Be Useful: The Only Way to Improve Employability (Job Security)

This weekend, a friend of mine asked me to help him compose an M&A model. As you can tell from the posts, this weekend was particularly busy. However, this friend has been incredibly helpful before. I told him I'd meet up with him tonight so that we could go over the financial statements of the two companies who he was proposing to merge. Personally, I think the fact that he asked me to help was a huge compliment as this person is exceptionally talented and has been inspirational in terms of pushing me to achieve my best.

We went over the financial statements of the two companies and discovered there was a lot of "interesting" (chaotic) things going on in their respective annual reports and financial statements. Because of the unique nature of their businesses, they had complex derivatives structures which would allow them to hedge bets against strategic changes in the market which would adversely affect them. However, this meant that they had "interesting" cash flow statements which required a great deal of scrutiny. This was added, of course, to the natural challenge of building a model to merge two separate companies and creating a new capital structure, modeling their future performance, and determining earnings dilution (accretion).

In the course of this exercise (which took just over an hour), he also taught me about private equity and how some of the management fee structures work, how they are levied, how they offset the management fees of funds (theoretically) as well as reviewing how financial engineering works to gain returns through offsetting leverage applied with cash flow (EBITDA) coming in.

Having said that, I'm looking forward to putting together my finance prep team. I anticipate that we will probably meet sometime next week after the RFA recruitment primer scheduled for Friday. I'll probably be sending out an email to interested parties sometime tonight or early tomorrow (after my Econ quiz).