Contents
Introduction xi
Overview of the Book xii
Who Is the Book For? xiii
Structure of the Book xiii
Acknowledgments xix
CHAPTER 1
Introduction to Investment Banking 1
Overview of an Investment Bank 2
Overview of Investment Banking 7
The Life of an Investment Banker 22
Frequently Asked Questions 47
CHAPTER 2
Accounting Overview 55
Introduction to Accounting 56
The Income Statement 58
The Balance Sheet 69
The Statement of Cash Flows 83
Integrating the Three Financial Statements 88
End-of-Chapter Questions 99
CHAPTER 3
Finance Overview 101
The Financial System 102
Principles of Finance 107
Introduction to Corporate Finance 114
Valuing Securities 130
End-of-Chapter Questions 145
CHAPTER 4
Financial Statement Analysis 147
Sources of Financial Information 148
Financial Statement Analysis 158
Analyzing Different Time Periods 169
“Normalizing” the Financials 174
End-of-Chapter Questions 177
CHAPTER 5
Valuation 179
Introduction to Valuation 180
Comparable Company Methodology 194
Precedent Transaction Methodology 210
Discounted Cash Flow (DCF) Analysis 219
Valuation Conclusions 238
End-of-Chapter Questions 245
CHAPTER 6
Financial Modeling 247
Overview of an Integrated Cash Flow Model 248
Building an Integrated Cash Flow Model 262
End-of-Chapter Questions 292
CHAPTER 7
Mergers and Acquisitions 293
M&A Overview 293
The M&A Process 302
M&A Analysis 310
End-of-Chapter Questions 322
CHAPTER 8
Leveraged Buyouts 323
Overview of LBOs 324
LBO Modeling 331
LBO Conclusions: Do We Do the Deal? 347
End-of-Chapter Questions 348
CHAPTER 9
Recruiting, Interviewing, and Landing the Job 349
What Are Investment Banks Looking For? 350
The Recruiting Process 354