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Investment Banking Discussion Thread

Discussion in 'Business, Careers & Education' started by jslade, Mar 9, 2012.

  1. Khayembii Communique

    Khayembii Communique Senior member

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    I have the financials for the target and not the buyer. One reason the buyer is interested in buying the target is to take over the target's network, which would save the acquirer $100M in network expansion capex. We've valued the target at ~$150-200M. How can I factor in this synergy?

    The two solutions I have found both seem to be insufficient. The first is to add the synergy into the denominator of EV/EBITDA but this decreases the valuation multiple which doesn't make sense to me. The second is to value the companies individually, then combined, then combined with the synergy; obviously I don't have the data to do this.



    Also, the target has informed us they have spoke with capital providers who have indicated they could refinance their existing debt at a pre-tax rate of 12%. I only have the information on the balance sheet that discusses current and long term liabilities. The income statement also has the net interest expense on it. I'm trying to figure out how to use this information to increase the valuation but with this limited amount of information it doesn't seem possible. I don't know the current interest rate, just that if they're refinancing to 12% it's gotta be higher than that. Then again I don't see why they'd give this to me if it's useless. Any ideas?

    This is an example from a few years ago that we're just doing a dry run on to iron out the kinks and answer any questions we think of.
     
  2. asdf

    asdf Senior member

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    .
     
    Last edited: Jan 10, 2013
  3. GreenFrog

    GreenFrog Senior member

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    IB is a contracting industry. I'd look into a different career if I were you. Bonuses aren't what they used to be and the hours are the same. Fuck that noise.
     
  4. JilSlander

    JilSlander Senior member

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    What else is there? Accounting? Law? Fashion? Education (lol)?
     
  5. concealed

    concealed Senior member

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    artisanal cupcake industry is booming
     
  6. GreenFrog

    GreenFrog Senior member

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    open a fuckin food truck
     
  7. JilSlander

    JilSlander Senior member

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    Shoutout to starving artists, amirite?
     
  8. OmniscientCause

    OmniscientCause Senior member

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    come on the cup cake bubble is going to pop in early summer 2013 we all know that...might as well combine your idea with GFs and make a cup cake food truck...seriously though food trucks are awesome.
     
  9. Khayembii Communique

    Khayembii Communique Senior member

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    Short the cupcakes
     
  10. GreenFrog

    GreenFrog Senior member

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    lo the cup cake bubble already popped two summers ago.

    the next bubble is gonna be macarons (no, not macaroons you dummy); you heard it here first!
     
  11. OmniscientCause

    OmniscientCause Senior member

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    Im thinking crepes...weve got a crepe place that just opened up by me in boston in fenway area then there is one on newbury street and a few down town. Also there are two different food trucks designated to crepes. So they get my pick.
     
  12. Khayembii Communique

    Khayembii Communique Senior member

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    I'm long froyo

    PS LBO models fucking suck to do for the first time
     
  13. Khayembii Communique

    Khayembii Communique Senior member

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    Well we presented our practice valuation and hit it pretty much on the head aside from not accounting for capex in the LBO projection, which overvalued it and caused us to suggest the wrong strategy. We also set the interest on debt too low, as the case we ran through took place in 2010 when debt markets were tight. I've probably learned more in the past week going through this practice case than I have about valuation pretty much ever before.

    The 12% refi was supposed to just be what we use as an interest rate on senior debt in the LBO model, so I was looking into it too much.

    How can I put this case comp on my resume? Just as a single line item? I don't have a ton of experience so I want to state it but not overemphasize it. I've heard of people in my situation putting on their resume that they've run through the various models (comps/trans/DCF/LBO) and bringing the examples to interviews. Is this reasonable or just stupid?
     
  14. MSchapiro

    MSchapiro Senior member

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    Nothing wrong with making a nice printout of your models and bringing it with to talk about should it come up during the interview.
     
  15. TRINI

    TRINI Senior member

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  16. Cantabrigian

    Cantabrigian Senior member

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    When I was going through recruiting, while I was never that honest, I'd make my cover letters very short and somewhat worth reading.

    Just tell them who you know at the firm / highlight anything that helps you but isn't readily apparent from your CV.
     
  17. Khayembii Communique

    Khayembii Communique Senior member

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    Hah I was thinking about doing something like that. Maybe I should start making my cold emails a little more entertaining. Anyone here in IBanking want to take a look at the models I'm using and give me some feedback on how they could be improved? Please PM me if so.

    Also, I just found out that a relative is a retired partner from a pretty reputable and longstanding MM Asset Management/IBD firm. He was on the Asset Management side, and worked as a PM for years before becoming partner, but I'm going to see if he has any pull for IBD. I also wouldn't mind AM and would prefer that long term but IBD just intrigues me right now.

    What relation do appraisal/valuation firms have with investment banks? You know, firms that value tangible/intangible assets, portfolios, derivatives, machinery, etc. I just got a call from someone at one of these firms and was wondering if that would be a good stepping stone to IB.
     
    Last edited: Jan 17, 2013
  18. JilSlander

    JilSlander Senior member

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    You mean valuation firms like Duff & Phelps?
     
  19. Khayembii Communique

    Khayembii Communique Senior member

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    Yes
     
  20. MSchapiro

    MSchapiro Senior member

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    Had a professor who had started one. Only relation with I-banks was making them look like idiots in court. Although it would be impossible to argue that it isn't an excellent technical stepping stone.
     
    Last edited: Jan 17, 2013

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