Interview prep · Valuation
Valuation interview questions
How bankers value a company — trading comps, precedent transactions, and the multiples you'll be asked to calculate and defend.
Sample questions
What are the main valuation methodologies?+
Three core approaches
- comparable companies (trading comps) - current multiples of similar public firms
- precedent transactions - multiples paid in past M&A deals
- discounted cash flow (DCF) - intrinsic value of projected cash flows. Others include LBO analysis (a floor for a financial buyer) and sum-of-the-parts.
Why might trading comps and precedent transaction comps give different values?+
Precedent transactions usually price higher because they include a control premium (paying for 100% ownership) and potential synergies, and they reflect market conditions at the time of each deal. Trading comps reflect minority, public-market prices today. Precedents are also harder to compare due to varying deal dynamics and dated data.
1,000+ more, across 12 categories
Start free with 20 cards. Spaced repetition makes them stick for the superday.
Start free