Ok... so I've got my initial investment and subsequent dividends as the basis for my IRR.
My question is... at exit, the proceeds figure that should be beefing up my IRR should be:
a) that years dividends + (LTM EBITDA x Exit Multiple x Control Premium) b) that years dividends + (LTM EBITDA x Exit Multiple x Control Premium) - Debt b) that years dividends + (LTM EBITDA x Exit Multiple x Control Premium) + Cash - Debt
I'm a little confused on this because of the exit multiple method.
FYI... my exit multiple, for the time being, is strictly based off of CompCo stock price, hence does not include control premium.
Also... is it appropriate to get to your exit sale price VIA DCF? Or maybe some type of blended TEV based on CompCo multiple, DCF and transactions?
Should I be factoring in debt amortization in my FCF for DCF? Intuitively, it seems as though debt amortization should be negatively impacting FCF, but I haven't seen debt amortization on other FCF build-ups.
It's different depending on how you decide to model the accretion in, but in general debt amort affects taxable income, tax expense and therefore FCF.
I'm pretty sure its c), to get to the equity value from FV.
Ive always seen:
EBITDA D&A (-) EBIT
Interest (-) EBT
Taxes (-) NOPAT
CapEx (+/-) NWC (+/-) D&A (+) FCF
I have a feeling it has something to do with a certain level of debt being the ordinary course of business and an extraordinary near-term debt amortization (amortizing loan used to pay an asbestos settlement, for example) would impact FCF as a FCF adjustment.
Can anyone a little more experienced shed some light on this. Is amortization a FCF component for a DCF?
Also can someone shed some light on the exit purchase price for an LBO model as I mentioned above. Thanks.
WHAT ARE YOU GUYS TALKING ABOUT DCFs AND LBOs! STOP WITH THE NONSENSE...
The answer is C)
when calculating the exit year (most likely year 5), you take EBITDA * Multiple (most likely same as entry or one that generates the threshold IRR) - Debt + cash (strip cash off balance sheet prior to sale)...
The multiple can also be used to test the realistic exit scenario because if you need a 10x multiple to exit, well then maybe you should consider a more realistic deal...
(C) is the correct answer - with some caveats.
At exit, you assume the Company is either taken public again or sold. The proceeds at exit amount to the PE firm's EQUITY stake in the business. Therefore:
EBITDA * Exit Multiple = Enterprise Value. Enterprise Value - Debt + Cash = Equity Value (Proceeds)
Be careful when you apply a control premium:
EBITDA * Trading (CompCo) Exit Multiple * (1 + Control Premium) is wrong.
You should be applying a premium to only the EQUITY value of the company. The correct way to apply the premium here would be:
(EBITDA * Trading Exit Multiple) - Debt + Cash) * (1 + Control Premium)
The DCF should be based off of FCF to the firm... which includes FCF to equity holders and debt holders.
So you don't take out debt/loan amortization because that is CF to debt holders. If you were to strip out all debt obligations, you would essentially have a FCF to equity holders, and not the enterprise as a whole... which would make this an erroneous input into a DCF which is supposed to calculate ENTERPRISE value.
Re: Deducting debt amortization from FCF for a DCF
Whats funny is I did this in my fucking model late last night... don't ask me why.
Duke MMS Program Blown Up !! (Originally Posted: 03/30/2012)
Dukes Master in Management Studies program just got BLOWN UP.
Some kid wrote a scathing review on Dukes website and not Dealbook has picked it up. Not good at all!
http://www.dukechronicle.com/article/mms-making-mediocre-standard#disqu…
http://dealbreaker.com/2012/03/duke-mms-student-charges-university-with…
"If you don’t know what the Fuqua School of Business Master of Management Studies program is, you’re not alone. Neither do recruiters at America’s top consulting firms, investment banks and the whole slew of organizations that descend on campus every Fall to handpick Duke’s annual contribution to the hopeful 1 percent"
not sure if one person writing a letter to show that hes a nasshole while a bunch of MMS students bash him underneath means its 'blown up' id love to see what some of the BCG and MBB guys think will happen to his offer ;)
You're going to Fuqua correct? (baller)... I think you should teach everybody a lesson about what happens when you talk shit on the school that shorttheworld attends. email BCG lol.
Yeah... I can't imagine BCG will be all that pleased if/when they see this.
I doubt they'll take back the offer, but his chances for internal promotion just nose-dived.
I think it is just disappointing that someone would shit on their program and fellow students.
^^^ YES! He needs to show some respect for those who have taught him, and his peers. Also, he needs to show some respect for others. Not a cool thing to do.
Idiot got a master's to stay close to his GF? the fuck?
hard to describe this guy without triggering the profanity filter at work
selfish close-minded idiot?
What a douchenozzle. I'd punch this guy in the face if I saw him walking around. Congrats, you're better than everyone else. Now go take a long walk off a short pier.
And to quote a commenter on Dealbreaker:
"Putting your career on hold to hang out with your girlfriend is the NKI"
I wanted in on the MMS program, but when they rejected me, I didn't spew venom like this guy is doing... not that he should be even doing that.
I did, however, hex the Duke b-ball team so they'd lose in the first round.
Nothing like bashing a school and a program that you are a part of... what a clown.
you seriously dont think theyll take his offer back? do you think a bank would be okay with this happening?
i think he just titanic'd his career
This isn't just foolish, it's toolish, too. This sounds like your standard douchebag that thinks he's better than everyone else. With or without this letter, he wasn't going to be successful.
Considering the person who posted this has 2 banana points and has been around for just over a day, I'm gonna take a shot and say he's the one who wrote the letter. Now he's going around the internet trying to spread this load of horseshit that he somehow thinks is productive and conversation-initiating. What a jackass.
Whistleblowing never ends well for the whistleblower.
True story from some business research article.
This guy is a complete joke.
While it may be true that the MMS program is not extremely well-known yet in banking and consulting (it has, after all, only been around for a few years...), the notion that any graduate business program short of maybe an M7 MBA will magically open all of the doors is an absurdity in itself.
As an incoming MMS student, I researched the program extensively, talked to many current students, and basically understand that the program provides people with liberal arts backgrounds a quick introduction to many different fundamental parts of the business world, ultimately helping them answer the "why [insert business role here]?" interview questions. This does not imply landing offers at MBBs and top BBs, and to downright expect this to be the case is misguided.
What you do gain access to is a massive network of Fuqua alumni, the Fuqua career database, and fantastic faculty members who do have connections at top firms in the sweetest of industries. But just like with going to top 10 undergraduate schools, no one is going to hand you an amazing offer if you're not putting in the work through aggressive networking and interview preparation. "I went to Duke, I am owed things" -- this guy needs to hop on the WAAAAHHHHmbulance.
I remember meeting this kid at a recruiting event, actually. After reading this, I wouldn't want to be on his case team.
This kid stepping in a pile of shit that's for sure.
Wonder if he's Greg smith's son.
Adopted Indian child..
Writing an open letter isn't the best way to deal with these issues. If the MMS has issues, maybe after graduation you speak to the dean, faculty, program director etc. and discuss what you see as issues. That might get stuff done, this just makes the program and yourself look bad.
Duke MMS - Any info on reputation? (Originally Posted: 01/09/2010)
Anyone have any info of the program's placement / reputation
you mean fuqua? the program is only a few years old (like 2) so I have no idea. If you're talking about the undergrad certificate its a joke- all sociology classes and athletes
yea im talking about the 1 year masters program. I tried to search for info about it but since it is so new there isn't much out there. Wondering how competitive the program is and if its worth the cost.
Not super competitive. Worth the money depends on what you want to get out of it. If you just need a job and want another shot at recruiting at a target, then it's perfect. That said, it will not give you much of a leg up over others in terms of education. You recruit for the same positions as seniors and will essentially compete with Duke undergrads. The degree is great if you're behind on getting a job and are thinking about a post-senior internship. It gives you something to do and it's not too hard.
What I've said here is basically for all 1-year management masters. I've heard that Duke is at the top of the heap of these, though it's only two years old so it's hard to tell.
If you really want to learn something though, go to a real MSF program, either at Princeton, LSE, OxBridge, or LSB. You'll probably still be recruiting for the same positions as undergrads, but the program will have been meaningful and employers will respect it. These programs are tougher to get into, so not sure if everyone would qualify.
Princeton is a Masters in Financial Math , not a MSF. LSE is a great program, but a huge class (80-100 people). MSF debate has been addressed in multiple posts. Duke MMS will give you a nice name on the resume though.
Agreed. Duke is basically good for a nice name on the resume, a second shot at recruiting from a target, and a good masters GPA. You won't learn a ton, but then again the point is getting you a job not learning. Sorry about the Princeton confusion.
Duke MMS started this past fall. Nobody has graduated yet and thus no data is available.
Do you think that getting an MMS will have any effect on getting an MBA down the line?
This year is the first year the program is running so the stats, placements, etc. probably won't be exceptional, obviously not as good as Fuqua's MBA program. However, from my understanding and reading the other forums on the Duke MMS it seems like this program is very well positioned to attract competitive students, especially in this economy. Although I don't know the figures I bet the average GMAT for this program for next year's class will most likely be >650 and GPA>3.4 so its not a program that anybody can get into and it is probably quite competitive to get into. Also the program is not really the same as an MSF degree which is more quant based.
I will say this. Everyone I have talked to about having a MSF degree usually thinks it is an MBA. I have to explain the differences and what the degree is before people get the point. Not saying that this is the right way to think about things, but if you tell people you have your Masters from Duke I have to wonder how many will assume or think in their mind that you are talking about an MBA. Not saying to be dishonest, but just saying.
Check out the FAQ's : http://www.fuqua.duke.edu/programs/other_programs/mms_foundations_of_bu…FAQs/
You can't transfer the credits and there is no joint degree opportunity. I think this is a big issues. I know a lot of MSF programs at other schools basically have you take 30 credits in MBA finance classes for the degree. I couldn't find out if these are special MMS classes or if they are just MBA classes. From what the FAQ's say I think it might be separate classes.
So would you recommend doing this program over taking a job working in the back or middle office in hopes of getting a front office job?
Depends on your stats. If you have good stats in undergrad that qualify you for a good FO job, but just did badly in recruiting then do the MMS. Not only will it give you another shot at everything coming from a big name, but you have the opportunity to do be a SA this summer and gain some more experience. If your stats are really good but you just don't have a job, consider an MSF and get some experience.
If your stats are bad, it's doubtful that the MMS program alone will make you competitive, but it still won't hurt.
Same? http://www.wallstreetoasis.com/forums/any-info-on-new-masters-program-a…
Generally, you can talk to your career services office and they'll clear you to apply for SA positions if you're going into a 1-year program (or at least that's how it works at my school). Usually you have to address it in the cover letter or resume so banks don't throw you out. Also, be sure you look at smaller opportunities that might be more open to a senior.
[quote=brick]Same? //www.wallstreetoasis.com/forums/any-info-on-new-masters-program-at-duke[…]
What's said on that thread is mostly true, but the recruiting numbers are way off. Anecdotally, the majority of people in the program have offers (know of 5 or 6 BBs, 2 MBB, and many smaller firms - keep in mind, these are are kids who didn't get a job first time around). That said, I'm not in this program and my info comes from a friend who is, so it might not all be accurate.
I feel that I have good stats but just screwed up recruiting.. regarding the MSF i was under the impression that it was geared towards S&T, which is an area which im not interested. Regarding the SA position, I plan on applying to the Duke program before the February deadline. How can I pursue an SA position even though I am unsure of whether i have been accepted. Also will my school let me apply for the SA positions because arent they usually reserved for juniors?
MSF is not geared towards S&T. You are getting a high level, finance specific, graduate education. I would say the only field you really aren't geared toward with a MSF is something quant based (that would be where a MFin would come in). The problem is that all the schools (MIT the exception) that offer a MSF programs are going to be of a lesser reputation then Duke. So basically a MSF will give you a much deeper finance understanding, but whatever school you choose will "dilute" your Duke undergrad.
.......
Bcbunker, thanks for clearing that up. The Princeton website makes it out to be closer to CMU's MSCF program than a traditional MSF. Sounds like your program gives a lot of flexibility which is nice.
Can I land summer IB internship with Duke MMS? (Originally Posted: 03/13/2015)
I know it's possible. But most banks say they designed summer internships in IB for undergraduates. I want to work in IB but I don't have any relevant IB internship. So how can I land an IB internship with Duke MMS because they say the summer analyst positions are for undergraduate and my undergrad sucks. Has anyone actually landed an internship with MSF/MMS master degrees? In short, is it possible?
Try to get an unpaid internship before the program starts. Start cold calling no-name boutiques.
Have you already been accepted to the program? Reach out to the Career Management Center (CMC) as they usually have a few IB internships lined up for incoming MMS students but these have filled up fairly early in past years.
However, I agree with idragmazda and think you might be better off reaching out to boutique banks and see if you can find something relevant. One thing that makes this difficult is you will have a shortened summer as the program starts in July.
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