Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions

by Joshua Rosenbaum, Joshua Pearl, Joseph R. Perella (Foreword)

In the constantly evolving world of finance, a solid technical foundation is an essential tool for success. Due to the fast-paced nature of this world, however, no one has been able to take the time to properly codify the lifeblood of the corporate financier?s work?namely, valuation. Rosenbaum and Pearl have responded to this need by writing the book that they wish had existed when they were trying to break into Wall Street.Investment Valuation, Leveraged Buyouts, and Mergers & Acquisitions is a highly accessible and authoritative book that focuses on the primary valuation methodologies currently used on Wall Street?comparable companies, precedent transactions, DCF, and LBO analysis. These methodologies are used to determine valuation for public and private companies within the context of M&A transactions, LBOs, IPOs, restructurings, and investment decisions. Using a step-by-step how-to approach for each methodology, the authors build a chronological knowledge base a

Genres: Finance, Business, Nonfiction, Economics, Textbooks, Banking, Reference

336 pages, Hardcover

First published May 4, 2009

Reviews

[Kunal · Rating 4 out of 5]

This was an absolutely incredible book and is one of the top 3 practical books I have read about in the field of banking. It gives a comprehensive review of how exactly to conduct step by step and think about each of the valuation methods (trading comps, transaction comps, discounted cash flow, and LBO model). Although I have been doing the job for a few years now, it was a helpful review to walk through how exactly you should think about certain characteristics of each of these companies when you are putting together this analysis and also how you should interpret the results. Again, this is an absolute must read for anyone trying to get into the industry and for any of you current bankers out there as a refresher. The template that is provided and the walk through of how to build the models is exactly what our templates looked like at Barclays so can speak highly on the credibility of the analysis / templates that are shown in the book. Definitely is a book I want to go back to and refer to from time to time as it is the handbook to valuation methodologies in investment banking and again contains information that bankers should know 110% of. Make no mistake, this should be a complete review for any current bankers so don't expect to be revitalize by the information in here.

[Piotr · Rating 3 out of 5]

Very technical book.

[Abhishek Dhanraj · Rating 4 out of 5]

Will write full review once I read it completely. I had to stop in the middle as there were too many calculations that needed to be understood and solved with full concentration. Will pick it up later.

[Ravi Dawar · Rating 4 out of 5]

The book does a good job in explaining the various valuation methods used by investment bankers. Though the book barely scratches the surface for DCF, it explains a great deal about LBO and M&A.

[Tom Carr · Rating 5 out of 5]

Most well-written, structured, and coherent textbook I've read.

[Joe Alt]

Recommended my finance prof
Stephen Schiestel

[Lea · Rating 4 out of 5]

Someone gave me the good advice to try using textbooks to learn new topics, even though I’m out of school. With this one, I feel like I finally understand what ibankers are doing and how deals are structured from their perspective.

[Chico · Rating 4 out of 5]

Solid

[Amin Mo · Rating 5 out of 5]

Throughout the last two years, I have read over 180 books of various kinds; philosophy, psychology, history, but the vast majority of around 100 books consisted of business and self-help books. I believe it is safe to say that this was the most overwhelming books which I had acquired a formidable amount of insight.
Normally, it takes around one hour on average for me to summarize the content of what I have read, nonetheless, this book at one sitting took me seven straight hours. It’s the definition of advanced books, it is very thorough and deep. It reminds me of when I read the Intelligent Investor which was one of the earliest readings of mine; I was completely clueless. Now however, the Intelligent Investor is nothing more than a walk in a park, and perhaps much briefer than that. I hope that within time, I get to this level with this book.
I would be lying if I said I understood everything, but even if the reader cannot grasp the concepts completely, or simply half-heartedly, it is still beneficial as it discuss fundamental operation of investment bankers, and contains information which is not easily accessible as one might believe. It is hard, and even nerve-wrecking at times, but it is as much and more worth the read.

[Georgi · Rating 5 out of 5]

Very informative, to the point book. Written from the perspective of how things are actually done, rather than offering dry theories. The book is very accessible and would be easy to follow even for people with little to no previous knowledge. Also helpful are the provided excel sheets, which can be an excellent support for your first financial models.

Strong recommendation for everyone interested in the field.

[Marvin Li · Rating 5 out of 5]

Can’t wait to read this to my grandchildren

[Moopchi · Rating 5 out of 5]

The book is split into 6 chapters. The first three cover the three traditional techniques of valuation, including both theoretical and comparable methods. The next two chapters deep dive into the world of leveraged buyouts, and how advisors structure analysis around LBOs. The last chapter provides insight into the sale process sell-side advisors do for targets, explaining both the ins and outs of auction and negotiated sales.

Before reading the book, I thought it would be structured like a typical academic textbook - many chapters and subchapters, with graphs and practice questions at the end. Indeed the cover of the book conveyed that notion of academia. However, going into the book I was surprised - it's structure was more simplistic but the content was still detailed with more extensive theory covered in the footnotes, making it accessible to read not just for students but anyone interested in high finance.

In terms of practicality, the information is conveyed on a step-by-step basis, making the book easy to follow through while equipping readers with the necessary skills to perform a basic valuation. The harder part will be applying this knowledge to relevant real world problems and targets, as valuations are more naunced and technical, but nontheless it is a good starting point for readers interested in this area.

[Harry Harman]

The model templates (and completed versions) for the valuation methodologies discussed in this book are available in Microsoft Excel format at www.wiley .com/go/investmentbanking—password:wiley09

When opening the models in Microsoft Excel, please ensure that you perform the following procedure: in the main toolbar select T “Calculation” tab, select M anual, select I ools, select O ptions, select the teration, and set “Maximum ite rations:” to 1000

the banker typically lays out the calculated financial statistics and ratios for the comparable companies (as calculated in Step III) alongside those of the target in spreadsheet form for easy comparison (see Exhibits 1.53 and 1.54). This exercise is known as “benchmarking.”

As a general rule, for companies in the same sector, higher profit margins translate into higher valuations, all else being equal.

[Andre Ruiz Loera · Rating 5 out of 5]

Investment Banking: Valuation, LBOs, M&A, and IPOs by Joshua Rosenbaum and Joshua Pearl offers an excellent overview of the technical aspects of investment banking, allowing readers to get a taste of what the day-to-day operations look like. The book does a great job breaking down complex concepts in a clear, understandable way, which can help someone decide whether they would enjoy the technical side of the job—though, of course, it won't prepare you for the sleep deprivation, stress, or long hours that come with it! While it might be overkill for most, especially if you're targeting a traditional bank, it’s definitely worth the read if you're aiming for an elite boutique or want to go into a superday fully prepared. Overall, this book is a solid investment in your understanding of investment banking fundamentals and provides great value for the price.

[Connor Radkov · Rating 4 out of 5]

This is a very in-depth guide into the world of IB. Overall, you don't need a ton of prerequisite knowledge coming into this book, just a general grasp on the roles that IBs fill in the finance ecosystem. Coming out of this, you'll have a solid understand of valuation techniques and how they can be applied. The authors lay out the steps for these techniques in a very clear and logical fashion. I do wish there was a small section regarding an overview of the three financial statements and how they relate to IB. This was touched on in the DCF, but I think an explanation of how these statements work would have improved the DCF section. Other than that, this is a great book for anyone who wants to learn more about IB.

[Andrew Breza · Rating 4 out of 5]

I wanted to learn more about M&A. I asked a professor friend for a book recommendation and she loaned me her copy of Investment Banking. This book gives an overview of the process from a practitioner's perspective. It's exactly what I needed to learn the basics. Readers looking for more theory or higher level math may be disappointed. If you're serious about the topic, I suggest following this book with something more academic (my friend also leant me a followup textbook that I plan to read).

[Dick · Rating 5 out of 5]

This has been on my desk as long as I can remember. For some random reason i pick it up expecting nothing as i thought it would help me read Street research better somehow. To my pleasant surprise, this is not just your average student manual but a very good and well written primer. There are a ton of related books but it’s not easy to find an author who know how to explain. No wonder it has been the top seller. I just wish both authors can keep writing more in-depth topics.

[Chester Lee Wey · Rating 4 out of 5]

Very useful and practical for any beginner undergraduate aspiring to be an investment banker. This to me was like an ultimate starter pack - one that points you to exactly what you need to know and what steps to take. However, it might not be as useful to someone who has done a few investment banking internships.

[Farhad · Rating 5 out of 5]

Best used as a training guide for aspiring and early stage bankers or valuation specialists. Great amount of detail on what you actually do on the job and how to go about it. This, with some modeling courses, are the next best thing to actual experience if you don’t have it coming out of school.

[Joel Mitchall · Rating 4 out of 5]

A simple, easy-to-read guide to basic valuation and deal structuring.

[roundface · Rating 5 out of 5]

Very good entry level introduction book for IB.

[Christopher Watterson · Rating 4 out of 5]

The gold standard for a reason. Detailed, thorough, and a valuable reference book even after the first read.

[Sai Suman Mirthipati · Rating 5 out of 5]

Really informative book! Liked that it goes into detail on the buy/sell side process (instead of the just the theoretical stuff on valuation), and it's written in a manner that's easy to follow

[Pedro Morales D · Rating 4 out of 5]

A must for everyone who is starting in the finance industry. This book gives you practical and easy examples of the valuations methods and how M&As are made. Very detail, easy going and solid book for young finance analysts.

[Alina · Rating 4 out of 5]

Very clear, precise, user-friendly. My only problem was the fact that its organization probably could’ve been cleaned up, especially with the tons of footnotes on some pages.

[Peter Håkansson · Rating 4 out of 5]

Good overview and very clear examples.

[Christian Lyman · Rating 4 out of 5]

Just some nice light summer reading

[Miguel Angel · Rating 5 out of 5]

Una guía útil sobre cómo se estructuran las operaciones de banca de inversión.

[A · Rating 5 out of 5]

An excellnt book, well structured and rich with fundmental and in depth knowledge of financial analysis. must read for any student seeking a position in the investment sector.

[Christy Matthews · Rating 4 out of 5]

Detailed coverage of various investment banking topics. Is it a boring read? Yes. Did the authors do a good job of compiling information and presenting it in an easy to understand way? Yes.