Valuation

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 this team more. Travel semi-regularly. 2) Valuation with big 4 accounting firm. Most of the work centered around PPAs with some due diligence M&A work. Team works primarily on valuing intangible assets. Travel is not common. Which position would be the best for making the switch into IB? Thanks for

14 Oct 2020

How would you account for the effect of COVID-19 in each of the 3 valuations methods? (DCF, Comparables, Precedent Transactions)

14 Oct 2020

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 S&T, but thought it could be nice to get some exposure on the fundamental side as well and learn the skillset of IBD/ER folks. Any ideas of specific desks to shadow or reach out to?

21 Sep 2020

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 important to adjust EBITDA for coding expenses that are capitalized rather than expensed. Something similar for Healthcare? Most popular multiples that are used? Unusual valuation details that I should be aware of? Accounting details that I need to be aware of? Thanks

28 Aug 2020

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 have spent considerable time studying real estate finance and building out RE models but that is not going to help me here. Does anyone have some basic guidance to help me understand how to pick a stock that won't get me laughed out the interview?

02 Sep 2020

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 we have adjusted interest expense which is a non-operating expense in P&L, therefore we need to add back to PAT in the cash flow from operations to get the real operating cash flow. Simultaneously, deduct interest expense from Cash flow from financing. 2. Can Interest expense be operating in some

04 Jul 2020

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

08 Oct 2020

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 don't understand. Lets say SONY and EA are competitors because they both occupy the gaming industry, but SONY encompasses much more beyond that where are EA only focuses on gaming. How can SONY's multiples be applied to EA's? Thank you. Any advice is appreciated.

06 Oct 2020

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!

25 Aug 2020

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. About me: Living in Europe, late 20s, non-target business school and average grades. I work in a Big4 valuation-team and recently moved from RE after being promoted. Started my career in a "start-up"/relative young company where I mainly build excel models to track investments etc. (No valuation etc

08 Mar 2020

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 company does data for fracking. How do I solve for this? I would like to know this for the future.

29 Jan 2020

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 see a lot of room for growth. I'm not sure where I want to be in 10 years, but I don't care to try and transition into IB. From what it seems, there isn't much change in salary either way I go. The bank is growing fast within the state, went public 2 years ago. However, our valuation team is also

18 Nov 2020

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 expense to the future cash flows + add the real estate value to the business value? Or only value the business with no market rent expense? I've been educated to go with the second option (because without the office the company wouldn't be able to generate any cash flow), but I still think the first

12 Nov 2020

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 region of the US. I would be working on M&A transactions as well as litigations. I'd be doing purchase price allocations, DCF, market analysis, etc. Job 2: I haven't yet received an offer, but have a 2nd round of interviews with Duff and Phelps tomorrow for a "Portfolio Valuation Analyst" position. I

11 Nov 2020

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? Thanks in advance.

10 Nov 2020

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 of a property so I want to make sure I get it right. If you have 10 minutes to spare, please look at the attached spreadsheet and fill in the spaces highlighted in yellow. This is essentially a VERY simplified version of the issue I am having in my real model regarding time 0 cash flows and the

29 May 2019

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 price is PV of future cash flows? Let's say you start a business with only equity, then balance sheet below: Assets: 10k Equity: 10k If there are 100 shares, then 100 dollars is share price. How does DCF give us value around this range? I am unable to comprehend, please help!

11 May 2019

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 investment club, in the Tamid group, and in a program that pairs me with a senior that is going into the financial services industry and with an analyst on Wall Street at a BB. That being said, I am looking for resources on the internet that will give me a deeper understanding of analyzing the

07 Oct 2020

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 paid out in non-junior level roles? (How much associates, and Directors make). Debating if I should take this role for the prestige or go work in a CF role for a Fortune 10 Company. Any help is appreciated. Thanks.

12 Feb 2019

Team, I recently purchased Rosenbaum and Pearl V2. The book is a GODSEND! (Particularly the new buyside chapter) Can anyone advise me on how I get hold of the Excel models to accompany the book? Thanks in advance!

26 Jan 2019

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 the financial structure and E is distorted by the current structure. Many thanks.

05 Nov 2019

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 transactions? Thanks!

09 Sep 2020

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

06 Sep 2020

TL;DR - tried tweaking DCF to make it more optimistic but cannot honestly justify tweaks. Resorting to arriving at target share price with DCF/Comps weight - don't know how to justify/explain my decision for 60% DCF 40% Comps. Need some guidance. Disclaimer: I'm creating an equity research/stock pitch report and I'm also heavily debating between sticking with a contrarian view or "staying in line" with the street. If I use my DCF, I'll be contrarion. With the split, I'll be "in line". Would it be wise just to "stay in line" when I'm presenting this report to potential recruiters/employers? I

31 Oct 2018

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...

12 May 2019

What should I do if the result of Net Working Capital is negative? Because this impact the stock price

20 Jan 2020

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 and gas reserves.

07 Jul 2020

Hello everyone, I'm a junior monkey trying to learn how to properly compose a football field graph and I'm looking for insight into what makes a successful one. Which variables should I take into account and what ranges should I be looking at to get proper min and max values for the DCF method?

03 Feb 2019

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 PE. With that in mind, what Industry team do you think would be best to position me for IB and eventually PE? I am thinking either TMT or Financial Services, but want to get other opinions.

26 Apr 2019

Saw a research analyst talk about valuing banks using P/B relative to ROE. P/B makes sense as they hold more liquid assets but why relative to ROE?

09 May 2018

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) at that point in time? Thank you so much

12 May 2020

Snapchat (recently renamed Snap Inc.) has filed for an IPO reportedly set for Q1 2017. Snap is seeking a valuation of $25 Bn according to reports at Bloomberg . The question arises if such a rich valuation of 25X Forward Revenue makes sense at all. "At $25 Bn, Snapchat would have roughly the same value as Linkedin and HP." What is Snapchat and how exactly is making money ? Snapchat primarily sells video ads. It also sells branded "filters" and most recently, a Discovery feature for mass marketers. Snapchat selling point is its demographics where users ages 18 to 24 account for 70% of the

17 Feb 2017

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.

14 Apr 2020

Each company and each analysis is different, however, the "bare-bones" fundamentals are the same for DCF, Comps, precedent transactions, etc. So with that, do you guys build models and valuations from scratch (as in format, labels, sheets, cells, everything) or do you use a generic bare-bones template then modify accordingly? Cheers!

06 Nov 2017

Hi, How would you estimate the value of an intangible asset, more specifically an R&D formulation? I represent an industrial buyer, who is considering to acquire an R&D formulation from a competitor. The products can be sold to our clients current customers, but will require some minor modifications. The estimated product life cycle of the technology is estimated by our client to ~7 years. The R&D formulation / products are not commercialized yet, and has no brand attached to it. What methods would you use to estimate the value of such technology? The relief from royalty method appears obvious

27 Apr 2017

Has anyone worked in the Valuation dept at shareworks by MS? What is it like workload wise? Do you get autonomy over the projects?

30 Mar 2020

Hey everyone! Hope you're having a fine Saturday. I am working on a stats project and have decided to do it on what makes a successful VC. I need to come up with both quantitative and binary qualitative variables. Here's what I've got so far: Quantitative: -total $ amount raised in all funds -total $ earned from all liquidity events from portfolio companies -$ valuation of remaining [currently] illiquid portfolio companies Qualitative -STEM background (y/n) -MBA (y/n) -Former entrepreneur (y/n) -Finance background (y/n) Constructed Variables -% return on investments What else would you all add

10 Oct 2017

Hi, We are just in the middle of modelling the financial statements of a meat company, with high level of inventories (think 9 months of salesm ham company). This company has a level of debt, we suspect associated to that inventory. That debt has a cost, so when we calculate the equity value of the company via EV-Debt+Cash we come up with a value near 0. Our question is the following, is there any adjustment to be made to these kind of companies (meat, wineries etc) carrying a high proportion of inventories on the balance sheet? At the beginning we discussed the option of liquidating

13 Oct 2017

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 coronavirus pandemic it had to temporarily shut down and resort to delivery. Since the business won't generate a lot of revenue (Limited to take-out orders only, hotel closed) but many fixed costs will stay the same I feel as if it might go belly-up. I sense a fantastic buying opportunity for savy

25 Mar 2020

Hi All, I was wondering if you guys knew a good website for Oil & Gas Valuation modeling, or if you could share a simple model with me that would be very basic .. Many thanks for your help

13 Feb 2017

I did not receive a return FT offer from a mid-tier restructuring boutique. After 2.5 months of intensive recruiting and networking with regional boutiques, I haven't received an offer. Banking / Big 4 valuation seems pretty unrealistic, given that the recruiting cycles of most firms have ended. I am looking of ways to set myself up for a role in the industry at some point in the future. I'm a senior Math major at a semi-target (think Brown, Penn SAS, Cornell CAS) with a 3.5 GPA in a quantitative major, if that is relevant at all. I am still cold-emailing bankers in small regional boutiques. I

08 Nov 2017

Hi all, I have some questions on an undying topic that's continuously discussed on the street: how tax rate affects EV valuation of companies. Some people argue it's positively correlated to EV while others argue it's the opposite. Based on my experience/observation, I think it's positively correlated especially when using unlevered DCF and simple EV formula. In the former case, increase in tax rate decreases WACC (EV goes up). And also in the latter case, cash and cash equivs go up as tax rate goes down (EV goes down). I heard some people saying it depends on valuation methodologies, so I

08 Sep 2016

Asking for interviewing purposes. How do you go about valuing fintech companies, particularly payment companies and robo-advisors? How does a company like Betterment get an $800mm valuation? What about companies that are pre-revenue or with negative earnings? Aside from the technical aspects, trying to get an understanding of how bankers think about these companies. Thanks in advance!

02 Dec 2017

I am valuating a public not-for-profit airport that is set for privatization. What discount rate can I use to do a DCF?

10 Nov 2017

Hi All - I have 2 interviews, one with Deloitte for their Valuation & Business Modeling team and one for PwC for their Deal - Valuations team. (Both in Dubai, UAE). I have been invited to do a case study for Deloitte - Valuation & Business Modeling. Does anyone know what this case study could look like? I am assuming excel based? I am new to this so I am not sure what to expect. I have also been invited to do a cast study for PwC - Deals Valuation. Any input here would be greatly appreciated as well!

25 Feb 2019

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 date on end of year 3 - and a PPT of investment opportunities/risks; value this company and make an investment recommendation. What's the right way to go about this? I'm in the entertainment business, not a bank so I don't think they're looking for something SUPER technical. My first thought

27 Jan 2020

When inserting an LBO valuation into a football field graph; how do you get to the lbo share price range (min and max)? It doesn't make sense to me to enter the entry equity value divided by # of shares since the capital structure is mostly made out of debt, do enter the exit equity value? I can't wrap my head around this, also, do I just look at IRR when deciding if an LBO would be profitable, or does the current share price imply and weigh in on anything?

03 Feb 2019

Hey everyone, I was recently interviewed for an internship with a local Investment Bank. More specifically, it was for their Mezzanine Capital Unit/ private equity arm. After the interview, everything was going fine and I had a good feeling. However, they asked me to do a quick analysis on a private company in an Asian country that doesn't have any financials public, within 5 slides. The company currently is involved with multiple tech businesses and I approached the problem by looking at the industry peers of each business (a major private MNC and established local asian companies), I

14 Jun 2017

We intend advertising some corporate finance related positions early next year and I hope to be interviewing candidates in Feb or March. While we have all the usual interview questions on the table I am hoping here to get your (candidates') view on questions you would like us ask you. Perhaps questions that you were not asked at other interviews but which would have helped you better project yourself to the interviewer. Many thanks in advance.

20 Dec 2017

I am calculating IRR from a 10 years projected cash flow + a terminal value. The terminal value I understand is usually calculated as FCFF(1+g)/(r-g). Incase of using terminal value for IRR calcuation should the r= cost of capital or r=IRR (in this case it will be iterative as its being used to calculate IRR itself). Please let me know the usual practice. Thanks.

26 May 2016