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Happy Saturday, future bankers!

Hope everyone is doing well and is having a great weekend! Today we’ll be going over the flaws with public company comparables, typical roles to play on a team, and a $1.65 billion private equity buyout.

🚀 Let’s get into it.

🔢 Technical Question

“What are some of the flaws with public company comparables?”

Public company comparables are a common valuation method that uses the multiples of similar publicly traded companies to estimate the value of a target company. However, this method has some flaws that you should be aware of, such as:

• No company is identical to another company, leading to discrepancies in valuation metrics. Even within the same industry, companies may have different growth rates, returns on invested capital, capital structures, and risk profiles. Therefore, it is important to select the most relevant and comparable companies and adjust for any significant differences.

• The stock market can be influenced by emotions, causing multiples to fluctuate dramatically based on market sentiment at any given time. For example, during periods of high optimism or pessimism, the multiples of public companies may not reflect their intrinsic value. Therefore, it is important to use historical averages or normalized multiples to account for cyclical or seasonal factors.

• Share prices for small, thinly-traded companies may not accurately reflect their intrinsic value due to lower liquidity. For example, if a company has a low trading volume or a large block of shares held by a few investors, its share price may be subject to manipulation or volatility. Therefore, it is important to use multiples that are less affected by liquidity, such as enterprise value multiples.

🗣 Behavioral Question

"What role do you typically play when you’re on a team?"

These are some hypothetical team roles that you can choose from:

• Shaper: You are a natural leader who drives the team forward with your energy and enthusiasm. You are action-oriented and good at overcoming obstacles and finding solutions.

• Implementer: You are a practical and reliable team member who turns ideas into reality. You are disciplined and organized, and you follow the rules and procedures.

• Completer finisher: You are a perfectionist who pays attention to the details and ensures high-quality work. You are diligent and thorough, and you meet the deadlines.

• Plant: You are a creative and original thinker who comes up with new and innovative ideas. You are independent and imaginative, and you challenge the status quo.

• Coordinator: You are a good organizer who clarifies the goals and roles of the team. You are calm and confident, and you delegate tasks and responsibilities effectively.

• Teamworker: You are a supportive and cooperative team member who builds rapport and harmony. You are diplomatic and empathetic, and you resolve conflicts and issues.

Depending on your preferred team role, you can modify your answer accordingly. For example, if you want to highlight your role as a shaper, you can say something like:

“In my previous internship at a boutique consulting firm, I was part of a team that worked on a market entry strategy for a local healthcare client. My role was to lead the team and drive the project forward. I was responsible for defining the scope and objectives of the project, setting the timeline and milestones, and assigning the tasks and roles to the team members. I also motivated and encouraged the team to overcome any challenges and issues that arose along the way.

As a result of our work, the client was able to identify the most attractive and feasible market segments, and to develop a clear and actionable plan to enter and grow in those segments. I think I played a valuable role in the team because I leveraged my strong leadership and problem-solving skills, and I delivered the project successfully under tight deadlines. I also learned a lot from the feedback and guidance of my team leader and peers, and I improved my communication and collaboration skills. I think this experience prepared me well for the investment banking role, as I enjoy working in a fast-paced and dynamic environment, and I can handle complex and challenging projects with professionalism and enthusiasm.”

🗞 Industry News

A $1.65 Billion Private Equity Buyout 💰

HireRight, a leading player in global background screening services and workforce solutions, has announced its upcoming acquisition by investment funds linked with General Atlantic and Stone Point Capital. The deal, valued at a hefty $1.65 billion, involves the Sponsors purchasing all outstanding shares not already owned at $14.35 per share in cash, offering a substantial premium over recent trading prices.

In response to the proposal, HireRight's Board of Directors put together a Special Committee to weigh the transaction alongside other strategic options. With independent directors and advice from legal and financial experts, the Special Committee gave the transaction a unanimous thumbs-up, deeming it fair and advantageous to all non-affiliated stockholders. Guy Abramo, HireRight's President and CEO, expressed delight with the agreement, highlighting the significant immediate cash premium it delivers to unaffiliated stockholders. The transaction is slated for completion in mid-2024.

Read more about this story below.

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Thanks for tuning in today! Best of luck to everyone working through recruiting right now. If you sign an offer, reply to this email and let us know about it! Like seriously, do it—we’d love to hear about it!