Accounting
Levered free cash flow is available to which of the 2 owners in a business's capital structure
Equity holders
This type of valuation methodology is used for conglomerates, valuing each of their branches separately
Sum-of-the-parts valuation
This makes debt cheaper than equity. It's tax-deductible.
Interest tax shield
The yield on this government security is currently 4.6%
What is the 10-year treasury
These are examples of Adjusted Ebitda add-backs
(List 2)
Restructuring fees
Legal fees
Goodwill Impairments
Write-downs
These multiples would be used for a company that has no revenue
(List 2)
EV/Page views
EV/Scientists
EV/Subscribers
This phenomenon is when a PE firm takes on new debt to pay themselves a dividend
Dividend Recap
An effect of this monetary policy action makes existing bonds less valuable, their price will decrease, yields will increase
What is increasing interest rates
List 5 ways a company could use cash on the balance sheet
CapEx
Dividends
M&A
Buy back stock
Lower debt
Expand internally
This is a way to present a range of valuations implied by each methodology
Football field
These are some characteristics that PE firms look for in 'ideal' LBO candidates
(List 4)
Strong management
Growing industry
Economic moat
Low CapEx
Assets for collateral
Stable cash flows
These are examples of things that the buyer gets beyond balance sheet items
(List 3)
Synergies
Employees
Customer relationships
Eliminating a competitor
Patents/Innovation
This stage of an IPO is when the investment bank pitches the company to institutional investors, gauging their interest
Road Show
This is a way of accounting for a company's competitive advantage in a valuation
Look at the multiples in the 75th percentile rather than median
Add a premium to some of the multiples
These are some ways that you can increase IRR in an LBO
(List 5)
Buy low/sell higher
More debt at entry
Margin expansion
Assume higher growth
Dividend recap
Shorten holding period
This determines if the offer price is fair to the target's shareholders. Typically done by a 3rd parter to show that the seller has done its due diligence
Fairness opinion
These are complications when valuing a private company that you want to take public
(List 1 of 2)
WACC and beta calculations
This could be a reason why precedent transactions could yield a lower valuation than public comps
Mismatch in M&A market and Public market
Markets were down (March 2020), and now they're up
These 2 methods are used to determine what institutional investors pay for the company's stock pre-IPO
Book building and Fixed-price