Musings on Markets

JANUARY 5, 2024

In my corporate finance class, I describe all decisions that companies make as falling into one of three buckets – investing decisions, financing decision and dividend decisions. Financing Flows 5. EBIT & EBITDA multiple s 5. Dividend yield & payout 3. Default Spreads 3. Margins & ROC 3. Tax rates 4.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Brian DeChesare

SEPTEMBER 13, 2023

Its financial profile now looks like this: Its Debt / EBITDA is now 10x, its EBITDA / Interest has fallen below 1x, the Secured Debt is trading at 90% of its face value, and the Unsecured Debt is down to 60%. A few years later, the company’s industry declined, and it was slow to cut costs and enter new markets.

Equity 103

Equity Banking EBITDA Start-ups 103

Musings on Markets

MARCH 8, 2023

This is the last of my data update posts for 2023, and in this one, I will focus on dividends and buybacks, perhaps the most most misunderstood and misplayed element of corporate finance. Of course, just as there are companies that choose other dysfunctional corporate finance choices.

Dividends 102

Dividends Start-ups Finance Corporate Finance 102

Musings on Markets

JANUARY 31, 2024

In fact, that objective of value maximization drives every aspect of the business, as can be seen in this big picture perspective in corporate finance: For some companies, especially mature ones, value and profit maximization may converge, but for most, they will not.

Equity 80

Equity Book Value Start-ups Corporate Finance 80

Musings on Markets

FEBRUARY 27, 2023

One simplistic proxy for this cash generating capacity is EBITDA as a percent of enterprise value (EV), with higher (lower) values indicating greater (lesser) cash flow generating capacity. Debt to EBITDA, Interest Coverage Ratios If debt to capital is not a good measure for judging over or under leverage, what is?

Equity 52

Equity EBITDA Start-ups Net Debt 52

Equilest

NOVEMBER 25, 2024

Let’s dive in! Introduction Leveraged Buyouts (LBOs) are some of the most intriguing yet complex mechanisms in corporate finance. Start by evaluating profitability metrics such as EBITDA, operating margins, and net income. Start by projecting the target company’s income statement, including revenue, costs, and EBITDA.

Private Equity Firm 40

Private Equity Firm EBITDA Debt Financing Equity 40

Brian DeChesare

DECEMBER 21, 2022

And in fields like corporate finance , much of the recruiting happens at schools that are “semi-targets” for investment banking, such as ones in the #30 – #50 range in the U.S. But the problem is that revenue will also fall if advertisers flee, so even if the company’s margins improve, cash flow, EBITDA, etc.,

Banking 97

Banking Start-ups Finance EBITDA 97

Brian DeChesare

AUGUST 10, 2022

If Midstream companies want to grow beyond the fee increases written into their contracts and possible volume growth, they need to spend on Growth CapEx and estimate the incremental EBITDA from that spending: Further adding to the complexity is the GP (General Partner) / LP (Limited Partner) structure used at most MLPs.

Banking 98

Banking EBITDA Dividends Equity 98

Brian DeChesare

APRIL 13, 2022

That gets you thinking about materials companies that might benefit from this trend, so you research the sector and run a screen looking for companies with FCF yields >= 10%, revenue growth >= 10%, and TEV / EBITDA multiples <= 15x.

Equity 98

Equity Start-ups Banking Marketability 98

Brian DeChesare

MARCH 8, 2023

The fundamentals do not relate to EBITDA , Free Cash Flow , or valuation multiples but to factors like the weather, human behavior, geopolitics, and supply and demand. You think about these issues and commodity-specific factors, such as pipeline/plant capacity, outages, and new drilling activity for oil, to predict how prices might change.

Finance 119

Finance Start-ups Banking Alpha 119

Musings on Markets

FEBRUARY 27, 2022

When profits are scaled to revenues, you get margins, and as with absolute earnings, margins come in various forms, as can be seen below: In addition to margins based upon income measures (gross, operating, after-tax operating and net), there are other margin variations, with EBITDA and after-tax operating margins coming into play.

Start-ups 98

Start-ups Equity Book Value Marketability 98

Global Finance

JUNE 4, 2024

And in that short time, it’s imperative to focus on value creation and EBITDA. Shareholder value creation was the overriding thesis, but the journey to getting there was going to be impossible for them with their current balance sheet and financial structure. That is almost always the guiding north star.

Private Equity Firm 59

Private Equity Firm Start-ups Finance Equity 59

Musings on Markets

NOVEMBER 10, 2022

Accounting 101 I am not an accountant, and have no desire to be one, but I have used their output (accounting statements) as raw material in valuation and corporate finance. billion, which results in an adjusted PE ratio of about 6.

Finance 96

Finance Start-ups Equity Equity Financing 96

Brian DeChesare

JUNE 1, 2022

It is 100% possible to use standard valuation multiples, such as P / E and TEV / EBITDA , to value power/utility companies, and you’ll see many examples in the Fairness Opinions below. Books: Fisher Investments on Utilities , Principles of Utility Corporate Finance , and a metric ton of books on renewables.

Banking 98

Banking Equity Book Value Capital Structure 98

Brian DeChesare

SEPTEMBER 11, 2024

Finally, many renewable energy debt deals take place within Project Finance teams at banks – but Project Finance and corporate finance are very different ! If you look at the presentations and valuations below, you will still see standard valuation multiples like TEV / Revenue, TEV / EBITDA, and P / E.

Banking 59

Banking Finance Start-ups Equity 59

Musings on Markets

JANUARY 28, 2024

In particular, there are wide variations in how risk is measured, and once measured, across companies and countries, and those variations can lead to differences in expected returns and hurdle rates, central to both corporate finance and investing judgments.

Risk Premium 117

Risk Premium Beta Start-ups Equity 117

Valutico

AUGUST 17, 2022

We’re particularly happy that this represents a significant increase in our offering for Venture Capital and Corporate Finance firms across the 70 countries Valutico is already being used in. CEO of Valutico, Paul Resch stated: “We’re extremely excited to announce the new VC method as part of Valutico’s ever-expanding toolbox.

Start-ups 52

Start-ups EBIT Weighted Average Cost of Capital Discounted Cash Flow 52

Valutico

NOVEMBER 7, 2023

Users can also delve into in-depth deal specifics, like stake purchases, deal amounts, and crucial multiples such as EV/Sales, EV/EBITDA, EV/EBIT and P/E. Detailed information on deals, buyer profiles, and industry medians can also be found within the system, making it an impressive and full-bodied tool for finance professionals.

Marketability 52

Marketability Finance EBIT Business Valuation 52

Musings on Markets

JANUARY 10, 2025

In corporate finance and investing, which are areas that I work in, I find myself doing double takes as I listen to politicians, market experts and economists making statements about company and market behavior that are fairy tales, and data is often my weapon for discerning the truth. Financing Flows 5. Book Value Multiples 3.

Risk Premium 115

Risk Premium Dividends Start-ups Corporate Finance 115

Musings on Markets

FEBRUARY 12, 2025

I am in the third week of the corporate finance class that I teach at NYU Stern, and my students have been lulled into a false sense of complacency about what's coming, since I have not used a single metric or number in my class yet. The EBITDA margin is an intermediate stop, and it serves two purposes.

Equity 72

Equity Start-ups Banking EBITDA 72

Musings on Markets

JULY 24, 2024

Country Risk in Business Most corporate finance classes and textbooks leave students with the proposition that the right hurdle rate to use in assessing business investments is the cost of capital, but create a host of confusion about what exactly that cost of capital measures.

Risk Premium 75

Risk Premium Equity Start-ups EBITDA 75