Associate Interview - Generalist
1. Hotel Biz P/L went down, what happen?
a. Consulting case, Revenue and Cost, dive deep into each cost and rev driver of hotel. Had experience in a Hotel deal so not that hard
2. Manufacturing business, what are the drivers to evaluate business
a. What are line items in revenue and cost of the business
i. Units made and sold for revenue
ii. Standard COGs. Didn’t mention warranty and servicing cost
b. How to project CapEx and Depreciation?
i. Wasn’t sure if interviewer wanted consulting type answers where you find out current PPE and PPE life, and find out whats the replacement cost per year or financial modeling answer where you peg CapEx/Depr as % revenue.
Technical Questions:
1. Depreciation up to 20; what happen to 3 FS
i. Standard IB answer. Everyone should know this.
2. 10x PE entry, earning at $10, 3-year exit, what you need to know to calculate MOIC and IRR
i. Exit multiple; Earning at exit; any change in equity % stake
3. Paper LBO:
a. EBITDA 250m
b. Flat for 5 years
c. 750m debt @10%
d. WC source of cash at 6m per year
e. 35m per year CapEx
f. 40% tax
g. No cash balance minimum
h. PPE constant; meaning Depr=capex
i. Cash just accumulate on BS
j. What is the purchase price for 3x MOIC @ EV/EBITDA exit of 6x
k. Follow up question
i. How can WC be source of cash
• More efficient WC management
• Decrease inventory and A/R; Increase A/P accrued expend and current liabilities
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