Deutsche Bank IB Interview Questions

Price/Revenue and Equity Value/EBITDA are mismatched because Revenue and EBITDA are pre-interest metrics available to all capital providers, so they must pair with Enterprise Value, not Equity Value, which excludes debt holders' claims.

GAAP expensing is prudent given high failure rates, but for valuation purposes I'd capitalize and amortize R&D to better reflect true invested capital, match costs to revenues, and produce more meaningful profitability metrics like ROIC.

Project unlevered free cash flows for 5–10 years, discount them at WACC, add a discounted terminal value (perpetuity growth or exit multiple), yielding enterprise value, then subtract net debt and other claims to get equity value per share.

Key bank valuation line items include Net Interest Income, Provision for Credit Losses, Non-Interest Income/Expense, Pre-Provision Operating Profit, Tangible Book Value per Share, CET1 ratio, and the core metrics P/TBV, ROTCE, and ROE that link them together.

Subtract COGS and operating expenses from Revenue to get EBIT, tax-effect it to get NOPAT, then add back D&A and subtract CapEx and increases in net working capital to arrive at unlevered free cash flow.

A capital (finance) lease records an asset and liability with split depreciation/interest expense, while an operating lease uses straight-line rent expense; companies historically preferred operating leases for lower reported leverage, though post-ASC 842 both now appear on the balance sheet.

A PE firm can increase returns by growing revenue, expanding margins, achieving multiple expansion, paying down debt with the company's free cash flow, and maximizing leverage at entry to minimize the initial equity check.

Minority interest is the non-controlling shareholders' claim on a consolidated subsidiary; on the balance sheet it equals their ownership percentage times subsidiary equity, on the income statement their share of net income is deducted, and it is added to enterprise value.

At Year 0, the sponsor contributes $400 equity alongside $600 debt to acquire a $1,000 EV company; at Year 1, after $50 debt paydown, the sponsor raises $200 new debt paid as a special dividend, releveraging to $750 debt and reducing equity to $250 while boosting IRR through early cash return.

Start by rebuilding what the cart really earns. Add back the owner's own pay and any personal or one-time costs. That gives seller's discretionary earnings (SDE). Then subtract a market wage for running the cart. What remains is what the business earns beyond pay for the owner's labor. Small owner-run businesses like this typically sell for roughly 2-4x SDE. Expect the low end when the value depends on the owner, or on a permit whose transfer is uncertain. The resale value of the cart, equipment, and inventory sets a floor, and value falls toward it if the permit or spot cannot transfer. Compare the offer to that range and to what the owner gets by keeping the cart.

I'd triangulate three approaches: primarily cap NOI at a market-derived cap rate, run a DCF for irregular cash flows projecting NOI over a hold period to a terminal value, and sanity-check against comparable sales per square foot and replacement cost.

You can improve LBO cash flows by growing revenue, cutting costs to increase EBITDA, reducing cash taxes via the interest tax shield, minimizing CapEx, optimizing working capital, lowering cash interest through debt paydown or refinancing, and monetizing non-core assets.