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