Valuation Essentials

Value drivers framework: cash flows, growth, risk, reinvestment needs, returns on capital; enterprise value vs equity value at a conceptual level; what makes one business more valuable than another; when multiples make sense vs when they mislead; how interviewers expect you to reason about value.

DCF building blocks: unlevered FCF intuition (EBIT, taxes, D&A, capex, NWC); forecast logic and key drivers; discounting and present value; terminal value methods (perpetuity vs exit multiple); WACC intuition at a high level; sanity checks and common DCF interview pitfalls.

Comparable companies logic: peer set selection, size/growth/margin matching; equity value vs enterprise value multiples; which multiple for which business (EV/EBITDA, EV/Revenue, P/E); normalization (one-offs, run-rate); interpreting why multiples differ; quick comps-style interview questions.

Precedent transactions logic: deal context, cycle effects, synergy expectations; control premiums and why they exist; when premiums are higher/lower; differences vs trading comps; using transaction comps to frame valuation ranges in interviews; pitfalls (small sample sizes, outdated deals, special situations).

Sensitivity thinking: what moves value most (growth, margin, reinvestment, discount rate, terminal assumptions); scenario framing (base/up/down); triangulating value using multiple methods; defending a valuation range under pressure; classic traps and gotcha questions (EV vs equity, double counting, inconsistent assumptions).