Private Credit Model & Case Study

For a private credit case study, especially in direct lending to sponsors, here's what you need to know based on the most helpful WSO content:

1. Modeling Expectations:

   • You may be required to build a debt paydown model. This typically involves forecasting cash flows, assessing the company's ability to service debt, and analyzing leverage metrics.
   • Be prepared to explain your forecasting assumptions and the structure of your model. This includes discussing key drivers like revenue growth, margins, and working capital.

2. Investment Committee (IC) Memo:

   • A typical IC memo for private credit includes:
     • Business Overview: What the company does, its competition, value proposition, and stability across cycles.
     • Historical Financials: Key observations and trends.
     • Forecast Financials: Projections and deleveraging profile.
     • Proposed Capital Structure: Terms, leverage, and stress tests.
   • For direct lending, IC memos can range from 40-50 pages (detailed analysis and diligence conclusions) to 80-100 pages for more comprehensive deals.

3. Case Study Tips:

   • If time-constrained, focus on a 2-page summary covering the main points: investment merits, risks, and rationale for your assumptions.
   • Be ready to present your findings and defend your analysis during the interview.

Unfortunately, specific templates or sample IC memos aren't provided in the WSO dataset. However, you can enhance your preparation by reviewing LBO models and financial statement modeling resources, as these are closely related to private credit modeling.

Good luck with your case study!

Sources: Golub Capital type direct lending fund, Private Credit is Paradise, Private Credit Case Study, Debt Fund/Direct Lending Recruiting