IB400 - fit-ish questions Flashcards
1 If you had $10 million to invest in anything what would you do with it?
ask investor’s goals first. Big capital gains over 30-40 years? (then well-diversified portfolio) Tax-free retirement income? (municipal bonds) What types of assets interest them?
If you owned a small business and were approached by a larger company about an acquisition, how would you think about the offer, and how would you make a decision on what to do?
key terms:
- price
- form of pmt. - cash, stock or debt
- future plans for company vs. your own plans
–important things to you - maybe retaining a role in the company
- Let’s say you could start any type of business you wanted, and you had $1 million in initial funds. What would you do?
You’ll want to ask follow-up questions to see if the interviewer is looking for something more specific, because this one is wide open.
–It’s better to focus on a niche market because most broad, horizontal markets are already dominated by major companies (Microsoft, Goldman Sachs, Exxon Mobil, etc.).
You should also explain your reasoning on why this type of business would be attractive and how it could grow with minimal future investment.
–niche market with high margins that req. little startup capital
sorbing!!! OPEN market in US. - low cost to startup
- –easily marketable - constant market always on the search for new innovations and discoveries
- -once people are hooked, they are hooked with food - loyal customers
- Can you talk about a company you admire and what makes them attractive to you?
Do not say something commonly known. Saying Google or Apple, for example, would be bad.
Instead, go more obscure and pick a company no one knows so that they can tell you’ve done your research and so that they’re less likely to ask probing questions.
emphasize qualities that investors would find appealing, such as a great and well-diversified customer base, a unique competitive advantage in the market or a high-margin business model.
- Let’s assume you are going to start a laundry machine business. How would you analyze whether it’s viable?
profitable? - LOCATION - estimate how many customers you would get, how much pay - find MONTHLY then ANN. revenue
- -cost - purchase building and machines - need a loan $500K
- -labor to maintain machines
- -good location - big city
- Tell me about an M&A deal that interested you recently.
You want to say who the buyer and seller were – and include background information if they are not household names – as well as the price and the MULTIPLES - (Purchase Price / Revenue, Purchase Price / EBITDA)
- Do you agree with the $700 billion bank bailout?
yes - look up reason
- What’s your personal Beta?
measured by CAPM - measures expected return and expected risk - higher beta = higher potential return, but also more risk
say above 1.0 - but not too much…more ambitious then ave. person…like to try new things which brings risk…but now so reckless you are careless - not too spontaneous
QUANTIFY YOUR VALUE - Solamere
what was the EBITDA of company? - annual growth rate
