Name: FIN 420 – Investment Banking and Capital Markets

Supported Program Outcomes:

  • PO1: Explain risk vs. returns, explain methods of measuring and managing risk
  • PO2: Use financial models, including for optimal portfolios and estimation of expected returns
  • PO3: Distinguish between equilibrium and no-arbitrage pricing, apply both
  • PO4: Explain costs / benefits of separation of ownership and control in typical large firm
  • PO5: Understand how market frictions can influence financial decisions
  • PO6: Explain how investment and financing decisions create and destroy value

Course Objectives:

  • CO1: Demonstrate the fluency necessary to understand/explain current and historical financial news and events, particularly with respect to mergers and acquisitions, initial public offerings and investment banking
  • CO2: Locate relevant information in financial statements
  • CO3: Utilize appropriate financial technologies and databases (Excel, CapIQ and Bloomberg) to access and effectively present financial information
  • CO4: Understand that value changes depending upon what is being priced
  • CO5: Determine what each valuation model is actually valuing
  • CO6: Determine effect of leverage
  • CO7: Describe differences in types of debt tranches
  • CO8: Demonstrate how to create a discounted cash flow model
  • CO9: Demonstrate how to value a company using comparable companies
  • CO10: Demonstrate how to value a company using precedent transactions
  • CO11: Create and defend a basic leveraged buyout model
  • CO12: Calculate if acquisition is accretive or dilutive

Course Units:

  • Unit 1: Financial Statement Analysis
  • Unit 2: Excel Modeling
  • Unit 3: Building a Forecast Model
  • Unit 4: Valuation Overview
  • Unit 5: Discounted Cash Flow Analysis
  • Unit 6: Trading Comparables (Comps)
  • Unit 7: Initial Public Offerings (IPOs)
  • Unit 8: Precedent Transactions
  • Unit 9: Leveraged Buyout Analysis (LBO)
  • Unit 10: Strategic Mergers & Acquisitions

Unit Being Redesigned:
Unit 6: Trading Comparables (Comps)

Unit Objectives:

  • UO1: Understand the role of trading comparables as a relative valuation technique
  • UO2: Describe what different multiples are telling us and when it is appropriate to use them (e.g. P/E vs. EV mulitples)
  • UO3: Construct a set of comparable companies (comp set)
  • UO4: Define the key drivers of value creation: growth, ROIC/ROE and WACC/Ke
  • UO5: Calculate P/E, EV and industry multiples
  • UO6: Apply trading comparables to value a real-world company

Summary of Blended Activity Flow

Pre-Class Activities In-Class Activities Post-Class Activities

Pre-Class 1

  • Read Chapter 1: “Comparable Companies Analysis” Investment Banking, Rosenbaum and Pearl
  • View video lecture
  • Self-assessment

Pre-Class 2

  • View video lecture
  • Self-assessment

In Class 1

  • Check-in from self assessment
  • Small Group Activity: Constructing a set of trading comps
  • Partner Activity: Calculating the Components of Trading Comps
  • Calculate P/E Multiple
  • Calculate EV Multiple
  • Calculate LTM Multiple

In Class 2

  • Calculate Forward Multiple
  • Check-in from self-assessment
  • Class discussion
  • Group Activity: Build a comp set for Case Company (Chipotle Mexican Grill)
  • Report Out

Post-Class 1

  • NA

Post-Class 2

  • Submit Completed Comp Set & Valuation for Chipotle Mexican Grill

Timmo Dugdale

Center for Teaching, Learning & Mentoring Division of Teaching and Learning

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