Paper LBO mistake - fatal??
I interviewed for an Associate role at a Pe firm that I’m well qualified for. I did a paper LBO wit them in last 15 minutes of an hour long video interview. it wasn’t the best case I did as I was sloppy the way I did it but I got the final in the end. Rest of the interview I smashed and I think I came across as someone who knows his stuff. I spoke intelligently about my deal experiences, different drivers of my deal, operating model as well as the qualitative case study did (before we broke into paper lbo). I am pretty sure I came across someone who knows exactly how lbo works and so pissed that I had a brain freeze moment though right at the end
Interviewers walked me through the potential next steps (I didn’t request those btw) after I’d asked my 3/4 questions, and said that they had a few more folks to interview (which is taking time) before deciding second round case study invites.
Are mistakes on paper lbo Fatal for ur chances? Under a lot of stress at the moment so can’t deal any. But would you say that the way interviewer closed off, I wouldn’t be moved forward?
Probably fatal unless you did something small like minor mental math error. You should provide more detail on what you missed. Both so we can help you with a more informed answer and for others that are trying to learn.
Please see my reply below.
I'm confused, you made a mistake but were correct at the end or was this more of a roundabout way which wasn't the most efficient through the lens of the interviewer?
Please see my reply below.
Thanks Taking_A_Step_Back and TheBuellerBanker . Pretty basic steps missed which weren't the most efficient. I got my initial MoM answer in 15/20 seconds, but that was wrong because I did not seek clarification on some things, so I was missing a step or two. First, I thought he meant net debt (not debt) so I didn't calculate the cash generated at the end of the holding period. When reminded, I was at ease and did so but then I did not include the interest as I thought interviewer meant no debt payments and no interest while he'd meant only the former. Once that was provided to me, I made the calculation and made a minor mathematical error which I immediately fixed when reminded and got the right MoM. For IRR, I just told them the excel formula (that was right BTW) and mentioned I had no idea what it'd be so I'd be speculating and gave a number that proved to be wrong. I did not panic at any point thought. I had spent the good 30/40 minutes comfortably answering questions on my deals, and I have internship and some full-time experience in PE. Pretty clear I know how to do a LBO and have a solid interest in investing
I think you handled the situation properly but not differentiating between provided debt and net debt is a red flag for me in that situation. Also people not probing for more info and asking questions is a problem because we purposely withhold info so that we know people know to ask for it. I think you handled the situation the best way possible and I hope it resonated with the interviewer but what I said above is likely what the interviewer was thinking
posted above
Can you share what the question was?
I think in situations like this, it comes down to comparing you against the other candidates that they are interviewing. Some firms think that the mechanics of a LBO can be taught so they don't stress you not necessarily messing up some "calc" steps that you might have forgetten, but ensure that you understand all of the drivers, how to make proper assumptions, and are generally "smart". Now, if there is another candidates that impressed them on all of these factors and nailed the LBO model, then you are probably out of luck. It really comes down to who they are comparing you against.
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