Private Equity Masterclass

Part I

Industry Fundamentals

What the job actually is, before any of the recruiting apparatus around it. Four divisions, two kinds of transaction, and the org logic that decides which deals land on your desk.

Structure

Four divisions, two transaction types

Investment banks contain four main divisions: asset management, equity research, sales & trading, and investment banking itself. "Investment banking" as a job title refers specifically to the last of these — the advisory business.

Banks earn an advisory fee (a small percentage of transaction volume — on a $1bn deal, sub-1%, but that's still tens of millions) on two kinds of transaction:

Capital raises

Equity deals: IPOs, follow-on offerings (a public company issuing more shares), convertible bonds
Debt deals: bank debt, high-yield bonds, investment-grade bonds

M&A

Sell-side: banks always prefer this — you're paid when the deal announces and closes
Buy-side: paid only if your client wins; often just a retainer if they don't, since one of several bidders always loses

Structure

Product groups vs. coverage groups

Banks organise their bankers one of two ways — sometimes both at once.

Product groups

One transaction type (e.g. M&A, ECM, DCM) across many industries
Deep expertise in a transaction, broad industry exposure
Drawback: pigeonholed exit options, especially in ECM/DCM. M&A product groups are the exception — exits are wide open

Coverage groups

One industry (e.g. healthcare, TMT), all transaction types
Deep view of an industry's landscape, exposure to varied deal types
Drawback: you won't enjoy every transaction type equally — heavier on presentation and pitch work when a deal doesn't materialise

Goldman Sachs runs almost entirely on coverage groups; JPMorgan keeps a separate M&A product group; elite boutiques like Evercore and Centerview are M&A-only by design. The split is bank-specific — check each one individually.

Why clients pay

Five ways banks add value

Maximise financial outcomes — the right price for equity, the right amount of debt, the highest price on a sale.
Process management — running due diligence, data rooms, and legal coordination that a company can't run on its own expertise.
Understanding market climate — knowing when to launch and when to shelve. An IPO can die in the week markets tank after months of prep.
Connecting companies — senior bankers hold the relationships (Michael Grimes at Morgan Stanley knowing Zuckerberg, Cook) that a $500m company can't get on its own.
Industry & product knowledge — pattern-matching a tricky situation against every similar deal the bank has seen before.

Reason 1, illustrated — competitive tension in a sell-side process

Banks contact buyers the client wouldn't have found or approached alone — bidding blind against each other pushes the price past what a direct sale would achieve, easily clearing the ~1–2% fee.

Where the jobs are

Bank tiers, and the ladder inside one

Tier	Focus	Typical deal size	Examples
Bulge bracket	All products, all industries, global	up to $50–100bn	Goldman Sachs, Morgan Stanley, JPMorgan, BofA
Elite boutique	Mostly M&A, non-capital-intensive	$1bn – 20bn+	Evercore, Centerview, Lazard
Middle market	All products, smaller-revenue clients	$0.5bn – a few bn	Jefferies, Piper Sandler, Raymond James
Boutique	One industry or function, small deals	sub-$500m	varies widely

The hierarchy — five rungs, and what actually changes at each one

Managing Director — reviews pitch books, brings the client relationships that generate the deals; the rainmaker role, worth 80%+ of the value chain.
Director / SVP / Principal — starts forming client relationships directly; barely touches models or decks anymore.
Vice President — present at client meetings, gives direction to analysts and associates, but not yet owning the relationship.
Associate — double-checks the analyst's work cell by cell, builds some pages and models directly.
Analyst — the workhorse; builds the model from scratch, 60–90% of the underlying work.

Value concentrates at the top, where an MD's client relationships are what actually bring deals in the door. ~$175k analyst-to-associate base, rising toward $600k–$1m total comp by VP — figures as stated in the source video (2025); comp varies by bank and moves year to year, so treat as directional, not a quote.

Part II

Accounting

The three statements, how they connect, and the handful of rules that make each one behave the way it does. This is the part your Google Doc already covers in full — kept here as a complete, illustrated reference rather than something to re-read line by line.

Statement 1 of 3 · over a period of time

The income statement

Definition

Reports a company's revenue, costs, expenses and profit or loss over a period of time.

The line-by-line walk a banker expects in an interview — memorise the sequence, not just the words:

Top-line to bottom-line — a $100 revenue base, walked down to net income

Every real income statement collapses to this shape — Apple splits COGS by product vs. services, Coca-Cola keeps one SG&A line, but revenue → COGS → gross profit → OpEx → EBIT → interest & tax → net income never changes.

Three rules for what belongs on it

Must fall 100% within the period. Rent spanning 2025–2027 on a 2025 income statement only shows the 2025 slice.
Must affect the company's taxes (and so net income). Debt repayment and dividends flow straight to the balance sheet — they never touch the income statement.
Must be a revenue, expense, gain, or loss. Gains/losses are non-core: asset sales, lawsuit settlements, FX moves. Never debt repayment, dividends, or CapEx — none of those are gains or losses.

↓ Jump to a full worked income statement

The rule underneath everything

Accrual accounting

Definition

Measures performance based on when things happen, not when cash moves — the single most-tested concept in banking accounting interviews.

Two rules do all the work:

Revenue recognition — two mirror-image examples

Matching principle is the other half: COGS is recorded when the sale happens, not when the inventory was bought — $100k spent on water bottles sits off the income statement until the bottles actually sell.

Statement 2 of 3 · over a period of time

The cash flow statement

Cash is king

Revenue isn't cash. EBIT isn't cash. EBITDA isn't cash. Net income isn't cash. Only cash is cash — and cash generation is the true measure of a company's value (ask BlackBerry).

If you could only keep one statement, it's this one — it reconciles non-cash accounting items (AR, inventory) back to real cash, and captures flows the income statement never sees at all (CapEx, debt raised).

The three sections — and exactly what moves each one

Operating always starts from net income and adjusts for non-cash items and working-capital changes; sum all three sections and you get the net change in cash for the period.

What counts as a non-cash add-back?

Any expense that reduced net income without any actual cash leaving the business gets reversed here. The two you'll see in almost every example in this document are D&A (spreading an asset's cost over its life) and stock-based compensation (paying employees in shares rather than cash) — both covered in full back in the income statement section above.

Real-world cash flow statements usually carry a few more. Impairment / write-downs — marking an asset's recorded value down on paper (say, goodwill from an acquisition that isn't performing), with no cash changing hands. Deferred taxes — the gap between the tax expense shown for accounting purposes and the actual cash tax paid this year, caused by timing differences between tax rules and accounting rules. Unrealized gains or losses — a paper gain on an investment still being held, or an FX translation swing — the same kind of item that sits in AOCI on the balance sheet.

The test is always the one from the income statement rules: did this actually cost, or bring in, real cash this period? If not, it gets added back (or subtracted, for a non-cash gain) here.

↓ Jump to a full worked cash flow statement

Statement 3 of 3 · a snapshot in time

The balance sheet

The golden rule

Assets = Liabilities + Shareholders' Equity

Assets are what a company owns that generates future cash. Liabilities are what it owes. Shareholders' equity is what the owners keep once everything else is paid — it is both a source of funding and a running scorecard of value created.

Current (≤ 1 yr)		Non-current (> 1 yr)
Cash & equivalents, marketable securities, accounts receivable, inventory, prepaid expenses	Assets	Long-term investments, PP&E, intangibles, goodwill, deferred tax assets, equity-method investments
Revolver, current portion of LTD, accounts payable, accrued expenses, deferred revenue	Liabilities	Long-term debt, lease liabilities, deferred tax liabilities, pension liabilities

↓ Jump to a full worked balance sheet

The trickiest section of the balance sheet

Shareholders' equity, line by line

Built from four kinds of line item

Common stock is booked at par value (a nominal figure, e.g. $0.0001/share) and never changes with the market — the cash actually raised above that goes to additional paid-in capital instead.

Expand each line item for what the abbreviation stands for, the plain-language definition, and a quick worked number.

Common Stock at par value

The legal "stated" value of every share issued and outstanding. Par value is a deliberately tiny, arbitrary number — often $0.0001 or $0.01 a share — and it never moves, no matter what the stock actually trades for.

100 shares × $0.01 par = $1 common stock, regardless of what those shares were actually sold for.

APIC Additional Paid-In Capital

Also called surplus capital. The cash shareholders paid above par value when the shares were first issued — effectively "total cash raised, minus the par value sliver." Like common stock, it's frozen at the moment of issuance and doesn't move with the share price afterward.

100 shares sold at $10 each = $1,000 raised. Common stock = $1 (above). APIC = $1,000 − $1 = $999.

Preferred Stock

A separate class of ownership carrying a fixed dividend and priority over common shareholders if the company is liquidated. It gets its own par value and APIC lines when a company has it — most don't. The video's own estimate: roughly 1–5% of companies carry preferred stock at all.

Retained Earnings RE

The single most-tested line item in this whole section, and the direct thread connecting the income statement to the balance sheet: prior retained earnings + net income − dividends. A brand-new company starts at $0.

Year 1: $0 + $100 net income − $0 dividends = $100. Year 2: $100 + $200 net income = $300.

AOCI Accumulated Other Comprehensive Income

A catch-all for gains and losses the company hasn't actually "realized" through a sale yet — unrealized gains or losses on investments still being held, and currency-translation adjustments from converting an overseas subsidiary's books back into the parent's reporting currency.

Say a company holds $500k of bonds it bought at par, and rates move so they're now worth $520k on paper. It hasn't sold them — no cash has changed hands — so that +$20k can't go through net income. It sits in AOCI instead. Same logic if a UK subsidiary's £10m of assets are suddenly worth $12.6m instead of $12.4m purely because GBP/USD moved: the $200k swing lands in AOCI, not the income statement.

Treasury Stock

The cost of shares the company has bought back on the open market but not formally retired. It's a contra-equity account — it always shows up as a negative number, reducing total shareholders' equity.

NCI Non-Controlling Interest

The slice of a majority-owned subsidiary (>50% owned, but not 100%) that belongs to someone else. Own 75% of a company and you still have to consolidate 100% of its financials — the other 25% is isolated here as NCI. It comes back in a bigger way in Part III.

Seeing it in practice

One company, three statements, fully tied together

Synthetic figures — built to teach the connections, not a real filing

Everything above is easier to hold onto against one real-looking set of books. Meet Meridian Systems, Inc., a mid-size software company, FY2025 — every number below was chosen so the three statements actually tie to one another, the way the video keeps insisting they do.

Meridian Systems, Inc.

Income Statement · Year Ended December 31, 2025 · $ in millions

Revenue	1,200
Cost of goods sold	(360)
Gross profit	840
Research & development	(210)
Selling, general & administrative	(290)
Operating income (EBIT)	340
Other expense, net	(10)
Interest expense	(25)
Earnings before tax	305
Income tax (21%)	(64)
Net income	241

→

D&A ($85m) and stock comp ($45m) never get their own line on the income statement — they're mixed invisibly into the COGS, R&D, and SG&A totals above (which do have their own lines). That invisibility is exactly why the cash flow statement below has to pull them back out and add them back separately — it's undoing a cost that never actually cost the business any cash.

Meridian Systems, Inc.

Cash Flow Statement · Year Ended December 31, 2025 · $ in millions

Operating

Net income	241
+ Depreciation & amortization	85
+ Stock-based compensation	45
− Increase in accounts receivable	(25)
− Increase in inventory	(8)
− Increase in prepaid expenses	(5)
+ Increase in accounts payable	12
+ Increase in deferred revenue	18
Cash flow from operations	363

Investing

Purchases of marketable securities	(60)
Proceeds from maturities of securities	40
Capital expenditures	(95)
Cash flow from investing	(115)

Financing

Proceeds from issuance of debt	50
Repayment of debt	(35)
Dividends paid	(60)
Repurchase of common stock	(25)
Cash flow from financing	(70)

Net change in cash	178
Cash, beginning of year (plug: 420 − 178)	242
Cash, end of year	420

→

The full walk, in one line: $241m net income + $130m non-cash add-backs − $8m working-capital moves = $363m cash from operations → −$115m investing → −$70m financing = $178m net change in cash → + $242m already in the bank = $420m. That $420m — not the $241m — is what lands on the Balance Sheet's cash line below. Net income is where this statement starts, not the answer it produces.

Meridian Systems, Inc.

Balance Sheet · As of December 31, 2025 · $ in millions

Assets

Cash & equivalents	420
Marketable securities	150
Accounts receivable	180
Inventory	60
Prepaid expenses	25
Total current assets	835
PP&E, net	310
Goodwill	220
Intangible assets, net	95
Deferred tax assets	15
Total non-current assets	640
Total assets	1,475

Liabilities

Accounts payable	95
Accrued expenses	70
Deferred revenue	110
Current portion of LT debt	40
Total current liabilities	315
Long-term debt	380
Lease liabilities	35
Deferred tax liabilities	20
Total non-current liabilities	435
Total liabilities	750

Shareholders' Equity

Common stock & APIC	340
Retained earnings	405
AOCI	(5)
Treasury stock	(15)
Total shareholders' equity	725
Total liabilities + equity	1,475

→

Retained earnings of $405m = $224m brought forward + $241m net income − $60m dividends paid. Total assets ($1,475m) matches total liabilities + equity ($1,475m) exactly — the golden rule, holding.

Part III

Equity Value & Enterprise Value

Two different answers to "what is this company worth?" — and the foundation every valuation method in Part IV builds on.

The core distinction

The house analogy

A $500,000 house, funded half by down payment, half by mortgage

Selling the house means paying off the mortgage regardless of the price agreed — so the price quoted to a buyer is always the enterprise value, never just the equity slice.

Value to shareholders only

Equity value, properly

Definition

Value to only equity shareholders after all debt and other obligations are satisfied. In theory: market value of total assets − market value of total liabilities = market value of common shareholders' equity.

Three ways to calculate it — but for public companies, only one matters in an interview:

1 · Market value of net assets — theoretical 2 · Share price × diluted share count — public companies, use this 3 · Last funding round valuation — private companies

Worked example — Apple

$213/share × 14.84bn diluted shares = $3.16 trillion — i.e. the market cap.

The video quotes $3.17tn; the inputs as stated multiply to 3.161, so treat the final digit as rounding in the share price or share count, not a different method.

Equity value ≠ shareholders' equity

Shareholders' equity (book value) includes preferred stock and NCI; equity value doesn't. Book value is historical cost — what was actually paid, frozen on the day it happened. Equity value is forward-looking market opinion — what investors believe the company can generate in cash from here.

Worked example — book value vs. equity value

$500m buildings + $200m inventory + $100m patents − $300m debt = $600m book value. The company trades at $1,200m equity value.

Equity value ÷ book value = 2.0× — the market sees roughly double the value the accounting record shows, priced on growth and earning power the balance sheet can't capture.

Who gets paid first

Investor hierarchy

Different capital comes with different liquidation priority — the order investors are paid if a company sells everything and winds down.

$50m in cash, distributed against a $75m debt claim — nothing left for anyone else

Value to every capital provider

Enterprise value

Definition

The value of core business operations to all investors — capital-structure-neutral, and often described as a company's takeover price.

EV = Equity Value + Debt + Preferred Stock + Non-Controlling Interest − Cash

The bridge from equity value to enterprise value — worked example

All figures $m. $1,000 equity value + $100 preferred + $300 debt + $50 NCI − $150 cash = $1,300 enterprise value. Run it in reverse (given EV, solve for equity value) and the signs simply flip.

Reverse worked example

EV $7,000m, preferred $200m, debt $2,000m, NCI $300m, cash $3,000m.

Equity value = 7,000 − 200 − 2,000 − 300 + 3,000 = $7,500m

Non-operating items get stripped out because EV is meant to reflect only core operations: excess cash, marketable securities, minority stakes in unrelated businesses, assets held for sale, excess PP&E not used in operations.

Making multiples apples-to-apples

Non-controlling interest

Own >50% of a company and accounting rules force you to consolidate 100% of its financials into your own — even the sliver you don't own. NCI is how enterprise value accounts for that unowned sliver, so that a multiple like EV/EBITDA compares like with like.

LargeCo owns 80% of SmallCo — building an apples-to-apples EV/EBITDA

EV/EBITDA = 620 / 60 = ~10.3×. Skip the NCI add-back and the numerator would only reflect 80% of SmallCo while the denominator counts 100% of it — the multiple would be quietly wrong.

Part IV

Valuation

The most heavily-tested topic in banking interviews, and the actual day-to-day of the job — comps, precedents, and the discounted cash flow.

Two families of method

Relative vs. intrinsic

Relative

Trading comps — what similar public companies trade at
Transaction comps — what similar companies sold for

Intrinsic

Discounted cash flow — what the business itself can generate
LBO, dividend discount model (the latter mostly for financial institutions)

There's no single correct valuation — only a more or less defensible one. Bankers triangulate across all of these into a football field: a range built from the 52-week trading price, analyst targets, trading comps, transaction comps, and the DCF stacked side by side.

Relative valuation, present tense

Trading comps

Interview answer

A relative valuation methodology comparing financial metrics across a set of similar public companies to determine a target's valuation.

Build the peer set
4–8 companies, similar on business model, industry, geography, size, and financial profile. More than ~15–20 stops helping — you're no longer comparing like with like.
Select, collect, calculate
Pick metrics that fit the company's stage (revenue multiples for growth, EBITDA/P·E for mature), pull the data, calculate the multiples.
Analyse & value
Choose a defensible multiple range from the peer set, apply it to the target's own metric.

Peer-set construction — Netflix, three plausible peer groups

Peer group	Companies	Why they qualify
Streaming	Disney, Comcast, Warner Bros. Discovery, Paramount	Direct streaming competitors, despite very different broader businesses (theme parks, cable)
Traditional media	AMC Networks, Lionsgate, Fox, Sony	Studios producing the same kind of content
Broader tech	Alphabet, Meta, Amazon, Spotify	Netflix is fundamentally a tech company at its core

Excluded deliberately: Apple (streaming is a rounding error of its business), Tesla and Microsoft (unrelated products), Tencent (similar model, wrong geography).

What the actual comps table looks like — streaming peer group

Illustrative — synthetic figures for teaching purposes

Company	Share price	Mkt cap	EV	Rev growth '26E	EBITDA margin	EV/EBITDA	P/E
Disney	$105	$190bn	$235bn	3%	18%	9.2×	19.4×
Comcast	$38	$145bn	$260bn	1%	27%	6.8×	10.2×
Warner Bros. Discovery	$10	$24bn	$55bn	−3%	15%	6.1×	—
Paramount	$12	$9bn	$22bn	0%	11%	7.4×	—
Netflix (target)	$1,150	$495bn	$505bn	9%	30%	15.8×	32.1×

Netflix trades well above every streaming peer on both multiples — the fundamentals rule from earlier holds: higher growth and margins earn a premium multiple. P/E is dashed out for Warner Bros. Discovery and Paramount because their net income is too thin for the multiple to mean anything, exactly as flagged in the multiples section.

Worked example — applying a multiple range

Target's 2026E EBITDA = $100m. Peers trade at 10×–15× 2026E EBITDA.

Low end: 100 × 10 = $1.0bn · High end: 100 × 15 = $1.0bn – $1.5bn range

Relative valuation, past tense

Transaction comps

Interview answer

A relative valuation methodology comparing financial metrics across a set of previously completed M&A transactions similar to the one being analysed.

	Trading comps	Transaction comps
Time horizon	Present / future (NTM)	Historical, at time of deal (LTM / NTM)
Peer criteria	Strict	Looser — smaller universe of deals
Includes a premium?	No	Yes — inflates the multiple
Needs updating?	Constantly	Never, once built
Reliability	Good — same-day market conditions	Weaker — conditions vary deal to deal
Typically yields the	Middle valuation	Highest valuation of the three methods

LTM / NTM, anchored to a deal's announcement date (example: 1 March 2025)

The precedent transactions behind ByteTech Co.'s range, below

Illustrative — synthetic figures for teaching purposes

Acquirer	Target	Announced	EV	LTM EBITDA	NTM EBITDA	Premium
Argon Capital	Fleetbase	Aug 2022	$1,850m	16.0×	12.5×	28%
Vantage Holdings	Ridgeline SaaS	Nov 2022	$980m	14.2×	11.0×	24%
Union Point Partners	Metric Works	May 2023	$1,410m	11.5×	9.2×	21%
TechSphere	CloudNova	Mar 2024	$3,600m	12.0×	9.5×	32%
Solera Group	Northlight	Jan 2024	$2,240m	10.0×	8.0×	19%

Five deals spanning 2022–2024 — exactly the 10.0×–16.0× LTM and 8.0×–12.5× NTM range applied to ByteTech Co. below. Premiums cluster 19–32%, consistent with the 10–30% rule of thumb.

Acquisition premium

Definition

The % difference between the offer price per share and the target's unaffected share price — the incentive to give up control, remove execution risk, and beat other bidders. Typical range: 10–30%, with 30% a safe answer if asked for one number.

Real example — Palo Alto Networks' $25bn acquisition of CyberArk, July 2025

$383 → $434 almost overnight — the jump on the 29th, a day before the formal announcement, is the market pricing in a leak. $25bn total deal value included a 26% premium to CyberArk's unaffected 10-day volume-weighted average price.

Worked example — ByteTech Co. (the source video's own illustrative figures)

Trades today at 9.5× LTM EBITDA / 8× NTM EBITDA. Five precedent deals in the sector closed at 10×–16× LTM and 8×–12.5× NTM (premium-inflated, so naturally above where ByteTech trades unowned).

LTM: $200m × [10×–16×] = $2.0bn – $3.2bn EV
NTM: $225m × [8×–12.5×] = $1.8bn – $2.8bn EV

Intrinsic valuation

The discounted cash flow

Time value of money

A dollar today is worth more than a dollar tomorrow — you could invest it and earn a return in the meantime.

Worked example — your rich uncle's offer

Option A: $100k in one year + $100k in two years. Option B: $180k today. Assume a reliable 10% annual return.

PV(yr 1) = 100,000 / 1.10 = $90,909
PV(yr 2) = 100,000 / 1.10² = $82,645
Total PV of Option A = $173,554 — less than the $180,000 on the table today. Take Option B.

Interview answer — what is a DCF?

An intrinsic valuation methodology based on a company's future free cash flows. Project cash flow 5–10 years, calculate terminal value (exit multiple or perpetuity growth), discount both back at the WACC to reach enterprise value.

Five steps, in order

Step 1 — unlevered free cash flow

UFCF = EBIT × (1 − tax rate) + D&A − CapEx − Δ Net Working Capital

Available to all investors, debt and equity alike — which is why it starts from EBIT (before interest) rather than net income. Explicit forecast period: 5 years for mature, stable companies; 10 for early-growth; 15–25 for long-ramp industries like biotech, where negative cash flow can run for years before a drug approval flips the switch. The governing rule: forecast as far as the assumptions stay defensible, then hand the rest to terminal value.

Step 2 — WACC

WACC = (%Equity × Cost of Equity) + (%Debt × Cost of Debt × (1 − tax rate))

Worked example — 80% equity / 20% debt, 20% tax rate

Step 3 — terminal value

Perpetuity growth

TV = FCF × (1+g) / (WACC − g)

Grounded in economic theory
g typically 2–3% — a company can't outgrow the economy forever
Very sensitive to small changes in g or WACC

Exit multiple

TV = Final-year EBITDA × exit multiple

Simple — it's just a comps analysis
Anchored to real market data
Reintroduces market noise into an otherwise intrinsic model

Worked example — exit multiple

Year-5 EBITDA $200m × 8× exit multiple = $1.6bn terminal value

Steps 4–5 — discount, then bridge to share price

From enterprise value to an implied share price

Compare the $8 implied price against the current market price — trading above it signals overvalued against these assumptions; trading below signals a buying case, assuming the model's inputs hold up.

For a private company there's no market share price to compare against — the DCF simply stops at enterprise value or equity value.

Part V

Practice

Drills, sorting exercises and full worked cases, each marked the moment you answer rather than at the end. Nothing is recorded — reset any drill and run it again. Distractors are built from the mistakes people actually make, so expect to have to reason or calculate rather than spot the odd one out. Recruiting fundamentals are deliberately excluded; everything here is technical.

Quiz · Part II material

Accounting drills

Drag & drop

Sort the line items

The fastest way to stop second-guessing where something belongs. Drag an item into a bucket — or tap the item, then tap the bucket. It turns green or red the instant it lands, and you can move it again until it's right.

Quiz · Part III material

Equity & enterprise value drills

Quiz · Part IV material

Valuation drills

Quiz · everything

Mixed drills

Full worked cases

Build it yourself, start to finish

Four synthetic companies with the raw data laid out in front of you, including items that don't belong where you might first put them. Work down the steps in order — each one checks itself, and you can reveal any answer if you get stuck.

See the real thing

Every worked number in this document is synthetic, built so the connections come out clean. These aren't — live, real statements for three companies referenced throughout, both the official filing and a cleanly reformatted view of all three statements.

Apple

NASDAQ: AAPL

Coca-Cola

NYSE: KO

Netflix

NASDAQ: NFLX

Industry Fundamentals

Four divisions, two transaction types

Capital raises

M&A

Product groups vs. coverage groups

Product groups

Coverage groups

Five ways banks add value

Bank tiers, and the ladder inside one

Accounting

The income statement

Three rules for what belongs on it

Accrual accounting

The cash flow statement

The balance sheet

Shareholders' equity, line by line

One company, three statements, fully tied together

Picking up here

Equity Value & Enterprise Value

The house analogy

Equity value, properly

Investor hierarchy

Enterprise value

Non-controlling interest

Valuation

Relative vs. intrinsic

Relative

Intrinsic

Trading comps

Build the peer set

Select, collect, calculate

Analyse & value

Transaction comps

Acquisition premium

The discounted cash flow

Step 1 — unlevered free cash flow

Step 2 — WACC

Step 3 — terminal value

Perpetuity growth

Exit multiple

Steps 4–5 — discount, then bridge to share price

Practice

Accounting drills

Sort the line items

Equity & enterprise value drills

Valuation drills

Mixed drills

Build it yourself, start to finish

See the real thing

Apple

Coca-Cola

Netflix