Syllabus

Entrepreneurial Finance
(18th February, 2018)

 Instructor: Gábor Baranyai

Tel: +36 (30) 222 1925
Email: gbaranyai@[Link]
Office:
Office hours: by appointment

 Credits: 2 (4 ECTS) (8*150 minutes with 20 minutes break)

 Term: Winter 2017-2018
 Course level: MA/MSc (Max 25 students)
 Prerequisites:
Students must have successfully completed Accounting, Financial Reporting and Control and Finance to
be admitted into this class.

Course description

The Entrepreneurial Finance course prepares students to be competent in the skills of an entrepreneur
and corporate financial manager. The course will focus on the specific needs of entrepreneurial ventures,
including stat up and development phase financial and management problems.

The course will consist of a combination of lectures, case discussions and building/analysing Excel fiancial
models.

We will focus on practical managerial implications and considerations. Excel proficiency is essential to
complete the course succesfully.
The key delivery of the course is to prepare the students to build individually an Excel financial plan,
analyse different financial and management problems:

- principles and managerial considerations of financial planning,

- standard financial statements – consolidated and consolidating,
- financial planning and budgeting,
- working capital management, liquidity management,
- financial control, measuring venture’s financial performance,
- free cash flow and managerial implications
- financing options, cost of capital, optimal capital structure,
- valuation, exit strategies,
- mezzanine financing,
- analysing exit options,
- risk analysis, scenario and sensitivity analysis.

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The practical oriented course assumes active participation of the students in the classes. Joint discussions,
thinking and reasoning are essential to achieve the objectives. The students will get individual home
assignments from class to class, which require application of the topics, discussed at the class, individual
research using publicly available sources and preparation and presentation of brief analyses.

Learning outcomes

Core Learning Area Learning Outcome

Interpersonal Participate in class discussions and problem solving exercises. Present arguments and
Communication Skills findings. Objectively critique findings of fellow students.
Technology Skills Individual/group research, using publicly available on-line sources. Excel proficiency in
financial management.
Cultural Sensitivity and Harness international and professional diversity of students in viewing issues and
Diversity problems from different perspectives.
Quantitative Reasoning Students will learn how to prepare and apply financial models to appraise the value of
a venture or better evaluate the market potential of an opportunity.
Critical Thinking Exercise the powers of inquiry, logical thinking and critical analysis. Interpret and
evaluate theoretical arguments and empirical evidence.
Think and reasoning!
Ethics and Social Evaluate and discuss challenges related to corporate governance, social responsibility
Responsibility and ethical and professional behavior.
Understand for-profit and social enterprise.
Communication Skills Prepare for investor presentation. Problem oriented and strate forward approach, but
be sensitive and reasonable.
Presentation skills – brief, efficient presentation is required. Balance information
delivery, conclusion and Q&A.
Management Knowledge Attain a broad understanding of management principles and techniques –
and Skills communication, reporting, motivation, conflict management, risk management, hire-
fire decisions. Students will develop skills to prepare and present a financially sound
investment presentation to top management and/or investors.
Reading list

Compulsory readings:
J. Chris Leach – Ronald W. Melicher (2015 Fifth Edition) Entrepreneurial Finance CENGAGA Learning,
ISBN 978-1-285-42575-7
Selected articles, case studies and other readings will be assigned to the participants, time to time.
Optional reading (good to know):
Keith A. Allaman (2007) Modeling Structured Finance Cash Flows John Wiley &Sons, Inc., ISBN 978-
0-470-04290-8
John F. Tjia (2009) Building Financial Models McGraw Hill, ISBN 978-0-07162-126-7
Paul Pignataro (2013) Financial Modeling & Valuation Wiley Finance Series ISBN 978-1-118-55876-8
Jerald E. Pinto – Elaine Henry – Thomas R. Robinson – John D. Stowe (2010) Equity Asset Valuation
Wiley Finance ISBN 978-0-470-57143-9

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Recommended readings/research:

 Economic and financial press (The Financial Times, The Economist, The Wall Street Journal,
Business Week, Fortune),
 Review and practice on-line data bases and other resources (Amadeus, Damodaran, Reuters,
Investment banks home pages).
Assessment

The final grade is based on the overall evaluation of students’ performance. The following components
and weights make up the grade:

 Class participation (individual) 20%

 Individual project assignment I. (week by week homework) 40%
 Individual project assignment II. (final take home exam) 40%

Grade Assessment Points

A Outstanding 100-88%

A- Excellent 87-76%

B+ Good 75-64%

B Fair 63-52%

B- Satisfactory 51-46%

C+ Minimal pass 45-40%

F Fail 39- 0%

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Course schedule and materials for each session

Class Date Topic Preparation Deliverables

1. 21st February 2018 Overview Readings (pre class reading):

Wednesday - The Entrepreneurial Environment Leach/Melicher Ch 1. and 2.
5:30 – 8:30 p.m. - Entrepreneurial Process
Room:N13 412/A
- Business/Financial Planning Readings:
Leach/Melicher Ch 3.
2. 28th February 2018 Financial planning and budgeting Readings: Individual homework
Wednesday - Initial Considerations Leach/Melicher Ch 4. assignment #1
5:30 – 8:30 p.m. - Standard Financial Statements and
Room:N13 412/A
Key Relations
3. 7th March 2018 Managerial Considerations Readings: Individual homework
Wednesday - Business Assessment Leach/Melicher Ch 5. and 6. assignment #2
5:30 – 8:30 p.m. - Liquidity Management, Treasury
Room:N13 412/A
- Working Capital Management
- Breakeven Analyses
- Analyzing financial Performance

4. 14th March 2018 Financing the Venture Readings: Individual homework

Wednesday - Financing Alternatives and Leach/Melicher Ch 7. - 12. assignment #3
5:30 – 8:30 p.m. Managerial Considerations
Room:N13 412/A
- Types and Costs of Financial Capital
- Determination of Financing Need
- “J” Curve
- Uses & Sources
- VC and other financing alternatives

5. 21st March 2018 Valuation Readings: Individual homework

Wednesday - Valuation Methods Leach/Melicher Ch 7. - 12. assignment #4
5:30 – 8:30 p.m. - Valuing Early-Stage Ventures
Room:N13 412/A
- Value Creation
- Enterprise Value/Equity Value

6. 28th March 2018 Mezzanine Financing Review selected Mezzanine Individual homework
Wednesday - Mezzanine Financial Plan Funds home pages assignment #5 and #6
5:30 – 8:30 p.m. - Financial Structuring
Room:N13 412/A - Typical Financial Planning
Problems
7. 4th April 2018 International financial and tax Readings: Guest speaker
Wednesday perspectives Leach/Melicher Ch 15. and 16. Gábor Baranyai
5:30 – 8:30 p.m. - Transfer pricing EY Amsterdam
Room:N13 412/A
Exit, Risk Analysis
- Analysis of Alternative Exit Scenarios Take Home Exam
- Sensitivity Analysis
- Risk Analysis, @Risk
8. 11th April 2018 Take home exam discussion
Wednesday - Common mistakes
5:30 – 8:30 p.m. - Benchmarking conclusions
Room:N13 412/A - Project assessment
- Key take away

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Brief bio of the instructor

Gábor Baranyai
Gábor Baranyai has been originating, executing and monitoring private equity and venture capital
investments in Central and Eastern Europe for over nineteen years. His main activities are transaction
structuring, fund raising and other M&A assignments. Gábor Baranyai acted partner and managing
director of DBG Eastern Europe’s (a generalist private equity fund) from 1999 to 2005. Prior to joining DBG
Eastern Europe, Gábor was country director of CETI (a telecommunications-focused venture capital fund)
and served as an investment manager with the International Finance Corporation (the private sector arm
of the World Bank). He was also a member of the board of directors of MOL (the Hungarian national oil
company) for several years. Gábor is member of the Hungarian Venture Capital and Private Equity
Association and Board Member of the Canadian Chamber of Commerce in Hungary. Gábor has an MBA
from the Joseph M. Katz Graduate School of Business at the University of Pittsburgh. He has MSc in
chemical engineering.