Oct 08, 2026 by Offer

Lazard "Walk Me Through a DCF" 2027: Step-by-Step Guide

To walk through a DCF at Lazard, sequence the steps: project free cash flows, determine the discount rate, calculate terminal value, and bridge to equity value. This technical question is commonly reported by candidates. Interviewers want ordered logic and assumption-awareness — explain it as you would to a colleague, naming what drives each step.

What Your Lazard Walk Me Through DCF Must Prove

This is the fundamental valuation screen: do you understand the model or just the acronym? The interviewer listens for correct sequencing, knowledge of key assumptions (growth, margins, WACC, terminal value), and the maturity to stress sensitivity and cross-checks. A clear walkthrough with caveats beats a rushed recitation.

How to Build a Strong Lazard Walk Me Through DCF

Step 1 — project unlevered free cash flow for 5–10 years: revenue growth, margins, taxes, capex, and working capital changes — state the key assumptions.
Step 2 — determine WACC: the blended cost of equity (CAPM) and after-tax cost of debt, weighted by target capital structure.
Step 3 — terminal value: either perpetuity growth on final-year cash flow or an exit multiple — note this often drives most of the value.
Step 4 — discount everything to present value, sum to enterprise value, then bridge to equity value via net debt. Close with sensitivity: which assumptions move the answer most, and that you would triangulate with comps.

Example line: "I would project free cash flow for five years, discount at WACC, and add a terminal value — flagging that the terminal assumptions and the revenue growth rate are the biggest sensitivities, so I would present a valuation range and sanity-check it against trading multiples rather than defending a single number."

Common Mistakes

Wrong order or skipped steps; sequencing is the core of the test.
No mention of WACC components or what drives it.
Presenting a point value with no sensitivity discussion; ranges and caveats show understanding.

The DCF walkthrough is the single most standard technical question in banking — it must be automatic.

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FAQ

How detailed should I go?

Steps, key assumptions, and what the output means — not spreadsheet mechanics. Explain, do not recite.

Perpetuity growth or exit multiple?

Know both and their trade-offs; be ready to explain when you would prefer each.

What drives WACC most?

The cost of equity — via beta and the equity risk premium — and the assumed capital structure. Say so explicitly.

Is this asked everywhere?

DCF questions are commonly reported by candidates across banks; formats may vary by role and region. Check the official careers page.

Preparing for Lazard's interview? Our 2027 Lazard Online Assessment Video Interview Exact Questions and Answers has practice questions and answers — $79 one-time, instant download.