Chapter 18
Trying Your Hand at Investment Banking with a Case Study
IN THIS CHAPTER
Understanding why firms buy versus build
Seeing how firms can afford to pay a premium over market value
Discovering how goodwill is created on the balance sheet
Finding out how pro forma financial statements are constructed
Seeing how deals are constructed
Congratulations! You’re an investment banker. Well, at least you will be one in this chapter. After you read this chapter, you’ll know how to piece together the complex framework of a merger or acquisition deal. You’ll need to use your cunning, and things you’ve discovered in other chapters, to forge a mishmash of financial data into a cogent plan for a company looking to buy another one.
Investment bankers advise companies on ways to increase their value and ultimately the value of stock held by the owners of the firm. There are many different ways that companies can transform themselves and add value for stockholders. One of the most popular methods ...
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