Valuation

Hi guys. Easy questions below. 1. what's the difference between annual recurring revenue and run rate? Aren't these basically the same? 2. I don't understand when I'm looking at a CIP when they say "projecting 2023 run rate revenue of $10m." Why wouldn't you just say 2023 revenue of $10m? Run rate...

24 Mar 2022

Hi all, I have a case study at an activist hedge fund coming up and am thinking about how I should structure my write-up. The basic structure should be similar to a traditional L/S case study. I will obviously need to state an upside / downside ratio / upside / downside valuation. For a L/S case...

23 Feb 2022

hi team... 1st scenario: assume I am a buyer assessing a potential target. this potential target had a recent financing round and you can see both the pre and post money valuation from the round... which metric (pre or post) would be more relevant for helping me, the buyer, determine how much i...

18 Mar 2022

Hello everyone, I recently graduated from business school, have nearly two years in private banking (pwm sales of PE funds and AM in PE as well). I started working in business modeling and valuations at a big 4. We are based in Luxembourg. From what I was told, real valuation work is done rarely....

21 Dec 2021

Hi guys, I am an intern in M&A and have some questions regarding enterprise value and the calculation of valuation multiples. I got taught that enterprise value stays always the same (I forgot the exact formulation) in calculating the multiples. Why is that? I mean the factors in the enterprise...

08 Feb 2022

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....

08 Mar 2020

Can someone help me please? I would really appreciate your feedback on my qualification test. What can be improved? Assignment below: Please prepare the following materials on the assigned publicly listed company: · One slide in Power Point format with an overview of the company o Please presume...

02 Jun 2021

Hi all, I'm working with a company that offers broadband solutions (data, VoIP, cable) to subscribers in rural and remote areas. The company background is as equipment manufacturers - they are all engineers - but have been able to negotiate spectrum agreements in emerging markets that allows them to...

10 Mar 2022

Here's my question to all the tech gurus out there. Subscription-based software business has some revenues (let's say 1m), decent but not phenomenal ARR growth and has spent to-date 5-6m in R&D. They tell us that valuing them off revenue is not gonna fly, as revenue doesn't quite reflect yet all the...

12 Feb 2021

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...

21 Sep 2020

Can anyone point me in the direction of a primer or resources on building unit economics models for tech companies? Everything I've found so far is pretty theoretical and hasn't been too useful in practice. I'm trying to get a better understanding on how to value public tech/SAAS companies with...

11 Feb 2021

I am working on a start up with some friends and am trying to model out a scenario for our cap table. Let's say we are taking in investment for the first time ever and that we are raising at a $10M valuation and are offering 20% equity for $2M in capital. Let's assume our valuation doubles in 12...

11 Oct 2021

Became interested in M&A Arbitrage recently and am hoping to get a deeper look at how it all works. Know the bare minimum basics, but need some recommendations on readings/resources to learn more. Also am more specifically interested in learning how the valuation process works in the M&A Arbitrage...

06 Oct 2021

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...

12 Feb 2019

Hi there, A bit ashamed to say that I am still a bit confused how growth stocks actually produce their returns for their shareholders over time. More specifically the actual mechanics of it. Please bear with me: Let's say you buy one stock of a tech company today at t=0 at a rather high 1yr forward...

19 Feb 2021

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...

04 Jul 2020

Hi all-I'm a recent finance grad with hopes to land in PE someday. I know the road to PE almost always involves doing time in valuation and/or IB, (or corp dev) and I'm having issues getting onto that first step. A little background about myself: I have had two full-time internships in accounting &...

29 Sep 2021

Does anyone have experience with these type of programs? Would you recommend them? Which program? I was asked to look at potential use of valuation software for my firm (DealSense specifically) to standardize the valuation process and formatting. Analysts are overwhelmed and it might be helpful for...

29 Dec 2021

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...

14 Oct 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...

11 Nov 2020

Hey, I am a German student from a no name Uni with a good Bachelors degree. I got experience in Assurance at the Big 4, worked 6 month in the Corporate Finance department of a small bank and another 3 month in Transaction Advisory at a Big 4 Firm. I really want to get into IB in London but I feel...

13 Sep 2021

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...

31 Oct 2018

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...

17 Feb 2017

Hi everyone, Wondering what you feel are the best methods to value a company that is loss-making for the next 4y (still trying to figure out margin run-rate after that) in the Saas space? Thinking of going TAM -> % penetration -> steady state margins -> cash conversion Don't have much info (nor...

13 Oct 2021

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...

29 May 2019

I am building a model for a software co that does regular acquisitions every year. The companies it acquires have plenty of definite lived intangibles that need to be amortized. 1.Over the past year, the weighted average life of the definite lived intangible assets of all the acquired companies was...

09 Feb 2022

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...

11 May 2019

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...

02 Sep 2020

I've been reading these forums for a while and finally decided to make the push into IB. Currently looking to lateral internally (or externally if it doesn't work out) from a PWM rotational program into Investment Banking. I've been doing my homework and following the guides posted on here and M&I....

28 May 2021

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...

12 Nov 2020

Hey monkeys, I'm approaching my dissertation - an 80-page paper that concludes my Master of Finance programme. I work in IB and my interests/curriculum lies within the domain of corporate finance, valuation, modelling, investing, etc. I'm struggling to come up with a relevant and proprietary topic...

10 Nov 2021

Hi All. Am needing guidance on how to answer the question below. Anything you can share would be greatly appreciated! If we were looking at an investment in X sector, where would you start your research and analysis? My thinking is that you would Start with researching the market (ensure it is large...

09 Jun 2021

Hi guys, I am currently interviewing for a role and have been tasked to build a valuation model for a gas downstream and pipeline player (i.e. they supply products and the associated infrastructure). I'm struggling on a couple of notes: 1) Typical forecast horizon - should I be forecasting out for 5...

08 Nov 2021

I just got a full-time offer to join the VME group at EY. Super stoked because the pay is ridiculously high considering I come from a no-name school and I'm just wrapping up my undergrad. I had a few questions about the job, mostly curious how much travel you get to do, what type of software you get...

04 Nov 2021

Hello all, been prepping with the WSO course, and am working on the PaySmart case. I have two questions, one specific to this case, and one that's more general: (1) Minor point, but in the video solution, when projecting out the market share for US and Europe, Europe increases by the given 0.5%...

27 Dec 2019

Not sure if this is the right forum for this, but I've been digging and digging for the past few days doing some research to figure out how to value this thing, and I've just been coming out blank. So I thought I'd open it up and see if anyone had any recommendations. If anyone knows of a better...

22 Oct 2021

Hi All, I am currently trying to complete a DCF, but am stuck on what I should select in terms of Capital Assets vs Capital Liabilities. Below is a screenshot of the balance sheet, I know typically Assets include: AR, Inventory, other receivables, and Other current assets. While Liabilities...

11 Feb 2021

I feel like there is a huge misconception about the timeline of M&A transactions and the functions carried out by affiliated parties during the process. Private Equity M&A Process Timeline Therefore, I would like to assume the following scenario in order to illustrate the entire process: A private...

31 Oct 2012

Hi all! I am beyond lucky to have many offers, however, they are all over the place and I don't know what is the best option to pick for my future. I am a finance student - unsure what I want to do! Goldman Sachs PWM - Great name and pretty much double the pay I would be getting at the other...

23 Dec 2020

Hi all, I worked in a local investment banking boutique for some years and have just resigned to start my own M&A advisory firm. I used to work with Capital IQ, but have just noticed how expensive this is. I wonder whether you guys can suggest me a cheaper alternative to Capital IQ? I just need a...

02 Dec 2020

How do equity researchers think about economic moats? Like let's say you are evaluating a growing tech company that just IPO'ed or Hershey's or whatever it may be - how do you think about what features of the firm translate into an economic moat?

05 Feb 2022

Hi there, A bit ashamed to say that I am still a bit confused how growth stocks actually produce their returns for their shareholders over time. More specifically the actual mechanics of it. Please bear with me: Let's say you buy one stock of a tech company today at t=0 at a rather high 1yr forward...

19 Feb 2021

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...

28 Aug 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...

18 Nov 2020

Greetings everyone, I am graduating from one of the top universities in Turkey with high GPA. For a career goal, I want to be a part of M&A team in the investment banking. However, since IB scene in Istanbul,Turkey is very small, I am thinking that I should be moving abroad to work in IB. I got...

06 Jul 2021

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...

07 Oct 2020

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...

27 Apr 2017

I taught the first session of my valuation class, that I previewed in my last post, today. As part of that class, I do what I call a "valuation of the week", where I pick a company and value it and then post both my valuation (with the spreadsheet and the raw data that I used) and a shared Google...

09 Sep 2013

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

If you are a teacher, you measure your life in quarters and semesters. This is my fiftieth semester teaching, and, as in each of the prior forty nine semesters, I could not wait to get started. Coddled as only tenured faculty at a research university can be, I have only one class to teach this...

10 Sep 2012