Navigating Capital Structure Assumptions: Ensuring Accurate Valuations with Real-World Testing

Co-Sponsored by the National Association of Certified Valuators and Analysts®  (NACVA®) 

	Program Description		Who Should Attend
	How You Will Benefit		Schedule

Program Description

This course provides a focused exploration of a critical yet often underappreciated component in business valuation: the capital structure assumption. Participants will gain a thorough understanding of how the chosen capital structure directly impacts the cost of capital, and ultimately, the overall valuation of a business.

We will begin by examining the role capital structure plays within the weighted average cost of capital (WACC) and demonstrating its influence on valuation outcomes. A central theme of the course will be developing the judgment to determine when it is appropriate to apply an industry-standard capital structure versus a company-specific capital structure. Attendees will learn how to assess whether the subject company can realistically support and maintain the capital structure being assumed.

The course will also introduce techniques for performing a “reasonableness check” to evaluate the practicality of selected capital structure assumptions. Participants will learn how to use key financial ratios as diagnostic tools to test whether the industry-standard capital structure aligns with a company’s actual financial capacity. By analyzing these financial indicators, attendees can ensure their assumptions are grounded in reality.

In cases where a company-specific capital structure is more appropriate, we will walk through the process of deriving that structure, including a step-by-step demonstration of how to use tools such as Excel’s Goal Seek to determine a tailored capital structure based on the company’s financial profile. By the end of the course, participants will be equipped with practical tools and analytical frameworks to confidently evaluate and apply capital structure assumptions in their valuation work. 

How You Will Benefit
After completing this course, attendees will be able to:

• Explain the role of capital structure in the business valuation process and its effect on the cost of capital and overall valuation outcomes
• Differentiate between industry-standard and company-specific capital structures, and determine when each is most appropriate to use
• Assess whether a company can realistically support and maintain the capital structure being applied in a valuation analysis
• Employ reasonableness checks to ensure that chosen capital structure assumptions align with a company's financial reality
• Demonstrate how to use Excel’s Goal Seek tool to derive a company-specific capital structure in valuation models
• Create sound capital structure assumptions that are both justifiable and tailored to the specific context of the company being valued

Take Aways
After completing this course, attendees will be able to confidently evaluate and select appropriate capital structure assumptions in business valuation. They will understand how capital structure impacts the cost of capital and overall valuation, and how to assess whether a company can realistically support a given capital structure. Attendees will also be equipped to perform reasonableness checks using financial ratios and apply tools like Excel’s Goal Seek to derive company-specific capital structures when appropriate, allowing them to provide more credible and defensible valuations.

Who Should Attend

Delivery Method Group Internet-Based Program Level Basic Advanced Preparation None Prerequisites Previous training or experience with the fundamentals of accounting, finance, economics, and business writing. These individuals are often at the staff or entry level in organizations, although such programs may also benefit a seasoned professional with limited exposure to the area.    Finance 1 Total CPE Hours   1

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