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An essential, all-in-one guide to investment banking and valuation, complete with downloadable models - this new edition reflects valuable contributions from Nasdaq and the global law firm Latham & Watkins LLP plus access to the online valuation models and course.The thoroughly revised Third Edition of Investment Banking: Valuation, LBOs, M&A, and IPOs (Book + Valuation Models) delivers the most current discussion of valuation and deal-making fundamentals essential to the work of investment bankers, private equity professionals, hedge fund investors, corporate lawyers, executives, and students. Drawing on over four decades of combined experience in investment banking and investing, authors Joshua Rosenbaum and Joshua Pearl explain how to perform the valuation work and financial analysis at the core of Wall Street - comparable companies, precedent transactions, DCF, LBO, M&A analysis...and now IPO analytics and valuation. Using a step-by-step, how-to approach for each methodology, the authors build a chronological knowledge base and define key terms, financial concepts, and processes throughout the book.Now, over 10 years after the release of the first edition, the book is more relevant and topical than ever. The book has sold over 250,000 copies and is used in over 200 universities globally. It has become a go-to resource for investment banks, private equity, investment firms, and corporations undertaking M&A transactions, LBOs, IPOs, restructurings, and investment decisions. While the fundamentals haven't changed, the environment must adapt to changing market developments and conditions. As a result, Rosenbaum and Pearl have updated their widely-adopted book accordingly, turning the latest edition into a unique and comprehensive training package.The Third Edition includes six downloadable valuation model templates: Comparable Companies Analysis, Precedent Transactions Analysis, Discounted Cash Flow Analysis, Leveraged Buyout Analysis, M&A Analysis, and IPO Valuation, available at www.wiley.com/go/investmentbanking3e....
List of contents
Additional Resources xv
About the Authors xvii
Foreword xxi
Acknowledgments xxiii
Disclaimer xxxi
Introduction 1
Structure of the Book 3
Part One: Valuation (Chapters 1-3) 3
Part Two: Leveraged Buyouts (Chapters 4 & 5) 5
Part Three: Mergers & Acquisitions (Chapters 6 & 7) 6
Part Four: Initial Public Offerings (Chapters 8 & 9) 8
ValueCo Summary Financial Information 9
Part One Valuation 11
Chapter 1 Comparable Companies Analysis 13
Summary of Comparable Companies Analysis Steps 14
Step I. Select the Universe of Comparable Companies 17
Study the Target 17
Identify Key Characteristics of the Target for Comparison Purposes 18
Screen for Comparable Companies 22
Step II. Locate The Necessary Financial Information 23
SEC Filings: 10-K, 10-Q, 8-K, and Proxy Statement 24
Equity Research 25
Press Releases and News Runs 26
Financial Information Services 26
Summary of Financial Data Primary Sources 27
Step III. Spread Key Statistics, Ratios, and Trading Multiples 28
Calculation of Key Financial Statistics and Ratios 28
Supplemental Financial Concepts and Calculations 42
Calculation of Key Trading Multiples 47
Step IV. Benchmark the Comparable Companies 50
Benchmark the Financial Statistics and Ratios 50
Benchmark the Trading Multiples 50
Step V. Determine Valuation 51
Valuation Implied by EV/EBITDA 52
Valuation Implied by P/E 52
Key Pros and Cons 54
Illustrative Comparable Companies Analysis for ValueCo 55
Step I. Select the Universe of Comparable Companies 55
Step II. Locate the Necessary Financial Information 57
Step III. Spread Key Statistics, Ratios, and Trading Multiples 57
Step IV. Benchmark the Comparable Companies 69
Step V. Determine Valuation 74
Chapter 2 Precedent Transactions Analysis 75
Summary of Precedent Transactions Analysis Steps 76
Step I. Select the Universe of Comparable Acquisitions 79
Screen for Comparable Acquisitions 79
Examine Other Considerations 80
Step II. Locate the Necessary Deal-Related and Financial Information 82
Public Targets 82
Private Targets 85
Summary of Primary SEC Filings in M&A Transactions 86
Step III. Spread Key Statistics, Ratios, and Transaction Multiples 88
Calculation of Key Financial Statistics and Ratios 88
Calculation of Key Transaction Multiples 94
Step IV. Benchmark the Comparable Acquisitions 98
Step V. Determine Valuation 98
Key Pros and Cons 99
Illustrative Precedent Transaction Analysis for ValueCo 100
Step I. Select the Universe of Comparable Acquisitions 100
Step II. Locate the Necessary Deal-Related and Financial Information 101
Step III. Spread Key Statistics, Ratios, and Transaction Multiples 103
Step IV. Benchmark the Comparable Acquisitions 111
Step V. Determine Valuation 113
Chapter 3 Discounted Cash Flow Analysis 115
Summary of Discounted Cash Flow Analysis Steps 116
Step I. Study the Target and Determine Key Performance Drivers 120
Study the Target 120
Determine Key Performance Drivers 120
Step II. Project Free Cash Flow 121
Considerations for Projecting Free Cash Flow 121
Projection of Sales, EBITDA, and EBIT 123
Projection of Free Cash Flow 125
Step II
