FT Partners IB Interview Questions

Use EV / NTM Revenue because fraud prevention is a high-growth software sector where many companies are unprofitable, making revenue the most consistently positive and comparable metric across the comp set. If the company is meaningfully EBITDA-positive, you can use EV / EBITDA as a secondary cross-check, but EV / NTM Revenue should be the primary multiple.

Reducing the tax rate increases enterprise value because higher after-tax operating cash flows (EBIT × (1 − t)) more than offset the slight WACC increase caused by a smaller interest tax shield on debt.

Project a mature, stable-growth company like Coca-Cola 3-5 years out since it's already near steady state, and a high-growth or pre-profit company like early Tesla 10+ years out until growth, margins, and capex normalize enough to apply a terminal value.

Precedent transactions usually price higher because the buyer is purchasing 100% of a company. It pays a control premium for the right to direct the business, and in a negotiated deal or an auction it typically hands the seller part of the synergies it expects from the combination. Trading comps price a small, non-controlling stake at whatever the market pays on a given day, so that price typically carries no payment for control or for synergies. Both sets are normally struck on the same LTM EBITDA and the same enterprise value basis. The gap is what is being bought, not how the multiple is computed.

You unlever the Betas of comparable public companies to strip out their leverage, take the median unlevered (asset) Beta, then relever it using the private company's target debt-to-equity ratio and tax rate via the Hamada equation.

Net income falls $22.50mm; the balance sheet adds $80mm net PP&E and −$2.50mm cash against $100mm new debt and –$22.50mm retained earnings; cash falls $2.50mm as the $7.50mm tax shield on $30mm of deductions falls short of the $10mm cash interest.

A discount rate is the percentage you use to turn money you expect in the future into what it is worth today. Future money is worth less than money in your hand now, for two reasons. Money you have now can be invested and grow. And a promise of future money might not be kept in full. The higher the discount rate, the less that future money is worth today.

In Y0, $10mm cash in creates deferred revenue with no income; in Y1 and Y2, $5mm revenue is recognized each year producing $1mm net income, while deferred revenue unwinds and cash decreases by $4mm annually to cover costs and taxes.

You would examine revenue growth trajectory and recurring mix, gross margin levels and scalability, operating leverage across R&D and S&M, EBITDA margin progression toward profitability, projection reasonableness versus market growth, and industry-specific factors like regulatory tailwinds, churn, and capitalized software.

The three are the income statement, the balance sheet, and the cash flow statement. They connect through two hand-offs. Net income, the bottom line of the income statement, starts the cash flow statement and also builds retained earnings inside equity on the balance sheet. Ending cash, the bottom line of the cash flow statement, becomes the cash line among assets on the balance sheet. That shared wiring is why a change in one statement moves the other two.

Cost of equity is the return shareholders require for bearing equity risk, calculated via CAPM as the risk-free rate plus the product of the company's relevered beta and the equity risk premium.

Audit the comps sheet across seven dimensions: peer comparability, calendarized financial data consistency, EV bridge completeness, diluted share count accuracy, numerator/denominator alignment on multiples, private company discount application, and use of median over mean with outliers flagged.