How to answer: Which valuation method gives the highest valuation? The short answer: it depends. • Comparable transactions and DCF are both on the higher end • Comparable companies and LBO are both on the lower end This question is part of your valuation questions in an Investment Banking interview. When I was going through the interview process, this question came up multiple times—especially at firms that focus heavily on M&A or private equity. It’s less about reciting a fixed answ...| iBankingAdvice
This is one of the classic questions in Investment Banking recruiting. You will 100% get this question. Knowing how to run a DCF is part of every Investment Banker’s core repertoire. You must know this question in and out. If you show up unprepared or are caught off guard, you will get rejected.This is where an interview situation differs from your academic studies. In college, you will get lecture notes that would devote an entire chapter on this topic. In an interview situation, you must ...| iBankingAdvice
Learn the four main valuation methods—DCF, comps, precedents, and LBO. Understand how each works, when to use them, and which typically yields the highest valuation.| iBankingAdvice
How are Private Equity funds structured? A private equity fund structure has multiple players. The general partner is the investment...| iBankingAdvice
What is commercial due diligence? Commercial due diligence processes evaluate a company's growth potential, competitive landscape,...| iBankingAdvice
What is a bolt-on acquisition? A bolt-on acquisition is an M&A strategy where a large company buys a smaller target company to expand its...| iBankingAdvice
Understanding buy and build strategies A buy-and-build strategy is a distinct approach to business growth and investment. Primarily...| iBankingAdvice
What is the secondary market? The secondary market is where investors trade existing securities. They do not buy securities from the...| iBankingAdvice
A working capital adjustment is a type of purchase price adjustment seen in the acquisition of a business. A buyer would demand a working...| iBankingAdvice
What is operating working capital? Operating working capital (OWC) measures a company's short-term financial health and operational...| iBankingAdvice
How does private equity recruitment work? Private equity is a highly competitive field with limited but highly paid roles. Most...| iBankingAdvice
TMT stands for Technology, Media, and Telecommunications. It is a specific industry group within Investment Banking that covers clients...| iBankingAdvice
A carve-out is a corporate maneuver where parent company divests an equity stake of its business, often a subsidiary or a business unit,...| iBankingAdvice
What is acquisition financing? Acquisition financing is capital obtained so that a company can buy another target company. Acquisition...| iBankingAdvice
You can think of Corporate Development as a company's in-house Investment Banking team. It is a unique career path combining deal-making...| iBankingAdvice
The short answer to "walk me through an LBO" A leveraged buyout starts with buying a company mainly using debt to increase the returns of...| iBankingAdvice
The short answer How are the three financial statements linked? Net income flows from the company's income statement to the balance sheet...| iBankingAdvice
What is a sell-side M&A process? The sell-side M&A process is the organized auction process of selling a company. Investment Bankers...| iBankingAdvice
What is the middle market? Middle market companies are businesses between small businesses and mega corporations. They have annual...| iBankingAdvice
EBITDA vs. gross profit – A quick overview Gross profit and EBITDA (earnings before interest, taxes, depreciation, and amortization) show...| iBankingAdvice
What is Unlevered Free Cash Flow? Unlevered Free Cash Flow (UFCF) is a company's cash flow available to both capital providers (debt and equity holders).It shows how much cash a business can generate to service its financial obligations or pay dividends after serving its financial obligations. It is also called Free Cash Flow to the Firm (FCFF). This cash flow figure is theoretical and accounts for operating expenses, capital expenditures and investment in working capital while ignoring interest| iBankingAdvice
iBankingAdvice is everything you'll ever need to start your elite Investment Banking career. Written by seasoned ex-Investment Bankers.| iBankingAdvice
What is the multiple on invested capital (MOIC)?MOIC stands for "Multiple on Invested Capital" and is a widely accepted measure of investment performance in the private equity industry.It is calculated by dividing the exit value purchase price of an investment by the purchase price of the initial investment.The multiple on invested capital helps investors assess the performance of the investment relative to the initial capital deployed. A higher MOIC is a sign of a more successful investment.MOI| iBankingAdvice