Investment Banking, Valuation, Leveraged Buyouts, and Mergers & Acquisitions, Second Edition

Investment Banking 2E focuses on the primary valuation methodologies currently used on Wall Street, namely comparable companies analysis, precedent transactions analysis, discounted cash flow analysis, and leveraged buyout analysis. These methodologies are used to determine valuation for public and private companies within the context of MA transactions, LBOs, IPOs, restructurings, and investment decisions. They also form the cornerstone for valuing companies on a standalone basis, including an assessment of whether a given public company is overvalued or undervalued. Using a step-by-step, how-to approach for each methodology, Josh R. and Josh P. build a chronological knowledge base and define key terms, financial concepts, and processes throughout the book. The authors also provide context for the various valuation methodologies through a comprehensive overview of the fundamentals of LBOs and an organized MA sale process, including key participants, concepts, financing sources and terms, strategies, and legal and marketing documentation. In the aftermath of the subprime mortgage crisis and ensuing credit crunch, the world of finance is returning to the fundamentals of valuation and critical due diligence for MA, capital markets, and investment opportunities. This involves the use of more realistic assumptions governing approach to risk as well as a wide range of valuation drivers such as expected future company financial performance, discount rates, multiples, leverage levels, and financing terms. While valuation has always involved a great deal of "art" in addition to time-tested "science," the artistry is perpetually evolving in accordance with market developments and conditions. In this sense, this book is particularly topical--in addition to detailing the technical fundamentals behind valuation, the authors infuse practical judgment skills and perspective to help guide the science.