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A fantastic, comprehensive, well written book on investment banking that explains in details the methodologies that are used on Wall Street. I was amazed how detailed and organized this book was. I have not found any other book that has been as practical and relevant to the real world. I continually use their Excel files to perform my own analysis which adds much more value to this book. Highly recommended.
While overall this might be a half decent book, the publishers clearly mislead buyers. The book states that all the Excel templates are available on their website. This would be highly useful and time-saving as people want to learn modelling, not Excel. Unfortunately after buying the book, I discovered the files are in fact NOT available. I have contacted the publisher several times over the past few months and they can't seem to bother to even reply. Very disappointing.
Update: the files are now available.
I still recommend looking at alternative books which can be more balanced between theory and execution.
Any PE, VC or M&A student will find this invaluable - if not only for the models and step-by-step instructions, then for the ease with which it is readable and understandable... Great examples too. Dont hesitate, buy it.
This book helps to get a rough understanding of multiples, LBO and M&A. Yet, the book is very qualitative and definitely lacks the detail and technical side which one expect from two investment banking professionals. For example I expected that the book would surely walk you through a LBO valuation from a bank or financial sponsor side (APV, irr, debt calculations - not just screenshots from their excel sheets), especially since Joshua Pearl works in the Leveraged Finance Group of Deutsche Bank, where this is his daily business. Furthermore a chapter on restructuring would have been interesting as well.
I believe this book is very good for beginners and intermediaries, but still has a lot of potential for improvement to also become more interesting for advanced practitioners. A little expansion with details, more valution aspects and a chapter about restructuring, and this book gets another star.
Working in the financial markets, I felt it necessary to learn about the process and mechanics of modelling so that I would be comfortable in digging through those models developed by Analysts to better form my own opinions on particular stocks of interest.
I do have some academic Accounting experience (several modules as part of an undergrad in Economics) but feel that previous accounting knowledge is not a pre-requisite to begin modelling; as long as one acknowledges their early attempts will likely have little practical value as the 'art' side of accounting (and part where experience is vital) is really where the skill/ value of an analyst comes in.
Having worked through the book, and since that done some of my own modelling, it has proved to be an excellent introduction to this little known to outsiders skill-set. The chapters are well thought out, with references throughout the book and the authors' reasoning is nearly always clearly communicated.
That being said, my first model (a DCF) was still very tough. It required trawling through book, constantly scribbling questions down, using the Excel spreadsheet ("Add comment" quickly became my favourite function within Excel for both my reasoning of the value, the source [as the book says to do] but also for my myriad of questions of how to find the fig., work it out etc. etc.) Even with this handbook it took many hours. However, after a few weeks I finished up with a sensible Equity Valuation of my co.
I should add that I am lucky to have a couple of friends who are analysts, and were a great help on those questions that really stumped me. Without them the process would have been significantly tougher as for all the uses of the internet, very specific accounting questions are still hard to get valuable answers to.
Could the book have had even more detail/ depth? I guess so, but that would defy the point of it being an Introduction, and could easily have meant it was fleshed out to a 700 page behemoth. Add to that the fact each person will always have their own questions as getting to grips with modelling/ learning in general is such a personal process.
I would add that the book is aimed at valuing both listed co.'s and private co.'s. For my needs, I will be modelling listed co.'s and comparing to the street's consensus so many of the steps are actually unecessary as there's more information available - whether that be other analysts research, co.'s IR, Annual Reports etc. so developing these models doesn't have to be quite as painful a process as it first seems.
Lastly, the template spreadsheets are a huge help in getting one started. While you're final piece probably won't look exactly like the author's/ you may have to alter some of the functions/ draw values from different parts of the Income Statement (as the co. may focus on different Earnings values such as EBITDA or NPAT etc.) it was a crucial part of seeing how analysts build their models in practice and made something that may have been overwhelming feel bite-size.
All in, an extremely valuable read and reference book moving forward. It alone won't make you a modelling maestro, but if you use this in conjunction with a mentor or two whom you can turn to where you have specific questions, it will be a hugely valuable and rewarding experience.
The content is presented well and covers the areas in detail while maintaining a good flow.
I needed this to help with a potential transfer from the sales and trading side of IB to M&A/Lev Fin and hopefully to PE. The feedback I have received so far from practitioners is good and my preparation has centered mainly on this book. I therefore see it as a good buy for someone with no experience in the specific area; however, I can also see myself continuing to use it as a helpful reference point if I make the move and progress in the industry.