Headwaters MB - Summer Analyst | GFC Technical Interview Series

June 4, 2017

Headwaters MB - Summer Analyst


Why tech?

  • Very dynamic, always changing, always something new to learn

  1. Interesting tech deals?

  2. How to value a tech company?

  • Intrinsic and relative

  • The 3 main ways: DCF, intrinsic form of valuation

  • Public Comparable, Precedent transactions.

  • Many other forms such as sum of the parts (used for conglomerates)

What specific multiples to use for a tech company?

  • EV/Revenue, because a lot of companies in the early stage may not be profitable yet, but have revenue

Can you handle the hours?



How to calculate WACC?

  • High level WACC represents your opportunity cost of capital, or the cost of borrowing for a firm

  • Typically the formula is

  • % capital structure in debt * Rd * (interest tax shield)

  • % capital structure in equity * Re

  • Essentially this is a simplified version and it should theoretically just be the sum of the share of whatever security * its return * a tax shield if it does have one










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