So I had a chat with a headhunter contact that I have and he said that now they are giving analysts examinations where they essentially ask you to create a working DCF model of a company in a couple of hours. I've heard of online assessment games where they give you funny shapes and tricky math problems, but never one that asks you to do something like modeling. Has anyone else heard about or taken one of these exams? Anyone know who is currently doing this?
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for new hires at my MM overseas office, they have you construct a model that links the financial statements and projects them going forward. No DCF
*new hire candidates as opposed to summer analyst candidates
I work for a PE shop. Our last full-time analyst candidate was given 2 yrs of financials of a company, some assumptions, a few talking points, and a template for an investment proposal presentation. She then had to
1) Create a full financial model, including historicals and projections; 2) Determine the value of the company using DCF methodology; 3) Determine the value of the company using trading and transaction comps; and 4) Create a presentation giving her investment recommendation.
Why in the world would a PE shop test a candidate's ability to do a DCF? Per points 2 and 3, it sounds like the candidate is being tested on every valuation methodology EXCEPT the traditional LBO model employed by financial sponsors.
Primarily because she had limited work experience. Stellar candidate, quick on the uptake, right academic credentials, brilliant during the fit interview. Since she had little relevant (read: IB / PE) experience, we decided to test her on topics where she could conceivably shine if she had read enough books on finance. If she made the cut and proved that she could deliver on items that she should know, we could easily send her for an LBO training course.
Houlihan typically has a written exam coving accounting and various finance and economics topics.
I now work for a valuation firm and had to build out a working model, full DCF, prepare 2 case studies along with a couple of finance exams.
When I interviewed at a couple of distressed funds, I was asked every type of finance question on this planet ranging from M&A models to LBO models. I made it to final rounds but probably didn't make the cut b/c I had worked at two IBs:(
Is the houlihan exam just for full times, or for interns too?
For a MM investment bank, full time new analyst hire, to get the job I had to:
Simple if you understand it, but I know the other candidates struggled with parts of it. In other words, very fair test.
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