Question - What is the complete list of technical skills / financial techniques used in PE and HF?
I have been chugging through my finance college text books, but am having a hard time compiling a comprehensive list of financial techniques used in PE and HF.
Thanks!
For PE: (not a “complete” list - no such thing)
Financial Modeling:
Simple LBOs, 3-statement LBOs: * Operating builds for revenue – by customer, by cohort, by product, ramps etc. * Scenario building (base, downside, upside, add-ons, other bespoke) * Debt and cash flow schedules * Tax modeling – NOLs, DTLs, DTAs * Unique capital structures and cap tables – other debt tranches, PIK, preferred equity, seller notes etc. * Covenant analysis * Management equity incentive plans – earnouts, EIPs, rollovers + wealth waterfall * Accretion / dilution (add-ons, major M&A) * Sensitivity analyses (what-if, solver) * Funds flow (at closing)
Financial Analysis (“QoE”-like, help from QoE vendor such as EY, PwC):
Accounting:
Adjustments – assessment of validity
Net Working Capital – fluctuations/volatility, debt vs. debt-like items, cash vs. cash-like items, negotiating how much NWC to have at close
Ratios and metrics – margins, spreads, CAGRs, EBITDA/Revenue bridges
Company Data Analysis:
Fundamentally dealing with large, complex, sometimes unclean data sets – clean up, restructure, organize and convert into meaningful insights that tell a story.
Increasingly also modern large-data and visualization tools that are not Excel/Powerpoint – Power BI, Tableau, PowerPivot/pivot tables, Domo, Sisense.
Market Data Analysis (help from consulting vendor such as McKinsey, Bain):
Legal Analysis (lots of help from law firm such as Ropes & Gray, Skadden):
(“Technical”) Communication and Organizational Skills:
Thank you!
Can anyone talk about other financial techniques used in HF? Thank you
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