Quant Camp Course Outlines

1) VALUATION FUNDAMENTALS (STREAM 1)

The goal of this session is to introduce participants to corporate valuation. The session focuses on the strengths and weaknesses of the 4 primary valuation methodologies as well as the calculation of equity and enterprise value.

• What is enterprise value

─ The link between the balance sheet equation and valuation

─ Invested capital, net operating assets and the links to enterprise value

─ Book value vs. market value

• What is equity value

• Diluted shares outstanding

• Fundamental vs. relative valuation

• 4 primary valuation techniques

─ Trading comparables

─ Transaction comparables

─ DCF

─ LBO

• Strengths and weaknesses of each valuation technique

• Minority vs. majority stake valuation

• Key multiples

• Valuation football field

2) LONG‐FORM LBO MODELING (STREAM 2)

Participants build a full three statement LBO model layering in a complex capital structure. The need for two levels of equity ownership is discussed and returns to the equity holders and mezzanine holders are calculated after completion of the fully integrated model. Throughout the course, key PE interview concepts and questions are reviewed.

• Differences between the short‐form and long‐form LBO

• Sources of capital and associated costs / attributes

─ Term loans A, B and C

─ Second lien

─ Mezzanine and high yield

─ Preferred equity

─ Common equity

• PIK interest

• PIK dividends

• Warrants

• Rollover of existing management equity

• Understanding the need for two types of equity in the capital structure

• Constructing the opening, pro forma balance sheet

• Constructing the projected income statement, balance sheet and cash flow statement

• Cash sweep with mandatory and accelerated payments

• Calculating returns to equity and mezzanine holders

3)  INVESTMENT BANKING CASE SIMULATION (STREAM 3)

During the investment banking case simulation, participants learn about the role of investment bankers and experience a day in the life of an investment banker. Participants play the role of investment bankers advising a buyer on a potential acquisition. With the help of the instructor, participants complete all relevant analysis that will assist the buyer in deciding whether to make the acquisition and if so, at what price point. The case will require the participants to complete a full investment banking style pitch including the following sections:

• Executive summary

• Strategic rationale

• Target and acquirer positioning

• Valuation

─ Public comparables analysis

─ Transaction comparables analysis

─ DCF

─ LBO

• M&A analysis

─ Accretion/dilution

• Recommendation