Download Investment Banking: A Guide to Underwriting and Advisory by Giuliano Iannotta PDF

By Giuliano Iannotta

The contemporary monetary turmoil has raised suspects on funding banks and should definitely reshape the undefined. besides the fact that, the transactions routinely controlled by way of funding banks will nonetheless require the intervention of monetary associations, as consistently long ago. This publication goals at delivering an summary of those conventional funding banking actions. It covers the most components of funding banking: safeguard underwriting (equity and debt), syndicated loans, marketplace for company keep an eye on (M&As, LBOs, etc.), restructuring. there's a powerful volume of analysis papers at the diversified parts of funding banking. whereas this growing to be literature offers a conceptual framework, it has little to claim on "how to do things". the purpose of the e-book is to mix the students' and practitioners' perspectives: each transaction is tested from either views. even if deeper awareness is given to analyze, it really is performed with the easy and powerful language of business.

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Sample text

Thus, to determine the necessary current ownership, the Series A fund must estimate the amount of new stocks that will be issued in the future, but this amount depends in part on the amount of stocks that are issued now. This is a circularity problem that can be solved through a two-step approach. Consider again the example of 1 ml investment in a company that expects to earn 2 ml at yearend 5. The P/E ratio for comparables is 10. The projected terminal value is therefore 20 ml. How much will be available to investors and management?

5 times EBITDA is equity. Moreover the debt is usually structured in senior debt (supplied by banks) for about 4 times EBITDA and high-yield bonds for about 1 times EBITDA. Notice that the feasible debt structure changes over time depending on the market. 5x Mezzanine Equity Fig. 5 LBO financing structure Debt Debt EV EV Equity Equity t=0 t=1 Fig. 6 LBO candidate: The “stable-cash-flow” firm mezzanine financing, provided by specialized investors, the mezzanine funds. These funds demand higher compensation, which involves warrants or other equity-linked instruments (known as the equity kicker) in addition to interest (usually below market) on subordinated debt, which is repaid only after all senior debt is reimbursed.

Post-money). Suppose there are 1 ml shares outstanding pre-money. e. 6. It is now quite easy to infer the implicit value of the whole company. 97% investing 1 ml. 97%). This is the post-money valuation. , assuming that all convertibles are converted and all options are exercised. To wrap it up, the key elements of the VC method are the terminal value, the discount rate, and the proposed investment. The valuation method used by VC funds is usually the relative approach. Of course the challenging task is to predict the future net income of the company.

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