Looking at Capital Expenditures for Investment Bankers Corporate Finance Financial Modelling by Matt - July 13, 2019August 1, 20190 Capex capex capex - investment bankers love to talk about capex because it is a key component of the free cash flow formula. In reality, it is not something that bankers ask candidates about in interviews just for fun - capex is one of the most common line items that we
Understanding a Merger and Understanding a Merger Model Corporate Finance Financial Modelling Mergers & Acquisitions by Matt - March 24, 2019March 24, 20190 A Lesson in Mergers & Acquisitions Theory Step back for a second and forget all of the accretion/dilution, tax implications and purchase price allocation jargon that goes into mergers and acquisitions and read this to understand the basics of mergers and acquisitions. A firm buys another firm. There are no synergies and
Spreading Investment Banking Comps: Net Debt Corporate Finance Fixed Income Trading Comparables by Matt - March 17, 2019March 17, 20190 Getting to the equity market value of a company was discussed in a prior post. Recall that the basic enterprise value formula is: EV = Equity + Net Debt [Debt - Cash] The extended formula can be: EV = Equity + Debt - Cash & Marketable Securities + Preferred Shares + Minority Interest +
Spreading Investment Banking Comps: Calculating Fully Diluted Market Capitalization Corporate Finance Trading Comparables by Matt - March 17, 2019March 17, 20190 We will explain the most important part of spreading comps for investment bankers in this post. The brunt of conducting comparable companies analysis is to calculate the appropriate enterprise value, which will have certain components which are "live" and certain components that are the latest historical financial statement data. So to
How to Answer “What Two Companies Do You Think Should Merge?” Corporate Finance Interview Questions by Matt - September 12, 2018September 12, 20180 This is an excellent investment banking interview question which shows that the interviewee thinks about corporate finance applications outside of theory. A lot of candidates have the technical interview questions rehearsed and have great answers about: Why investment banking? Can you work the hours? Are you really passionate about finance? And then after convincing you
A Comparison of Spin-Outs versus Carve-Out IPOs: Part I Corporate Finance by Matt - August 22, 2018August 22, 20180 Spin-Out of Non-Core Assets For many corporates, there will be talk about non-core assets and their role under the broader company umbrella. These non-core assets may be divisions that do not fit into the business thesis that investors are looking for. As a very simple example, if a chain of coffee shops
Dividend Policy and Return of Capital Corporate Finance by Matt - October 5, 2017February 28, 20180 Corporations often ask investment bankers - "What should we do with our dividend?" Theoretically, dividend policy does not change the value of the firm – implementing a dividend or adding to a dividend should not change the share price1. However outside of academia, it does for reasons including: Tax on Dividends versus
Accretion/Dilution Analysis – Part IV: Synergies and Source of Funds for M&A Corporate Finance Mergers & Acquisitions by Matt - September 3, 2017February 19, 20180 Accretion/Dilution for M&A with Mixed Funding Sources Larger, transformative acquisitions tend to require a mix of debt and equity financing unless the acquirer had an underleveraged balance sheet beforehand and substantial cash reserves. As such, finding the breakeven for accretion requires additional calculation. The appropriate cost of acquisition is accordingly the blended
Accretion/Dilution Analysis – Part III: Using Debt for Acquisitions Corporate Finance Mergers & Acquisitions by Matt - September 2, 2017February 19, 20180 The last two parts of our Accretion/Dilution series focused on all-stock transactions, which are excellent in forming a theoretical understanding of the dynamics at play. However, acquisitions often have a cash component to the consideration, either in-whole or in-part. How this cash is funded is usually through debt, although excess balance
Accretion/Dilution Analysis – Part II: Accretion/Dilution Math and Breakeven Premium Corporate Finance Mergers & Acquisitions by Matt - September 2, 2017February 19, 20180 A commonly spread myth (along with “if you do not pass ethics, you will not pass the CFA”) is that for analyst and associate interviews outside of M&A, the only expected accretion/dilution question will be “in an all-stock transaction, is it accretive if company A (10x P/E) purchases company B