Transaction multiples - Study guides, Class notes & Summaries

Walk me through a basic LBO model. - ANSWER "In an LBO Model, Step 1 is making assumptions about the Purchase Price, Debt/Equity ratio, Interest Rate on Debt and other variables; you might also assume something about the company's operations, such as Revenue Growth or Margins, depending on how much information you have. Step 2 is to create a Sources & Uses section, which shows how you finance the transaction and what you use the capital for; this also tells you how much Investor Equity is r...

What is a leveraged buyout, and why does it work? - ANSWER In a leveraged buyout (LBO), a private equity firm acquires a company using a combination of debt and equity (cash), operates it for several years, possibly makes operational improvements, and then sells the company at the end of the period to realize a return on investment. During the period of ownership, the PE firm uses the company's cash flows to pay interest expense from the debt and to pay off debt principal. An LBO delivers...

LBO Questions and Answers (Graded A) Walk me through a basic LBO model. - ANSWER ️️ "In an LBO Model, Step 1 is making assumptions about the Purchase Price, Debt/Equity ratio, Interest Rate on Debt and other variables; you might also assume something about the company's operations, such as Revenue Growth or Margins, depending on how much information you have. Step 2 is to create a Sources & Uses section, which shows how you finance the transaction and what you use the capital for; th...

Which of the following statements about a P/E multiple is false? - ANSWERIt is not affected by non-cash expenses Why are acquisition multiples typically higher than comparable companies analysis? - ANSWERAcquisition multiples typically incorporate a premium Enterprise value is - ANSWERSimilar in theory to transaction value What is the formula for equity value? - ANSWERShare price x shares outstanding Which of the following pairs belongs together? - ANSWEREnterprise value and EBITDA Which of...

Would you be calculating Enterprise Value or Equity Value when using a multiple based on free cash flow or EBITDA? Enterprise Value. EBITDA and free cash flow represent cash flows that are available to repay holders of a company's debt and equity, so a multiple based on one of those two metrics would describe the value of the firm to all investors. What does Balance Sheet show? What's the equation? It is a snapshot of the company's economic resources and funding for those economic r...

Wall Street Prep Exam Questions With Correct Answers Latest 2024/2025 (GRADED) What is generally not considered to be a pre-tax non-recurring (unusual or infrequent) item? Extraordinary gains/losses what is false about depreciation and amortization D&A may be classified within interest expense Company X's current assets increased by $40 million from while the companies current liabilities increased by $25 million over the same period. the cash impact of the change in working capital was ...

LBO Modeling Exam Wallstreet Prep Questions With Answers Latest Updated 2024/2025 (Graded A+) What is generally not considered to be a pre-tax non-recurring (unusual or infrequent) item? - ANSWER>>>Extraordinary gains/losses what is false about depreciation and amortization - ANSWER>>>D&A may be classified within interest expense Company X's current assets increased by $40 million from while the companies current liabilities increased by $25 million over the same period....

What makes learning to model real estate assets challenging? Industry limitations to "one size fits all" modeling • Different players interact with real estate financial models in different ways Financial models are key to many real estate functions Such as: Private Equity Brokers Lenders Operators Asset Managers Property Management Formatting and Layout Always assume the model will be used by someone else • Be predictable • Create "plug-and-play" models to increase efficiency Color...

Enterprise / Equity Value Questions & Answers - Advanced, Valuation Questions & Answers - Advanced, Merger Model Questions & Answers - Advanced, Merger Model - Basic, Accounting - Basic, Accounting - Advanced, Enterprise / Equity Value Questions & And Answers Are there any problems with the Enterprise Value formula you just gave me? Yes - it's too simple. There are lots of other things you need to add into the formula with real companies: • Net Operating Losses - Should be valued and a...

How do you value banks and financial institutions differently from other companies? - Answer-You mostly use the same methodologies, except: • You look at P / E and P / BV (Book Value) multiples rather than EV / Revenue, EV / EBITDA, and other "normal" multiples, since banks have unique capital structures. • You pay more attention to bank-specific metrics like NAV (Net Asset Value) and you might screen companies and precedent transactions based on those instead. • Rather than a DCF,...