Lazard Frères & Co. Capital Markets (NYC) – Summer Analyst | GFC Technical Interview Series

June 3, 2017

Lazard Frères & Co. Capital Markets (NYC) – Summer Analyst

 

Explain WACC to me in layman’s terms?

  • Talk about this in terms of risk and required return for investors for the risk of investing in the company

What are the issues with precedent transactions?

 

 

How do you estimate WACC in companies?

  • Mention WACC equation

  • Calculate beta, etc.

How do you calculate cost of debt?

  • Return on corporate bond that corresponds to the timeline of the project

What factors would you consider when you include companies in your comparables analysis?

  • Same industry, similar business model, reasonable multiples…

  • How is the company positioned in its industry?

What is an equity investor looking for/what is a debt investor looking for?

  • Equity: Future returns, mention CAPM

  • Debt: Stable cash flows…

Would an equity investor or a debt investor be happy with an M&A transaction?

  • Generally speaking, a equity holder because of the potential for accretion in EPS

In a valuation, how do you handle a company with a lot of operating leases?

  • It affects through rent expense, so it would reduce UFCF

  • Probably use EBITDAR multiple

     

     

     

     

     

     

     

     

     

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