Investment Banking FOCUS NOTES provides a
comprehensive, yet streamlined, review of the basic skills and
concepts discussed in Investment Banking: Valuation,
Leveraged Buyouts, and Mergers & Acquisitions, Second
Edition. The focus notes are designed for use both as a
companion to the book, as well as on a standalone basis.
Investment Banking focuses on the primary valuation
methodologies currently used on Wall Street–namely,
comparable companies analysis, precedent transactions analysis, DCF
analysis, and LBO analysis–as well as detailed M&A
analysis from both a sell-side and buy-side perspective. Our focus
notes seek to help solidify knowledge of these core financial
topics as true mastery must be tested, honed, and retested over
time.
Daftar Isi
About the Authors vii
Introduction viii
Chapter 1: Comparable Companies Analysis 1
Overview of Comparable Companies Analysis 3
Step I: Select the Universe of Comparable Companies 4
Step II: Locate the Necessary Financial Information 7
Step III: Spread Key Statistics, Ratios, and Trading Multiples 9
Step IV: Benchmark the Comparable Companies 27
Step V: Determine Valuation 33
Key Pros and Cons 38
Chapter 2: Precedent Transactions Analysis 39
Overview of Precedent Transactions Analysis 41
Step I. Select the Universe of Comparable Acquisitions 42
Step II. Locate the Necessary Deal-Related and Financial Information 46
Step III. Spread Key Statistics, Ratios, and Transaction Multiples 49
Step IV. Benchmark the Comparable Acquisitions 64
Step V. Determine Valuation 66
Key Pros and Cons 67
Chapter 3: Discounted Cash Flow Analysis 69
Overview of Discounted Cash Flow Analysis 71
Step I. Study the Target and Determine Key Performance Drivers 73
Step II. Project Free Cash Flow 75
Step III. Calculate Weighted Average Cost of Capital 91
Step IV. Determine Terminal Value 106
Step V. Calculate Present Value and Determine Valuation 112
Key Pros and Cons 118
Chapter 4: Leveraged Buyouts 119
Overview of Leveraged Buyouts 121
Key Participants 122
Characteristics of a Strong LBO Candidate 127
Economics of LBOs 132
Primary Exit / Monetization Strategies 134
LBO Financing: Structure 136
LBO Financing: Primary Sources 138
LBO Financing: Selected Key Terms 142
LBO Financing: Determining Financing Structure 150
Chapter 5: LBO Analysis 153
Overview of LBO Analysis 154
Financing Structure 154
Valuation 155
Step I. Locate and Analyze the Necessary Information 158
Step II. Build the Pre-LBO Model 159
Step III. Input Transaction Structure 167
Step IV. Complete the Post-LBO Model 173
Step V. Perform LBO Analysis 188
Chapter 6: Sell-Side M&A 201
Overview of Sell-Side M&A 203
Auctions 205
Organization and Preparation 209
First Round 218
Second Round 229
Negotiations 236
Closing 241
Negotiated Sale 246
Chapter 7: Buy-Side M&A 247
Overview of Buy-Side M&A 248
Buyer Motivation 250
Acquisition Strategies 254
Form of Financing 259
Deal Structure 264
Buy-Side Valuation 273
Merger Consequences Analysis 278
Index 295
Tentang Penulis
Joshua Rosenbaum is a Managing Director at UBS Investment
Bank in the Global Industrial Group. He originates, structures, and
advises on M&A, corporate finance, and capital markets
transactions. Previously, he worked at the International Finance
Corporation, the direct investment division of the World Bank. He
received his AB from Harvard and his MBA with Baker Scholar honors
from Harvard Business School.
Joshua Pearl is an investment analyst at Brahman Capital
Corp. Previously, he structured and executed leveraged loan and
high yield bond financings, as well as leveraged buyouts and
restructurings as a Director at UBS Investment Bank in Leveraged
Finance. Prior to UBS, he worked at Moelis & Company and
Deutsche Bank. He received his BS in Business from Indiana
University’s Kelley School of Business.
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