expert
Expert with best answer

Vlad

97% Recommendation Rate

365 Meetings

5,409 Q&A Upvotes

USD 229 / Coaching

Evaluate Aramco’s valuation and IPO share in the case interview setting

JW asked on Nov 03, 2019 - 2 answers
Ex-Mck trainee (Oxford PhD), interviewing with MBB, done 60+ cases!

Dear Prep lounge community,

I am preparing for my upcoming Mck interview as an APD, and saw this big news announced, Aramco’s IPO, with these two questions popped.

1. What factors to consider for Aramco’s valuation?

2. How much percentage of shares should Aramco release for IPO?

So I really like to learn how would experienced consultants approach these two questions in a case interview setting situation.

In my understanding, the valuation processes can be (1) DCF analysis, (2) comparable company analysis, and (3) precedent transactions. However, which one is more feasible and appropriate to use in the case interview setting? And what are the factors we should consider?

As for Aramco’s share release for IPO, I can think of the following factors to consider:

(1) Financial factors

  • Capital raise
  • Lower cost of capital (equity & debt)
  • Share value

(2) Non-financial factors

  • Number of board members
  • Company governance
  • Regulation

But I really love to listen to your ideas and learn from you! Thank you!

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Vlad
Expert
replied on Nov 04, 2019
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
Book a coaching with Vlad

97% Recommendation Rate

365 Meetings

5,409 Q&A Upvotes

USD 229 / Coaching

Hi,

You will never have such a case at MBB interviews since it's too financial. Thus it's irrelevant.

Max what you can have is doing some simple DCF valuation on paper using company's profits and some discount rate

Best

Thank you Vlad! — Anonymous A on Nov 05, 2019

Alessandro
Expert
replied on Nov 04, 2019
Bain & Company | University of Cambridge | CV/Resume writing | 770 GMAT
Book a coaching with Alessandro

100% Recommendation Rate

66 Meetings

813 Q&A Upvotes

USD 149 / Coaching

Agree with Vlad - this sort of question would never come up in a Consulting interview, so I would really not worry about it.

Thank you Alessandro! — Anonymous on Nov 05, 2019

Related BootCamp article(s)

Cost-Benefit Analysis

Investments or single business cases need to be evaluated based on a certain set of criteria. Since financial performance is the key criterion in most cases you need to have an idea about future financial impacts. A key tool to asses this impact is the cost-benefit analysis which is used to determine the net effect of potential revenues and costs.

1 Q&A

Valuation

Valuation case studies require you to estimate how much a firm, patent, or service is worth. For these cases, use the Discounted Cash Flow method or the Industry multiple method.

Interviewer-Led vs Candidate-Led cases

Case Interviews can be led by the candidate or by the interviewer: In Candidate-led cases the main challenge is the structure. In Interviewer-led cases the main challenge is to adapt quickly

Opportunity Costs

Opportunity costs are an economic concept to quantify benefits of (discarded) alternatives. They measure the lost benefits that occur if you choose the best alternative instead of the second best one.

Quiz

Related case(s)

McKinsey Questions

Solved 33.2k times
4.5 5 835
| Rating: (4.5 / 5.0) |
Difficulty: Intermediate | Style: Fit interview | Topics: Personal fit

Tell me of a situation where you had an opinion and no one seemed to agree with you. What was your goal when you decided to join university / work / clubs / a sports team? Did you have a goal that you were not able to reach? What did you do? What do you want to be remembered for and how are you a ... Open whole case

BCG Questions

Solved 22.9k times
4.5 5 201
| Rating: (4.5 / 5.0) |
Difficulty: Intermediate | Style: Fit interview | Topics: Personal fit

What arouses your interest when you are working / studying / doing another activity (from the CV)? Tell me of a time where you had no idea what you were doing. When did you use an uncommon approach to do something? Have you ever had responsibility for other people? Tell me of a situation where y ... Open whole case

Gravestone Inc.

Solved 11.9k times
4.4 5 421
| Rating: (4.4 / 5.0) |

Your client, Gravestone Inc., is a mason producing gravestones situated in Switzerland. He is producing high-quality, hand-crafted gravestones with very skilled labour-force. In the recent past a technology was developed that would allow him to produce his gravestones with much less labour. He is ... Open whole case

Water flows

Solved 4.2k times
3.5 5 66
| Rating: (3.5 / 5.0)

We are a German owned water provider company based in the south west of the United States. As the biggest water provider in the region we serve the majority of the south west region. We measure our performance using the Economic Value Add (EVA) valuation technique. We are currently at a negative EV ... Open whole case