Private credit modeling

For your private credit interview, here's what you need to focus on based on the most helpful WSO content:

1. Financial Modeling Templates: WSO offers 27 financial modeling templates in a swipe file, which include essential tools for financial statement modeling, DCF, M&A, LBO, Comps, and Excel modeling. These templates can be incredibly useful for preparing your memo and modeling tasks.

2. Private Credit Case Study Prep:

   • You may be asked to create an LBO model to assess the debt capacity of a business. Unlike traditional LBOs, the focus will be on credit stats rather than equity returns.
   • Steps to prepare:
     • Compile a list of 5-10 public comparable companies.
     • Spread their capital structures (e.g., revolver usage, term loans, bonds) and calculate leverage ratios based on Adjusted EBITDA.
     • Use these insights to justify your assumptions and recommendations in the memo.

3. Key Interview Focus Areas:

   • Expect questions on accounting technicals, deal discussions with a focus on the credit thesis, and modeling exercises emphasizing credit metrics like leverage, coverage ratios, and interest rates.
   • Be prepared to discuss what level of leverage and interest rates would be reasonable for a given scenario.

4. Resources to Brush Up On:

   • WSO's free financial modeling lessons, which cover the 3-statement model, DCF, and accretion/dilution models.
   • Private equity interview questions, as they often overlap with private credit interviews.

5. Memo Writing Tips:

   • Clearly outline your credit thesis, supported by data from your model.
   • Highlight key risks and mitigants, as well as the rationale behind your assumptions.

If you haven’t already, consider accessing the WSO templates and lessons to refine your skills. Good luck with your interview—knock it out of the park!

Sources: Private Credit Resources and Prep, Private Credit Interview Advice, private credit - next steps?, Private Credit out of undergraduate?, Private Credit is Paradise