to the public company comparable multiples because the private company you're valuing is not as "liquid" as the public comps. This is most often used when a company has completely different, unrelated divisions -a conglomerate like General Electric, for example. than other methodologies. You may also put more weight on one or two of the methodologies if you think that they give you a more accurate valuation. Instead, you should use different sets for each division, value each one separately, and then add them together to get the Combined Value. If so, what was the issue and what did you do? It's also used right before a deal closes in a Fairness Opinion, a document a bank creates that "proves" the value their client is paying or receiving is "fair" from a financial point of view. cases the LBO will give you a lower valuation. It is often used to set a "floor" on a possible Valuation for the company you're looking at. You use Enterprise Value because those scientists or subscribers are "available" to all the investors (both debt and equity) in a company. Please see our Community Guidelines or Terms of Service for more information. Learn about investment banking…become an investment banker, Investment banking technical interview questions on valuation topics. One company had recent bad news or a depressed stock price so it was acquired at a discount. Question 12. They are also subject to the same economic conditions and market pressures. • Liquidation Valuation - Valuing a company's assets, assuming they are sold off and then subtracting liabilities to determine how much capital, if any, equity investors receive, • Replacement Value - Valuing a company based on the cost of replacing its assets, • LBO Analysis - Determining how much a PE firm could pay for a company to hit a "target" IRR, usually in the 20-25% range, • Sum of the Parts - Valuing each division of a company separately and adding them together at the end, • M&A Premiums Analysis - Analyzing M&A deals and figuring out the premium that each buyer paid, and using this to establish what your company is worth, • Future Share Price Analysis - Projecting a company's share price based on the P / E multiples of the public company comparables, then discounting it back to its present value. Question 28. Free Cash Flow you would use Equity Value. For the leased situation, the lease would show up in SG&A so it would be reflected in EBITDA, making EBITDA lower and the EV / EBITDA multiple higher. For the leased situation, the lease would show up in SG&A so it would be reflected in EBITDA, making EBITDA lower and the EV / EBITDA multiple higher. What other Valuation methodologies are there? 2. Comparable Companies, Precedent Transactions and Discounted Cash Flow Analysis. Example: If the median EBITDA multiple from your set of Precedent Transactions is 8x and your company's EBITDA is $500 million, the implied Enterprise Value would be $4 billion. Question 11. © WikiJob 2007-2020. Trick question - there is no ranking that always holds. VALUE LEADING QUESTION FOLLOW UP QUESTIONS KEY CRITERIA Compassion Give me an example of a time when you were particularly perceptive regarding a patient’s (or customer) feelings and needs? If you pass this test with 80% or above (16 questions or more), it is likely that you have a strong background in finance and are good to go ahead with our core courses! You might apply a 10-15% (or more) discount to the public company comparable multiples because the private company you're valuing is not as "liquid" as the public comps. 11. List of Investment Banks. Two companies have the exact same financial profile and are bought by the same acquirer, but the EBITDA multiple for one transaction is twice the multiple of the other transaction - how could this happen?

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