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| Valuing Company Securities by DCF: 'Discounting' with Present Value Theory (2241Q) |
Course CPE: 2 hours
Field(s) of Study: Finance–1 hr; Economics–1 hr
Program Level: Advanced
Prerequisites: Good knowledge of topic and experience in the field. Advanced level programs are often appropriate for seasoned professionals within organizations; however, they may also be beneficial for other professionals with specialized knowledge in a subject area.
Advanced Preparation: None
Delivery Method: QAS Self-Study |
Item
Number: 26BV0119VCS
Shipping Weight: 0lbs. 0oz. |
| Price:
$147.00 |
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Recording Date: January 19, 2026
Presenter: James A. Lisi
Program Description:
The current practice of discounting non-controlling private company shares based upon public market characterizations misses the mark because the analysis is not based on cash flows to the investor/security, but on cash flows to the company. Present value analysis offered here employs a security's cash flow as the main value determinant.
Because all investor benefits and costs are in the future, a cash projection with a return of capital and appreciation is the necessary valuation model. Analyzing the cash flow of the security, an appraiser can get a reliable result tied directly to a security's character. This rubric applies to common stock, membership interests, preferred stock, promissory notes, warrants, and options. To solve the appraisal problem, appraisers must select an exit date and event scenario, then project the cash to be received by the security, and apply an investor discount rate.
Problem set-up requires that ownership entitlements are strictly applied at the company level as components of company equity value. Then, the investor discount rate is seen to be driven by the risk-free rate and a company’s tendency to take additional cash from its investors, reinvest cash into the company, or distribute cash to its investors.
Takeaways
Experienced valuators will be able to value securities with a DCF model, whether common stock, options, warrants or other interests, without theoretical black box models or special discount data
After completing this course, you will be able to:
- Identify the concept of economic utility to a company so that its asset value and equity value are correctly distinguished
- Determine an investor/security discount rate compatible with the equity value that can be paired with the security's cash flows
- Recognize the risk-free rate as the basis of the lack-of-liquidity discount rate component
- Determine the effect of a company's cash calls, reinvestment or distributions and exit costs on the discount rate
- Determine the effect of a value floor, as seen in preferred stock and real estate, on the discount rate
- Determine conversion of lack-of-control data into a discount rate component
- Determine modeling of a security's cash flows to exit and complete a security's DCF analysis
- Recognize when a company's security may have a premium instead of a discount to current equity value
For more information regarding refund or concerns, please contact our offices at (800) 677-2009.
The Consultants’ Training Institute (CTI) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. |
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