Investment Banking Workbook

Joshua Rosenbaum is a Managing Director and Head of the Industrials & Diversified Services Group at RBC Capital Markets, where he also serves on the Management Committee for the U.S. Investment Bank. He originates, structures, and advises on M&A, corporate finance, and capital markets transactions. Previously, he worked at UBS Investment Bank and the International Finance Corporation, the direct investment division of the World Bank. He received his AB from Harvard and his MBA with Baker Scholar honors from Harvard Business School. He is also the co-author of Investment Banking: Valuation, LBOs, M&A, and IPOs and The Little Book of Investing Like the Pros. Joshua Pearl is the Founder and Chief Investment Officer of Hickory Lane Capital Management, a long/short equity asset manager. He focuses on equity investments and special situations utilizing a fundamentals-based approach. From 2011-2020, he served as a Managing Director and Partner at Brahman Capital. Previously, he structured high yield financings, leveraged buyouts, and restructurings as a Director at UBS Investment Bank. Prior to UBS, he was an investment banker at Moelis & Company and Deutsche Bank. He received his BS in Business from Indiana University’s Kelley School of Business. He is also the co-author of Investment Banking: Valuation, LBOs, M&A, and IPOs and The Little Book of Investing Like the Pros. JOSEPH GASPARRO is a Vice President in the Industrials & Diversified Services Group at RBC Capital Markets, where he advises on and executes M&A, corporate finance, and capital markets transactions. Previously, he worked in the Investment Banking Division and Global Markets Division of Credit Suisse. Prior to Credit Suisse, he worked at BofA Securities and UBS Investment Bank. He received his BA from Gettysburg College and his MBA from Rutgers Business School. He is a two-time recipient of the President’s Volunteer Service Award, bestowed by the President of the United States. He is also an editor of Investment Banking: Valuation, LBOs, M&A, and IPOs and The Little Book of Investing Like the Pros.

About the Authors vii

Introduction 1

Target Audience 2

Content and Applications 2

Chapter 1 Comparable Companies Analysis 3

Questions 3

Answers and Rationale 28

Chapter 2 Precedent Transactions Analysis 55

Questions 55

Answers and Rationale 76

Chapter 3 Discounted Cash Flow Analysis 93

Questions 93

Answers and Rationale 120

Chapter 4 Leveraged Buyouts 149

Questions 149

Answers and Rationale 160

Chapter 5 LBO Analysis 169

Questions 169

Answers and Rationale 189

Chapter 6 Sell-Side M&A 205

Questions 205

Answers and Rationale 217

Chapter 7 Buy-Side M&A 225

Questions 225

Answers and Rationale 243

Chapter 8 Initial Public Offerings 259

Questions 259

Answers and Rationale 270

Chapter 9 The IPO Process 277

Questions 277

Answers and Rationale 288