How To Value a Pig
Been seeing some of the questions go around in interviews (how to value a farm, how to value a tree, a cow, a moose) etc.
Preparing for full-time recruiting and was wondering how to answer funky questions like these
I don’t know how to value a pig, but any brit will pay 50 quid to shag a sheep, so maybe you could plug that into a dcf if you get a sheep based question.
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Sum of the parts
When it comes to valuing unconventional assets like a pig, the key is to demonstrate a structured thought process. Based on the most helpful WSO content, here's how you can approach it:
Identify Revenue Streams:
Estimate Costs:
Choose a Valuation Method:
Factor in Risks and Assumptions:
Add a Creative Twist:
The goal is to show that you can think critically, apply financial principles, and adapt to unconventional scenarios. Interviewers care more about your reasoning and structure than the exact numbers.
Sources: PE interview question - If you can only know 3 things for an investment analysis?, Notes for Technical Interview Questions, Real Estate Interview Questions Master Thread, Investment Banking Interview Questions - 15 Answers to Land the Job, PE professional, what's your process while judging an investment?
Any valuation can be broken down into the three approaches:
This approach can be applied to any product or service and you can add edge cases or complexity such as quality of meat or offspring of pigs or sum of parts analysis of the pig not holding all meat to be equal.
To expand, just in case this is a serious exercise. Yes, I have been watching Clarkson's Farm.
You'll want to create a field of values based on strategic rationale; is this buyer a financial buyer or strategic buyer? Important because you need to define the market. Single livestock sold farm direct has different pricing to wholesale processed livestock. But what if someone wanted to keep a pig as a pet instead?
You'll want to evaluate the main drivers of the pigs value. Is it a female for breeding? A male for breeding? How is it processed? Do you need meat, offal or animal derivatives (leather, oil, chemical additives etc...)? Different types have different costs. Ex: A male pig is probably more valuable to breed other pigs but they need different healthcare.
You may want to sensitize your outputs for valuation based on likelihood of certain outcomes. If this is livestock the system is dependent on commodities pricing when part of a large sale. You could use Bayesian math to create a distribution. Show me break even points on futures and forwards within the expected delivery window.
Any answer like mine is probably ridiculous and unnecessary.
Almost forgot to add, pigs hunt truffles when in the wild.
Great insights and all fantastic points for added layers of complexity and consideration.
Need to clarify if it has lipstick on it or not. Can change the valuation dramatically.
How can you put a value on something that eats garbage and gives you bacon. Real magic is priceless.
Easiest way is to turn the funky into finance. Think of the pig as an asset: breeding value = recurring income, meat value = liquidation value. Cap rate based on annual yield if it’s part of a farm operation. Use comps if there’s a local pig market, or DCF if you want to flex. Just show your logic is structured and not random.
Sum of the parts. Shannon Sharpe once famously said, "I'll eat everything on the pig but the squeal... oink"
Think the answers in here have addressed the question pretty entirely but would just flag that we ask similar Q's to like 19-20 year old intern candidates. I'd consider this one of the easier Qs. It tests if you're able to generalise valuation concepts (i.e. truly understand them) instead of simply regurgitate them.
I remember interviewing a kid once who had all sorts of IB internships on his CV. Including claims to knowledge of all the different valuation methodologies. Asked him a very similar Q to this and he didnt have a clue how to answer it. Then I asked him "how do you value a company", and he started reciting his practiced DCF or whatever answer and he still could not connect the dots. That's crystal clear evidence you don't understand what you're talking about.
So my point is, if you have done practice/study on technicals (which I hope if you're applying FT) and the answer to this Q isn't obvious to you then you are not actually understanding what you are studying.
Ask her husband how much her father’s worth
Assume a pig is 1/4 the size of a RBC FIG senior so maybe 50 pounds. Bacon is valued at $8 a pound. Remove the bones and the unusable parts and you are left with probably 25 pounds. 25*$8=$200.
Now, can you value the senior team of RBC FIG?
Just take the pig to auction. Let the market determine the price.
This is a really stupid interview question….They are literally priced on the Chicago Mercantile exchange on a daily basis.
I’d questioned the intelligence of the interview if they’re asking such a dumb question.
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