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Happy Sunday, future bankers!

Hope that everyone is having a great weekend!

Today we’re going to be delving into the the three major valuation methods, discussing more best practices when responding to behavioral questions, and discussing how Mark Zuckerberg added $28 billion to his net worth… in one day.

🚀 Let’s get into it.

🔢 Technical Question

“What are the three most common valuation methodologies?”

1. The three most common methodologies:

• Discounted Cash Flow (DCF): Explain that DCF projects a company's future free cash flows and discounts them back to their present value to arrive at an enterprise value. Highlight its versatility across industries and situations, but mention potential challenges like estimating future cash flows and discount rates.

• Comparable Company Analysis: Describe using publicly traded companies similar in size, industry, and risk profile to the target company. Explain how valuation multiples like P/E, EV/EBITDA, or Price/Sales are used to benchmark the target company's value. Mention limitations like finding truly comparable companies and adjusting for differences.

• Precedent Transaction Analysis: Discuss using historical M&A transactions involving similar companies to estimate the target company's value. Explain its relevance for companies with limited public comps or undergoing significant transitions. Highlight potential issues like limited data availability and transaction-specific factors.

2. Showcasing your analytical thinking:

• Briefly go beyond simply naming the methods and discuss their strengths and weaknesses, including industry applicability and data requirements.

• Briefly mention a situation where each method might be most appropriate, demonstrating your understanding of practical application.

• If the interview leans towards a specific industry or sector, tailor your examples accordingly.

Example response:

"The three most common valuation methodologies are Discounted Cash Flow (DCF), Comparable Company Analysis, and Precedent Transaction Analysis. DCF offers flexibility but requires careful cash flow and discount rate assumptions. Comparable Company Analysis is industry-specific but finding truly comparable companies can be challenging. Precedent Transaction Analysis is useful for unique situations but relies on limited historical data. Understanding the strengths and weaknesses of each method and using them in conjunction helps us arrive at a more informed valuation conclusion."

🗣 Behavioral Question

"What makes an ideal co-worker?"

Here's how you can respond to the question:

1. Highlight teamwork and collaboration:

• Emphasize the importance of working effectively in a team environment, achieving common goals, and supporting each other. Mention skills like communication, active listening, and problem-solving as crucial for collaboration.

2. Value individual strengths and contributions:

• Highlight appreciating diverse perspectives, expertise, and work styles. Mention respecting individual strengths and contributions to the team's success.

3. Focus on professionalism and work ethic:

• Emphasize a strong work ethic, dedication to deadlines, and a commitment to high-quality work. Mention being reliable, proactive, and taking initiative.

4. Adaptability and learning:

• Highlight the ability to adapt to changing situations, learn new things quickly, and be open to feedback. Mention being flexible and willing to go the extra mile.

5. Positive attitude and communication:

• Emphasize a positive and optimistic attitude that fosters a productive work environment. Mention clear and open communication, including constructive feedback and willingness to help others.

Example response:

"For me, an ideal co-worker is someone who's a strong team player. They value collaboration, actively listen to different perspectives, and contribute their unique strengths to achieve common goals. They're also highly professional, reliable, and dedicated to delivering high-quality work on time. But it's not just about hard work; an ideal co-worker also brings a positive attitude, open communication, and a willingness to learn and adapt to new situations. This creates a supportive and productive work environment where everyone thrives. One of my past co-workers, in particular, really embodied these traits. He/she was tasked with [X Situation] and did [X in response]. I’ve tried to embody some of those same traits in myself.”

Additional tips:

• Tailor your response to the specific company culture and values mentioned in the interview.

• Briefly mention an experience where you worked effectively with a teammate to showcase your understanding.

• Be genuine and enthusiastic in your response.

🗞 Industry News

Zuckerberg’s 28 billion reasons to celebrate💰

Mark Zuckerberg is having a financial revival thanks to a surge in Meta stock. The company's strong Q4 earnings and overall growth fueled a 22% stock increase, boosting his net worth to a record $165 billion, surpassing even Bill Gates. This represents a significant comeback from late 2022 when Meta faced criticism for VR investments and its stock dipped to $90 per share, leaving Zuckerberg's net worth at a mere (not really though, haha) $36 billion. The company's turnaround, including cost-cutting measures and strong financial performance, has not only enriched Zuckerberg but also solidified Meta's position as a trillion-dollar tech giant.

Read more about this story below.