WACCmaxxing
What does WACC stand for?
Weighted Average Cost of Capital
When do Q3 valuations need to be complete?
Prior to Thanksgiving disconnect
What is the key factor we consider when deciding if a deal going to IFVS at Q3?
Significant risk deals or complex models (OPM)
What is 1 qualitative factor in valuation?
Will accept: macroeconomic, geopolitical, industry, news articles/current events,
What you should set up ahead of fraud brainstorming Corp call?
Set up an internal team prep call to discuss potential schemes and how they would be perpetrated at Bx
What is alpha?
Alpha is the company specific risk premium that capture investment company specific risks within the WACC equation (unobservable input)
When do we perform the valuation risk assessments during the year? And when do we perform substantive testing?
Q2, Q3, Q4 And substantive is just Q3 and Q4 (Rollforward)
What are the preparers responsibilities when receiving the finding memo?
What methodology is most common among Blackstone's level 3 investments? In addition which is the primary and reported methodology?
Income & Market Approach or DCF & Market approach and the primary approach is income/dcf, corroborative approach is market approach (but market is what is reported in the AFS)
Who should you never forget when ordering lunch if you don't want to get called out?
Brian and AJ
What metric is an indicator of a stock’s price volatility or the level of risk relative to the broader market?
Beta
Approximately when do the BCP subcommittee occur and who provides me with the decks? Extra points if you know who I share them with once rec'd
~2 week prior to quarter-end and I ping/email Brian for them. Once I have all four I send them in a zipfile to Megan Kelly
True or False: we only use specialists on significant risk valuations
False- it is judgement based and also we often use on complex securities such as OPM regardless of risk classification
Provide context as to why most of our public investments are level 2 rather then level 1. Also name any two adjustments we see within our "public" portfolio. (extra 100 points if you know what risk we assign all public deals)
Most if not all of our 20+ publics have adjustments made so they are not simple P*Q deals with observable FMVs. Adjustments include TRA's, margin loans, covered calls, holdco cash, ESOP...etc.
extra: lower
What link to a call do I send following q-close?
Bx Quarterly Call
How do we test WACC on the Bx account?
Tested through a shared service center (SSC) which Austin is leading in CY
When should you request the AC deck from Aikya on the PV&A? (extra points if you know firmwide)
~2 weeks after Q-close (and ~2 weeks prior)
Name two different 2 specialists teams we often use
Boris for OPM's, Daniel Huggard for standard income/market, Marlene for renewables, Ravi for O&G
Why do we see deals use NTM figures and why do we exclude NTM EBITDA from confirmations?
Bx has shifted to NTM multiples on a lot of their new investments that they consider high growth. We should add a tickmark to ensure the NTM is reasonable based on the growth rate. NTM is not a confirmable input for the portco to provide given it is an internal projection
What do I set up 2-3 weeks after Q3 and Q4 related to a specific industry and memo we have to prepare?
O&G and Renewables Industry Update Call w/ specialists
Which type of companies/industries have lower WACC?
Stable industries—such as utilities, healthcare, and grocery retail—generally experience a lower weighted average cost of capital (WACC) bc they have predictable cash flows, lower risk and beta (volatility), and are overall less sensitive to economic cycles (stability= security)
When should we reach out to our Singapore and UK teams regarding referral instructions?
Singapore- initial instructions ideally November/December, UK in mid to late July
Name 3 assumptions our IFVS team owns
trending, comp set analysis, exit multiple analysis, alpha
What metrics and at which dates do we typically send confirmations for?
Ownership as of 9/30, Net Debt as of 6/30, LTM EBITDA (or sometimes income) at 6/30. Confirm the metrics with the analysts when you get updated confirm contact info
What are 3 things you should do when you get the firm email of snapshots coming up?
set up a full team reminder on calendar, set up call with seniors, email managers writeups, submit staff snapshots (or send mgrs list of what you do...etc.)