Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions
May 2009, ©2009
Investment Banking: 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 and define key terms, financial concepts, and processes throughout the book. They also provide a comprehensive overview of the fundamentals of LBOs and an organized M&A sale process.
In the aftermath of the subprime mortgage crisis and ensuing credit crunch, the world of finance is returning to the fundamentals of valuation and critical due diligence. This involves the use of more realistic assumptions governing approach to risk as well as a wide range of value drivers. While valuation has always involved a great deal of “art” in addition to time-tested “science,” the artistry is perpetually evolving in accordance with market developments and conditions. In this sense, this book is particularly topical—in addition to detailing the technical fundamentals behind valuation, the authors infuse practical judgment skills and perspective to help guide the science.
Structure of the Book.
ValueCo Summary Financial Information.
PART ONE Valuation.
CHAPTER 1 Comparable Companies Analysis.
CHAPTER 2 Precedent Transactions Analysis.
CHAPTER 3 Discounted Cash Flow Analysis.
PART TWO Leveraged Buyouts.
CHAPTER 4 Leveraged Buyouts.
CHAPTER 5 LBO Analysis.
PART THREE Mergers & Acquisitions.
CHAPTER 6 M&A Sale Process.
Bibliography and Recommended Reading.
JOSHUA PEARL is a Director at UBS Investment Bank in Leveraged Finance. He originates, structures, and executes leveraged loan and high yield bond financings, as well as leveraged buyouts, and restructurings. Previously, he worked at Moelis & Company in Capital Markets and Deutsche Bank in Leveraged Finance. He received his BS in Business from Indiana University’s Kelley School of Business.
“Rosenbaum and Pearl succeed in providing a systematic
approach to addressing a critical issue in any M&A, IPO, or
investment situation—namely, how much is a business or
transaction worth. They also put forth the framework for helping
approach more nuanced questions such as how much to pay for the
business and how to get the deal done. Due to the lack of a
comprehensive written reference material on valuation, the
fundamentals and subtlety of the trade are often passed on orally
from banker-to-banker on a case-by-case basis. In codifying the art
and science of investment banking, the authors convert this oral
history into an accessible framework by bridging the theoretical to
the practical with user-friendly, step-by-step approaches to
performing primary valuation methodologies.”
–Joseph R. Perella, Chairman and CEO, Perella Weinberg Partners
Praise for the Book
"Investment Banking provides a highly practical and relevant
guide to the valuation analysis at the core of investment banking,
private equity, and corporate finance. Mastery of these essential
skills is fundamental for any role in transaction-related finance.
This book will become a fixture on every finance professional's
—Thomas H. Lee, President, Lee Equity Partners, LLC Founder, Thomas H. Lee Capital Management, LLC
"This book will surely become an indispensable guide to the art
of buyout and M&A valuation, for the experienced investment
practitioner as well as for the non-professional seeking to learn
the mysteries of valuation."
—David M. Rubenstein, Co-Founder and Managing Director, The Carlyle Group
"As a practitioner of hundreds of M&A and LBO transactions
during the last 20 years, I recommend this book to advisors,
financiers, practitioners, and anyone seriously interested in
investment transactions. Rosenbaum and Pearl have created a
comprehensive and thoughtfully written guide covering the core
skills of the successful investment professional with particular
emphasis on valuation analysis."
—Josh Harris, Managing Partner, Apollo Management, LP
"Valuation is the key to any transaction. Investment Banking
provides specific step-by-step valuation procedures for LBO and
M&A transactions, with lots of diagrams and numerical
—Roger G. Ibbotson, Professor in the Practice of Finance, Yale School of Management Chairman & CIO, Zebra Capital Management, LLC Founder & Advisor, Ibbotson Associates, a Morningstar Company
"Investment banking requires a skill set that combines both art
and science. While numerous textbooks provide students with the
core principles of financial economics, the rich institutional
considerations that are essential on Wall Street are not well
documented. This book represents an important step in filling this
—Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School, Coauthor, Venture Capital and Private Equity: A Casebook
"Rosenbaum and Pearl have written the ultimate nuts and bolts
guide for valuation. It is the book that every business student
should study and every investment banker should use."
—Steven Davidoff, Associate Professor, University of Connecticut School of Law The Deal Professor, The New York Times