Entrepreneurship: focusing on valuation of companies and intangible assets

Aims

This course aims to: 

• introduce you to key aspects of entrepreneurship and of valuation
   
• provide a framework for you to evaluate key company attributes for developing valuation models
   
• introduce you to the application of various valuation methods so that they will be able to apply these in determining the value of companies and intangible assets and to support investment and business decisions

Content

The Entrepreneurship: focusing on valuation of companies and intangible assets course in the University of Cambridge International Summer Programme. The course will enable you to develop an understanding of entrepreneurship, with a focus of the valuation of businesses and their intangible assets, including intellectual property.

Entrepreneurship
This part of the course will enable you to develop an understanding of the key aspects of entrepreneurship, such as the importance of: (i) teams and leadership, (ii) understanding customers for the products and services being developed, (iii) analysing market conditions and the total addressable market, (iv) developing financial models, (v) the importance of intangible assets and intellectual property, and (vi) the valuation of early stage and growth companies, particularly for investment purposes and to support strategic business decisions.

Valuation of Companies and Intangible Assets & IP
This part of the course will enable you to develop an understanding of the main valuation methods, including the cost approach, market approach, and future income approach in valuing companies and their intangible assets and IP. The course will lead you step-by-step through the theories and main considerations that one must understand in order to develop a credible opinion of value. Real-life valuation issues will also be explored to further your understanding of how to work with imperfect data. The course will also relate the concepts to International Valuation Standards (IVS) and The International Private Equity and Venture Capital Valuation (IPEV) Guidelines and will discuss additional issues and complexities with working in an international market.

Presentation of the course 

The course will be taught through a combination of dynamic and engaging classroom-based teaching and practical exercises.

The course will begin with lectures and discussions on aspects of innovation and entrepreneurship, from case examples and practice, followed by lectures and discussions on the valuation of companies and intangible assets, including intellectual property (IP). 

You will be able to apply what you have learned to your own hypothetical entrepreneurial business idea, or to your current business opportunity. 

Course sessions

1. Introduction to Entrepreneurship 
   This session will include key aspects of entrepreneurship, such as the importance of: (i) teams and leadership, (ii) understanding customers for the products and services being developed, (iii) analysing market conditions and the total addressable market, (iv) developing financial models, (v) the importance of intangible assets and intellectual property.
    
2. Introduction to Assets, IP & Valuation 
   This session will include key aspects of: (i) how you can define an asset, (ii) a discussion on how financial markets help us establish value, (iii) how an enterprise value is comprised of tangible assets plus intangible assets, (iv) aspects of intangible assets and intellectual property (IP), (v) how valuations may be used as a tool to inform business and investment decisions, 
   (vi) the different purposes for valuation, and (vi) key aspects for the valuation of business 
   and assets.
    
3. Valuation - Cost and Market Approaches 
   This session will include key aspects of: (i) the Cost Approach to valuing Companies and Intangible Assets, (ii) considerations on when to use the cost approach, (iii) the two common cost definitions of reproduction cost new and replacement cost new, (iv) considerations of depreciation and obsolescence, (v) the Market Approach including the Guideline Public Company Method, the Merger and Acquisition Method and other methods such as the Recent Transactions & Investment Rounds.
    
4. Valuation - Future Income Approach, Net Present Value, Relief from Royalties 
   This session will include key aspects of: (i) the definition of an asset, (ii) the time value of money, (iii) the Future Income Approach: Discounted Cashflow Models, (iv) the Perpetuity, a special case of cashflows, (v) Capitalised Economic Income & Terminal Value Methods, (vi) Risks, Discount Rates and the Capital Asset Pricing Model (CAPM), (v) Valuing Companies versus Valuing IA / IP Assets, and (vi) key considerations for valuations for investment.
    
5. Entrepreneurship & Valuation - Practical Case Study 
   This session will include a practical case study, with a review of the key factors you should consider when analysing and valuing an entrepreneurial venture and its intangible assets 
   and IP.

Learning outcomes

You are expected to gain from this series of classroom sessions a greater understanding of the subject and of the core issues and arguments central to the course. 

The learning outcomes for this course are:

• to discuss confidently the fundamentals of entrepreneurship and to critically evaluate a business opportunity
   
• to confidently communicate verbally and in writing about the main aspects of a businesses that are important for its potential success, and in determining the value of the business and its intangible assets
   
• to apply valuation methods such as the cost, market and future income approaches in the valuation of companies and intangible assets, to support business and investment decisions

Required reading

Aulet, Bill and Murray, Fiona, “A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurship in the Economy”, Ewing Marion Kauffman Foundation (2013)

Available at: A_Tale_of_Two_Entrepreneurs_Report.pdf (kauffman.org)

Da Cruz Vasconcellos, Fernando, “How can firms continue to generate ‘excess returns’? Monitoring the Return on Investment on the Most Important Assets of Successful Companies” Internal publication (2020) (Available on VLE)

Typical week: Monday to Friday 

Courses run from Monday to Friday. For each week of study, you select a morning (Am) course and an afternoon (Pm) course. The maximum class size is 25 students.   

Courses are complemented by a series of daily plenary lectures, exploring new ideas in a wide range of disciplines. To add to your learning experience, we are also planning additional evening talks and events. 

Evaluation and Academic Credit  

If you are seeking to enhance your own study experience, or earn academic credit from your Cambridge Summer Programme studies at your home institution, you can submit written work for assessment for one or more of your courses.  

Essay questions are set and assessed against the University of Cambridge standard by your Course Director, a list of essay questions can be found in the Course Materials. Essays are submitted two weeks after the end of each course, so those studying for multiple weeks need to plan their time accordingly. There is an evaluation fee of £75 per essay. 

For more information about writing essays see Evaluation and Academic Credit. 

Certificate of attendance 

A certificate of attendance will be sent to you electronically after the programme.