Rank the 3 main valuation methods in from the highest to lowest expected valuation

We are continuing with how to answer main investment banking interview questions. This is really common question you will come across when interviewing for investment banking positions. To answer it, take a look at the content below, a sample for our IncuBanker online course…

Rank the 3 main valuation methods in from the highest to lowest expected valuation.

This can occur if there is a mismatch between comps and precedents, for example:

  • If there are no recent precedents and the industry is cyclical, then the precedents used might reflect a time when industry multiples were lower
  • If there are a limited number of comps and precedents then then the comps and precedents might reflect slightly different industries/types of companies, with the precedents reflecting companies with lower valuations

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