Ares Direct Lending Case Study

For your Ares Direct Lending case study, here's what you should prepare and expect based on the most helpful WSO content:

1. Light Touch Model (1 Hour)

• Focus on Capital Structure: Since the role is portfolio management and the model is described as "light touch," it's unlikely you'll need to build a full LBO. Instead, expect to:
  • Analyze a simplified capital structure (e.g., revolver, term loans, mezzanine debt, etc.).
  • Understand key metrics like leverage ratios, interest coverage, and repayment schedules.
  • Be prepared to discuss how changes in assumptions (e.g., interest rates, EBITDA growth) impact the structure.
• Preparation Tips:
  • Brush up on financial statement modeling basics (income statement, balance sheet, cash flow).
  • Review debt-related metrics and their implications for portfolio management.
  • Practice sensitivity analysis to show how changes in inputs affect outputs.

2. Excel Data Management (1 Hour)

• What to Expect:
  • Likely tasks include organizing and analyzing a large dataset, creating pivot tables, and summarizing insights.
  • You may need to clean data, identify trends, and prepare it for discussion.
  • Be ready to explain your thought process and how you derived conclusions from the data.
• Preparation Tips:
  • Practice creating pivot tables, filtering data, and using basic Excel formulas (e.g., VLOOKUP, INDEX-MATCH, SUMIF).
  • Familiarize yourself with conditional formatting to highlight key data points.
  • Work on summarizing data into clear, actionable insights.

3. General Portfolio Management Knowledge

• Key Concepts to Review:
  • Understand the role of direct lending in private credit, including sponsor-backed vs. non-sponsored deals.
  • Be familiar with how portfolio managers monitor credit risk, covenant compliance, and performance metrics.
  • Review how private credit firms like Ares self-originate deals and maintain sponsor relationships.

4. Additional Tips

• Time Management: With only 1 hour for each session, focus on efficiency. Practice working under time constraints.
• Communication: Be prepared to clearly articulate your approach and findings during the discussion.
• Confidence in Basics: While you don’t need to build a full LBO, having a solid grasp of debt structures and Excel basics will help you stand out.

By focusing on these areas, you'll be well-prepared to tackle the case study and excel in the data management session. Good luck!

Sources: Private Credit Resources and Prep, Private Credit Case Study, Ares vs. Golub Direct Lending, Ares Management 2021