OfficeHours

MAY 19, 2023

If you don’t have an account already, create a free account here and purchase our Buyside Starter Kit with the code BUYSIDESTARTER here. A Few Reads to Digest Valuation Simplified: How Discounted Cash Flow Modeling Drives Financial Analysis Harness Discounted Cash Flow (DCF) modeling for financial analysis.

Discounted Cash Flow

Lake Country Advisors

AUGUST 8, 2024

Adjust for Differences: Make necessary adjustments to account for differences between the target company and the comparables, such as growth rates or profit margins. Accurate and appropriate valuation is one of the pillars of maximizing the profits from a business sale. Example Scenario: Suppose you want to value a technology company, TechCo.

Discounted Cash Flow

Francine Way

JULY 19, 2017

Thus far, we have discussed five valuation methods: DCF, Comparable Company, Precedent Transaction, LBO, and Dividend Discount Model (DDM). So, a good valuation model has to take into account the possibilities of a variable having multiple values along with each value’s probability of occurring. To-date, we have lumped them together.

Valuation

Francine Way

JULY 20, 2017

Thus far, we have covered four popular valuation methods in M&A (DCF, Comparable Company, Precedent Transaction, and LBO) and one less known one that is making its way out of the academic realm into the business world (Dividend Discount Method, DDM). The 1st one for today is the Tangible Book Value (TBV) method.

Valuation

Francine Way

JULY 17, 2017

Balance Sheet Assumptions: Days Accounts Receivable (AR) = AR / Revenue * 360. Days Payable = Accounts Payable / COGS * 360. In this post, we will discuss the mechanics of LBO step by step, starting from the point where all the needed tools and data for such analysis as outlined here have been gathered.

Valuation

Wizenius

JUNE 12, 2023

Valuing a company that operates in a highly volatile industry with unpredictable revenue streams and market conditions requires a thoughtful approach that takes into account the unique characteristics and risks associated with the industry. Use different discount rate scenarios to account for varying levels of risk and uncertainty.

DCF Analysis

OfficeHours

OCTOBER 17, 2023

If you’re in your 20s, you have probably thought about saving, investing, or retirement in some way. Even though it may seem far off, it’s never too early to start seriously thinking about how much you are saving and how you can make your money work for you in an effective way that requires little time or effort on your end.

Private Equity

Wizenius

MAY 14, 2023

Terminal Value The terminal value is an essential component of a discounted cash flow (DCF) analysis. It represents the value of a business or an investment beyond the explicit projection period used in the DCF model. However, most companies have a longer lifespan and continue to generate cash flows well beyond that period.

DCF Analysis

Peak Frameworks

JUNE 7, 2023

Net Income - It's the starting point for calculating CFO, but it's based on accrual accounting. Because it's based on actual cash generated rather than accrual accounting, which recognizes revenue and expenses when incurred, not necessarily when cash changes hands. For instance, in 2020, IBM reported solid net income.

Financial Analysis

Wizenius

JUNE 25, 2023

Adjust the WACC to account for the company's specific risk profile. Adjustments for Negative Cash Flows: Incorporate adjustments in the DCF analysis to account for the negative cash flows in the initial years. One approach is to apply a higher discount rate during the negative cash flow period to reflect the increased risk.

Financial Models

Mergers and Inquisitions

MARCH 13, 2024

Financial Modeling: Like private equity, 3-statement models are common, as are valuations and DCF models , but LBO models are less common since not all deals use debt. Like venture capital, cap tables, liquidation preferences , and primary vs. secondary purchases come up frequently (plus, SaaS metrics , SaaS accounting , and so on).

Private Equity

Wizenius

JUNE 11, 2023

Evaluate Valuation Methods: Select appropriate valuation methods that account for the impact of inflation and currency fluctuations. Evaluate Valuation Methods: Select appropriate valuation methods that account for the impact of inflation and currency fluctuations.

Financial Modeling

Mergers and Inquisitions

DECEMBER 20, 2023

To accomplish that, I recommend the following timeline: How to Get an Investment Banking Internship , Step 1: Your First Year in University You don’t necessarily need to pick your major at this stage, but I would recommend finance/accounting or something that will be useful for a wide range of jobs.

Investment Banking

Successful Acquisitions

MARCH 2, 2023

To account for this variability, valuation professionals will lean into the comparables they feel are closest and most accurate and discount or remove entirely those that seem unrealistic. The first approach to valuation is the Asset Approach. A key advantage of this approach is that it is not theoretical.

Valuation

Mergers and Inquisitions

DECEMBER 6, 2023

So, expect a lot of quarterly financial projections , quick public comps , and simple DCF models linked to specific catalysts. Maximum Drawdown Limits: Because the multi-manager hedge funds are highly leveraged , they do not tolerate drawdowns. which may also contribute to market neutrality. Do Multi-Manager Hedge Funds Deliver?

Funds

Software Equity Group

FEBRUARY 26, 2024

DCF: Discounted Cash Flow Estimates a company’s value and forecasts future cash flow by incorporating the time value of money. DCF is used when making investment decisions and understanding a business’s current and future value. The cash accounting or the accrual method is used to prepare P&L statements.

Discounted Cash Flow

Mergers and Inquisitions

NOVEMBER 1, 2023

The short answer to #1 is that healthcare private equity firms operate in specific verticals with stable-ish cash flows, such as healthcare services, nursing facilities, medical devices, equipment, and healthcare IT. They do not invest in risky biotech startups attempting to cure cancer (at least not within their traditional PE portfolios).

Private Equity

Devensoft

AUGUST 22, 2023

As opposed to merely focusing on the market capitalization, which only accounts for the company’s equity value, the Enterprise Value Calculator considers the company’s debt, cash, and other financial liabilities. Discount Rates Discount rates are used in the DCF method to determine the present value of future cash flows.

Valuation

RKJ Partners

AUGUST 6, 2017

Below are the six recognized methodologies with short explanations of each: Discounted Cash Flow (DCF) Analysis: This analysis derives an ‘intrinsic’ value of a company. The advantage of this method is that it takes into account the development of the company, rather than simply the historical financials.

M&A

Mergers and Inquisitions

SEPTEMBER 20, 2023

Technical Questions – You could get standard questions about accounting and valuation or VC-specific questions about cap tables, key metrics in your industry, or how to value startups. If you worked at a startup, how did you win more customers or partners in a sales or business development role? strong opinions, loosely held). It raised a $2.6

Capital

Cooley M&A

JULY 9, 2021

In analyzing synergies, the court clarified that the deal price would be reduced for buyer’s expected synergies , even if those synergies were not ultimately achieved (so long as they were accounted for in the price). The court ultimately increased the deal price by $4.37/share share proposed by the petitioners, but more than the $0.92/share

Mergers and Acquisitions

Mergers and Inquisitions

MAY 29, 2024

In riskier verticals, such as mining, the required DSCR is much higher to account for the added risk of commodity prices. By contrast, Project Finance roles are more specialized and “siloed.” You may still consider the entire portfolio when making decisions, but there’s less of a direct connection than in corporate finance roles.

Corporate Finance

Mergers and Inquisitions

APRIL 19, 2023

Valuation , such as the different multiples used for mining companies and the NAV model in place of the DCF (see below). To value it, we build a standard DCF based on production volumes, CapEx to drive capacity, and assumed steel prices: The valuation multiples are also standard (TEV / Revenue, TEV / EBITDA, and P / E).

Investment Banking

Mergers and Inquisitions

JULY 19, 2023

Why would investors pay high fees for what is effectively a mutual fund?” These are all good questions. The short answer is that there is no “formal” requirement for the strategies a hedge fund must use. A hedge fund is defined by its structure : the split between Limited Partners (LPs) and General Partners (GPs) and the fees paid to each group.

Funds

Mergers and Inquisitions

NOVEMBER 20, 2024

Most online coverage says, “ Growth equity is a mix of private equity and venture capital, so expect interview questions from both those fields.” Q: Walk me through your resume. A: See our guide and examples for the “ Walk me through your resume ” question and the article on how to walk through your resume in buy-side interviews.

Private Equity

Mergers and Inquisitions

MARCH 5, 2025

If you had to pick a single industry that could be interesting to every hedge fund investing in individual companies, it might be biotech. Of course, biotech is not an official hedge fund strategy. While plenty of bankers and equity research professionals from healthcare teams enter biotech hedge funds, people with advanced degrees (M.D.,

Funds