Financial models in Investment banks focused on small software firms.

Dear Bankers:

Which models do Tech bankers build if they are focused on small-cap software sector?
E.g. software firms in the below $10MM revenue stage.

1) sell side small-cap software sector deals ?
2) buy side small-cap software sector deals ?

My hunch is that they will build a lot of trading comps and transaction comps.
I am curious to know - how frequently they use DCF ?

 
Best Response

Well, first off, it depends if the company is cash flowing. If FCF DCF. Additionally, it will depend on growth trajectory of the company. If the company is growing rapidly or has difficult to predict cash flows, then a DCF doesn't make sense. More often than not, most of the companies that my firm works with fall into either of these buckets. In some circumstances, you may occasionally build a DCF, but on the lower end of the middle market in tech, it is not used all that often.

Career Advancement Opportunities

May 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Lazard Freres No 98.8%
  • Harris Williams & Co. 25 98.3%
  • Goldman Sachs 17 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

May 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

May 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

May 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (21) $373
  • Associates (91) $259
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (68) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”