Headwaters MB - Summer Analyst | GFC Technical Interview Series
Headwaters MB - Summer Analyst
Why tech?
Very dynamic, always changing, always something new to learn
Interesting tech deals?
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
