Transaction multiples - Study guides, Class notes & Summaries

Wall Street Prep IB Interviews Trading Multiples and Comps/Precedent Transaction Valuation continued - from IBI lessons and supplemented with online modeling resources

What is a leveraged buyout, and why does it work? - ANSWER In a leveraged buyout (LBO), a PE 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 higher retu...

Wall Street Prep Exam Questions With 100% Correct Answers Latest 2024/2025 (GRADED A+) 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 capi...

Walk me through a basic LBO model. - ANSWER Step 1: Determine the purchase price by focusing on precedent transactions since you are buying the company and need to include the premium paid in other transactions. Step 2: How will the deal be financed. Source of funds includes the capital required to complete the transaction. Step 3: Create a pro forma balance sheet by adjusting the existing balance sheet of the company to reflect the LBO transaction, including the new capital structure. ...

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...

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...

What is generally not considered to be a pre-tax non-recurring (unusual or infrequent) item? Extraordinary gains/losses 2. what is false about depreciation and amortization D&A may be classified within interest expense 3. 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 a decrease of 15 million 4. the final component of an earnings projec...

Wall Street Prep Premium Exam Questions And Answers Latest Top Score. What is generally not considered to be a pre-tax non-recurring (unusual or infrequent) item? - correct answer.Extraordinary gains/losses what is false about depreciation and amortization - correct 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. the cash impact of ...

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. the cash impact of the change in working capital was - Answer a decrease of 15 million the final component o...

LBO MODEL FUNDAMENTALS EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ LBO Model A financial model used to evaluate the acquisition of a company using a significant amount of borrowed funds. Sources & Uses section A section in an LBO model that outlines how the transaction is financed and the purpose of the capital, including the required Investor Equity. Goodwill & Other Intangibles Non-physical assets on the Balance Sheet used to balance the equation after adjust...