Investment Banking Discussion Thread

[Khayembii Communique]

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.

 

[asdf]

.

 

[GreenFrog]

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. **** that noise.

 

[JilSlander]

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

 

[concealed]

artisanal cupcake industry is booming

 

[GreenFrog]

open a fuckin food truck

 

[JilSlander]

Shoutout to starving artists, amirite?

 

[OmniscientCause]



artisanal cupcake industry is booming

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.

 

[Khayembii Communique]

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.

Short the cupcakes

 

[GreenFrog]

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!

 

[OmniscientCause]



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!

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.

 

[Khayembii Communique]

I'm long froyo

PS LBO models ******* suck to do for the first time

 

[Khayembii Communique]

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?

 

[MSchapiro]

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?

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

 

[TRINI]

I thought this might be relevant to this thread:

http://www.businessinsider.com/stud...and-its-now-going-viral-on-wall-street-2013-1