Wall Street Wedensdays with Josh Persky
A Happy Ending Holiday Story
My happy ending holiday story is making the rounds on TV, radio and on-line. Yesterday, Cyrus Sanati of the NY Times put my story in the DealBook/Business section.
Today, my supervisor, Elliot Ogulnick, ASA, CPA, ABV, CVA, and I appeard on MSNBC, interviewed live by John Harwood and Tamron Hall.
It's hard to believe that five months have passed since I was pounding the pavement with my sign board - and all that's been happening!
Part 2. VALUATION TERMINOLOGY:
My happy ending holiday story is making the rounds on TV, radio and on-line. Yesterday, Cyrus Sanati of the NY Times put my story in the DealBook/Business section.
Today, my supervisor, Elliot Ogulnick, ASA, CPA, ABV, CVA, and I appeard on MSNBC, interviewed live by John Harwood and Tamron Hall.
It's hard to believe that five months have passed since I was pounding the pavement with my sign board - and all that's been happening!
Part 2. VALUATION TERMINOLOGY:
EBITDA is a company’s earnings excluding interest expense, taxes, depreciation and amortization (accrual based accounting measure)
- EBITDA is used by finance professionals when analyzing a company’s financial performance and determining its value
– The amount of cash a company generates from its operating activities
– Companies that generate more EBITDA can support higher interest payments and thus more debt
Free cash represents the amount of cash that is available to repay debt holders, distribute to shareholders as a dividend, or accumulate as cash on the balance sheet (after providing for on-going business operations) - “Funds the business does not need to support its operations and growth plan.”
To get to free cash flow, we must subtract the following from EBITDA:
- Capital Expenditures (Capex): Purchases of assets (e.g., buildings, computers, machinery) to support the operations of a business
- Change in Working Capital: The change in cash a business requires for day-to-day operations (e.g., the amount of cash needed to maintain adequate inventories, support investment in accounts receivable)
- Interest Expense: Expense for interest on a company’s debt
- Taxes: State and federal income taxes owed by a company
- EBITDA is used by finance professionals when analyzing a company’s financial performance and determining its value
– The amount of cash a company generates from its operating activities
– Companies that generate more EBITDA can support higher interest payments and thus more debt
Free cash represents the amount of cash that is available to repay debt holders, distribute to shareholders as a dividend, or accumulate as cash on the balance sheet (after providing for on-going business operations) - “Funds the business does not need to support its operations and growth plan.”
To get to free cash flow, we must subtract the following from EBITDA:
- Capital Expenditures (Capex): Purchases of assets (e.g., buildings, computers, machinery) to support the operations of a business
- Change in Working Capital: The change in cash a business requires for day-to-day operations (e.g., the amount of cash needed to maintain adequate inventories, support investment in accounts receivable)
- Interest Expense: Expense for interest on a company’s debt
- Taxes: State and federal income taxes owed by a company
Investment Banker For Hire: The Oracle of New York
You may have seen the investment banker Josh Persky on one of the tens...maybe hundreds of news pieces done about him...as the MIT grad hits Wall Street handing out his resume looking for work...wearing a sign saying "Experienced MIT Grad for Hire" hanging over his suit jacket. We believe his story itself is kind of an economic barometer, and certainly one that can reflect on the trajectory of thousands of out of work bankers in New York City. So we will present, once a week, the "Oracle of New York, " from Josh's blog, which is syndicated here by permission, and which can be seen daily at www.oracleofny.com
Here is the first installment.
Goldman Sachs, GE and the Oracle of Omaha
By Josh Persky (Currently in Omaha.)
The Oracle of Omaha (Warren Buffet) has added Goldman Sachs and GE to his trophy room, the Bailout Bill has passed the Senate, and I had a productive interview in Omaha. Is the worst of the storm passing?
I received the following email from a fellow MIT alumni:
I went to M.I.T.back in the '70s and am in a similar pickle: out of work. (I haven't tried your approach, but I am thinking about it.) Anyway, I thought I'd let you know (if you don't know already) that your picture with the sandwich board appeared in a Chinese newspaper, dated September 7. I'll be happy to send you the tear sheet, if you don't already have it. _Good luck on your job search. My heart goes out to you. I lost my position (as a speechwriter) last January....I am older than you and am having a very hard time.... _Best wishes ( out of work MIT grad)
For an upcoming interview, I was asked to provide the typical steps used to produce a valuation of a bank loan to a private company: 1. Gather and review financial and legal documentation. 2. Note key loan parameters, such as: interest rate, maturity date, type of loan (bullet or amortizing), first or second lien, financial covenants, up-front and other fees, pre-payment penalty. 3.. Note key financial performance parameters: EBITDA, income, margins, cash flow, balance sheet (historic, current, projected). 4. Analyze key financial ratios: leverage, interest coverage, loan to value. 5. Perform synthetic credit rating on company and DCF analysis on loan. 6.. Compare company to publicly traded similar companies. 7. Compare loan to publicly traded similar debt instruments. 8. If the company is distressed, determine the value of its assets. If the company is in bankruptcy, determine probability and timing of recoveries.
Four Fashion Headlines: March 4, 2008
Kors Names Wilmotte to European Post
Michael Kors said Monday that it has hired Cedric Wilmotte for the newly created post of senior vice president of European operations.
Arnold Orlick Out at Fortunoff Fortunoff, which is being purchased by NRDC Equity Partners, has ousted chief executive officer Arnold Orlick, sources said Monday.
Bon-Ton Taps Alfaro for Private Label Designer Victor Alfaro is getting back into fashion by teaming with The Bon-Ton Stores Inc., the York, Pa.-based department store chain, on a major private label program, according to sources.
Von Furstenberg, Nonprofit Launch 'Women Can' In recognition of the upcoming International Women's Day, Diane von Furstenberg on Monday helped the nonprofit Vital Voices Global Partnership kick off its "Women Can" campaign, an international effort by business leaders to inspire female leaders in developing countries.
Also in the News Azature, Branch, Chulo Pony, MYNK Cosa Nostra By Jeffery Sebelia, Eubiq NY, Joline Jolink, Kosmetique Label, Marcelll Toshi Creazoni, Marlova, Richard Ruiz. Roundree& Richardson, Matsu, Nela, Julie Haus, Kooba, KAra Janx, Gustto Denim AND Richie From Totally Cool Magazine.
