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Calculating Total Enterprise Value by subtracting a Cost EV from Freehold EV?
Hi WSO, I am reviewing a model where the client has calculated the EV of their Freehold Portfolio, by subtracting a central cost EV. So they have taken the freehold and leasehold portfolio EBITDA * EV/EBITDA Multiple (of 12.5x) and then subtracted Central Costs * EV/Central Cost multiple (of 9x).. I...
Mechanics Of Price Increase Of Growth Stocks At New Earning Announcement - Please Critique
Hi there, A bit ashamed to say that I am still a bit confused how growth stocks actually produce their returns for their shareholders over time. More specifically the actual mechanics of it. Please bear with me: Let's say you buy one stock of a tech company today at t=0 at a rather high 1yr forward...
Mechanics of Price Increase of Growth Stocks as New Earning are Announced - please critique
Hi there, A bit ashamed to say that I am still a bit confused how growth stocks actually produce their returns for their shareholders over time. More specifically the actual mechanics of it. Please bear with me: Let's say you buy one stock of a tech company today at t=0 at a rather high 1yr forward...
SaaS valuation off R&D spend?
Here's my question to all the tech gurus out there. Subscription-based software business has some revenues (let's say 1m), decent but not phenomenal ARR growth and has spent to-date 5-6m in R&D. They tell us that valuing them off revenue is not gonna fly, as revenue doesn't quite reflect yet all the...
DCF Valuation Net Working Capital
Hi All, I am currently trying to complete a DCF, but am stuck on what I should select in terms of Capital Assets vs Capital Liabilities. Below is a screenshot of the balance sheet, I know typically Assets include: AR, Inventory, other receivables, and Other current assets. While Liabilities...
SAAS/Tech Unit Economics Models
Can anyone point me in the direction of a primer or resources on building unit economics models for tech companies? Everything I've found so far is pretty theoretical and hasn't been too useful in practice. I'm trying to get a better understanding on how to value public tech/SAAS companies with...
Using complex excel function in financial modelling (Accounting, M&A, LBO, Valuation)
Hey monkeys, I am training in excel and I was wondering by this question: When do we use for instance "index-match" or "sum-product function" in financial statements, DCF, LBO or even a Merger Model. Could you please give some real-life example ? Thanks,
Fair rate of price appreciation on fairly valued stock: at cost of equity?
I am used to using cost of equity in DCF valuation etc. However, from a perspective of an investor in public equity markets: does cost of equity of, say 10%, imply that the justified growth for that share price should be 10%? So, if the share price is USD 10 today, the price should be USD 11 in one...
New equity value post M&A
Hi, Say A acquires 85% of B for a consideration of $200m. pre transaction, B has no debt and $60m of cash on the balance sheet. A ponies up $20m in cash (10% of the consideration) while the rest is financed with cash from B's balance sheet (20%), Debt (30%) and seller financing (40%, payable over 3...
URGENT: Interview Help Please!
Doing a presentation on a recent public M&A transaction (announced in Nov-20) I plan to spend a few mins on initial thoughts on the purchase price. Intend to look at the public comps of the target: Public comparable comps - compare EV/LTM EBITDA, EV/LTM Revenue and NTM P/E of the target today vs...
First Real Finance Internship - Goldman PWM, JPM TCIO, Private Equity, and more!!! What to pick??
Hi all! I am beyond lucky to have many offers, however, they are all over the place and I don't know what is the best option to pick for my future. I am a finance student - unsure what I want to do! Goldman Sachs PWM - Great name and pretty much double the pay I would be getting at the other...
Joseph J. Blake & Associates
Established in 1946 in New York, the firm provides real estate appraisals, market and feasibility studies, litigation support as well as offers a variety of other related consulting services. Through its national office platform as well as its formal strategic alliance with Sanyu – Japan’s...
Do you care about valuation?
For those who work at the shops with an emphasis on high growth and momentum (e.g., positive fundamental changes ), how much do you care about the valuation? What is your framework when it comes to the valuation?
From equity stategy to IB
Hi, im currently an intern at JP Morgan in Mexico City and have been here for just over a year, im looking for opportunities in IB and im very eager to start learning essential valuation subjects to make my applications more competitive.
Cheap alternative to Capital IQ
Hi all, I worked in a local investment banking boutique for some years and have just resigned to start my own M&A advisory firm. I used to work with Capital IQ, but have just noticed how expensive this is. I wonder whether you guys can suggest me a cheaper alternative to Capital IQ? I just need a...
Valuation or Commercial Banking
Finished a MSF in 2019 and have been working in valuation for a large accounting firm (~75 mil rev) for the last year. However, I have a close connection at a well respected, mid-sized bank, that is trying to recruit me and put me on a path to be a commercial lender. I enjoy the work I am doing, and...
How to separate real estate from business value?
Hey guys, I have a pretty elementary business valuation question. Imagine you are valuing a private digital marketing firm that owns its own office. How would you deal with the real estate value? Would you first value the business pretending it doesn't own any office and therefore adding a rent...
Which Valuation Job?
Hi everyone, I have two potential opportunities in valuation. Eventually, I'd like to end up in IB then PE/HF. However, I did not attend a target school and will have more of an uphill battle. Job 1: "Business Valuation Analyst" at a large regional CPA firm. They have a solid brand name around my...
Why in a trading comps valuation analysis, bankers use projected EBITDA or EBIT instead of the LTM metric?
I would like to know why in a trading comps analysis, the metric used to estimate the Enterprise Value (either EBITDA, EBIT or Revenue) is projected, instead of using that of the last 12 months. Is it the same for the P/E ratio? What about transaction comps, do they use projected metrics as well?...
Big 4 Valuations vs. Non-Big 4 TAS
I've got two offers to choose from. I eventually want to make the transition to IB. 1) TAS with non-big 4 accounting firm (think RSM, GT, BDO). Opportunity to work on live deals doing diligence, gain accounting experience, additional opportunities to work on strategy and valuation projects. I like...
How to account for COVID-19 in a valuation?
How would you account for the effect of COVID-19 in each of the 3 valuations methods? (DCF, Comparables, Precedent Transactions)
Real Estate - CBRE
Anyone else getting the vibe that CBRE materials are just really bad? Going through a valuation report with them and all the numbers are inconsistent throughout. Savills, JLL ones were decent, just can't get my head round some of these CBRE ones smh
Current Sophomore trying to understand more
Hi everyone, I am currently a sophomore at a non-target who had is looking for more clarification on accounting principles before I start my first-round interviews. Before I get called an idiot, I want to explain my past experience, I had a finance-related internship this summer, part of my school's...
How to find comparable companies for CCA?
Hi! Freshman here who know little to nothing about finance. I need help with valuation, and I was wondering if someone could explain to me how to find appropriate companies for a CCA. I've checked online and most websites just say some vague shit like "companies that are competitors" which I really...
Most versatile desks for IBD and ER skillsets?
Hey guys- any recommendations on the best desks for building a good skillset in valuation, modelling, credit analysis (or really, any of the skills that IBD/ER folks use)? I'll be interning at a BB in S&T but would love to cast my scope as wide as possible. Obviously I'm still really interested in...
Startup valuation
Hi, everyone! I have a question regarding how Venture Capitalists value startups. As I am starting to prepare myself for entering VC, I want to know more about startup valuation. I assume DCF models will be useless, so how are venture capitalists doing it? Is it through comps valuation or precedent...
Valuation of high debt company
Hi guys, I have an interview question for you: Could you please advise me on high to value a company which has high debt? Please mention which multiples you are going to use into your valuation and why. Thank you in advance
How to go about finding a strong stock to pitch for an interview?
I am a sophomore at a semi-target school and I am applying to a student run investment group. I have had my toes dipped into the finance world for about a year or two now, but when it comes to understanding the process of valuing a stock in order to use it as the stock to pitch, I am clueless. I...
Healthcare IB - Accounting/Interview Questions
I am looking for Healthcare specific accounting questions or interview questions to consider for a healthcare IB role. Basically, other than the general valuation methodologies and other general IB questions. What should I be prepared for a technical interview? For example, for software companies is...
EV / EBIT vs EV / EBITDA - Capex
Hi guys, Why would you value a company based on EV / EBIT as opposed to EV / EBITDA - Capex? You would account for capital intensity in both cases but in which cases would you use one vs the other? Thank you!
(Interview Question) Differences in valuing an Oil & Gas Company vs a company like Facebook?
What might you expect to find when you value an oil and gas company verses Facebook? The main difference that comes to mind is that w oil and gas the primary model used in valuation is an NAV, net asset valuation analysis. Its basically a very detailed DCF analysis w specific info on selected oil...
Interest Added Back to Cash Flow from Operations?
I want some clarity regarding the treatment of Interest expense in the Cash Flow statement. I'm not able to get a satisfactory understanding on the same. Let me just break down my doubt into two parts- 1. Why is interest expense added back to PBT in Cash flow from operations? My Understanding- Since...
Facebook's future estimates at its IPO
Hello everybody! I'm writing a thesis about Facebook's valuation over time. I want to build a DCF using the POV of a person who wanted to invest in the IPO (2012) just to see how a sensitivity table would have looked like. Is there a way I can find analysts' past estimates (even for just revenues)...
Health Insurance Model (UNH)
Does anybody know how to properly value health insurance companies? Trying to build a model for UNH but getting caught up in how different the health insurance income statements are. Any insight would be helpful.
Shareworks by Morgan Stanley
Has anyone worked in the Valuation dept at shareworks by MS? What is it like workload wise? Do you get autonomy over the projects?
How to get a rough valuation for a small business?
Hello WSO community, I need your help at roughly valuing a business. It is a restaurant with an adjacent hotel and catering in a mid-sized town (75k) in Germany. Restaurant is high-end, the hotel has 21 rooms and is four-star standard. Has 50 employees. Business seems to be going well but due to the...
From Big4 valuation to client facing finance position
Hi all I know that there is a lot of threads on some of the same aspects of my questions, but however I probably have another background. I am a bit trapped and have been working in various positions since I finished my master degree around four years ago and hope you can help me with some advice....
How do I value a company with only knowing it's revenue, recurring revenue, ebitda, and a few facts about it's business model?
I was given a question by a recruiter this afternoon for a corporate finance internship at a large private SaaS company. I just received a rejection letter, and it's probably because I bombed this question. I know that revenue is $17M, recurring revenue is $7M, and ebitda is 30% of revenue. The...
Internal Lateral Move - Need Help with Valuation Case Study
I'm making a lateral move within my company from operational finance/accounting to a FP&A role. As part of my application I have to do a case study. This is my first true "finance" role - take it easy. Case study is as follows: Given Selling company's P&L (3 years actual, 4 years forecast) - closing...
Negative Net Working Capital Valuation
What should I do if the result of Net Working Capital is negative? Because this impact the stock price
WSO PE Interview Course - PaySmart Case Questions
Hello all, been prepping with the WSO course, and am working on the PaySmart case. I have two questions, one specific to this case, and one that's more general: (1) Minor point, but in the video solution, when projecting out the market share for US and Europe, Europe increases by the given 0.5%...
What does full dilution do to a public company's valuation??
If a public co has 50m shs o/s and mkt cap of $5m but fully diluted had 105m shs what happens to mkt cap for purposes of a merger?
Do PE professionals look at multiples other than EBITDA multiple?
I have been taught that PE firms use EBITDA multiple for the purchase price and exit price, sometimes working back from the targeted IRR . Is it possible for PE folks to look at other multiples such as EBIT if the target is capital-intensive? I know P/E does not make much sense b/c you will replace...
Quants - Programs for your Models?
Might be the wrong forum for this, but for the quants out there, what are the programs you use when building your models? I know R is prevalent but I'm curious to what others are used? Also, do you mainly just tweak existing packages or start from scratch? Thanks!
Can someone please explain this to me?
I was recently offered a position to join the valuations desk of a MF PE Shop. I am from a nontarget and my ultimate goal is to eventually go to a M7 program for my MBA . Would taking this BO job hinder my ability to make that transition? Also, does anyone have any numbers into how compensation is...
VERY Basic Financial Modeling Question Regarding Time 0 Cash Flows and Initial Investment
I need a small favor. I have a very basic question about discounted cash flow modeling. I think I know the answer, and it is probably obvious, but I have been thinking about it so much that I have confused myself. This issue is very important to a financial model I have created for the acquisition...
Why is it said that investors don't get compensated for firm specific risk, they just get compensated for market risk in Capm?
Beta actually is there to get us to the firm specific risk against the market. So why is it said that investors are thought to hold a well diversified portfolio and don't get compensated for firm specific risk when beta gives that compensation? I guess I am missing something here...
Stock Valuation: Why does DCF give us equity value close to the range of the current share price?
Hi, I am finding it difficult to understand how DCF gives us the equity value in the range of the current share price? Example: Stock is trading at $110s. How does discounting future earnings, give us a value in the range of say $90-120? I am not able to understand it mathematically why the stock...
Big Four Valuation Offer: Choosing an Industry to Cover
I just accepted a full-time offer to start in Valuation at a Big Four firm in NYC after I graduate next month. I have a choice on which Industry Coverage team to join, and am looking for advice. My goal is to move over to an Investment Bank after ~1 year, and then eventually try and make the move to...
L&T’s Buyback – The Curious Case Of Rejection Of The Behemoth’s Proposal
L&T’s buyback proposal was recently rejected by SEBI on the grounds that the capital gearing ratio would exceed 2x, thereby breaching SEBIs buyback regulations. The marked difference in debt levels between the standalone and consolidated business’ is mainly due to the debt levels of L&T Finance,...
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