There are multiple methods investment bankers and other financial analysts use to value a company. One frequently employed relative value method is comparable company analysis. Comparable company analysis is especially useful when valuing the minority, non-controlling interest of a company.

Comparable company analysis is rooted in the idea that companies with similar characteristics should have similar valuation multiples. Typically, a group of comparable companies includes companies from the same industry as the company being valued and companies with similar fundamentals.

Financial statements report the basic shares outstanding. However, when attempting to value a company’s market value of equity, fully diluted shares outstanding is used instead of the basic shares outstanding number. Fully diluted shares outstanding provides a better representation of how the market is implicitly valuing the company. Basic shares outstanding are the total shares that a company issued and are outstanding. This number is directly reported on the financial statements.

Damn, it Feels Good to Be a Banker is a satirical account of life as an investment banking analyst in New York at a top tier bulge bracket investment bank. The book is written by Leveraged Sell-Out, the author of the Leveraged Sell-Out blog. One disappointment is that Leveraged Sell-Out was not actually a banker, but rather a strategy consultant that lived with many banking analysts. Still based on my buy-side experience and the stories my banking friends have told me this book contains many underlying truths.

In finance, investing, and business in general, valuation is a key skill. Markets set prices, but applying an accurate valuation to assets being priced in that market can provide insight into how accurate that market pricing is. However, all valuations are biased and based on many assumptions. Therefore, valuation is less of a precise method to determine the “correct” price, but rather more of an art that is a useful tool for evaluating an asset. Valuation models can be very quantitative and complex, but more quantitative models are not always better. Frequently, the …

Jamie Dimon is the CEO of JPMorgan Chase, one of the few investment banks that has performed relatively well during the credit crunch. Below is a recent Dimon interview by Charlie Rose that focuses on the key current economic events.

(Part two of the Dimon interview begins at about 43:50)

Dimon states that he is not able to pick a bottom in this market. Many times guests on financial news shows like CNBC claim they can pick a bottom, but a common thread among great investors and financial leaders is …

Private equity firms have increasingly funded buyouts without using investment banks, but investment banks still add value to the private equity industry.