As part of a mid-stage interview process, I have a case study coming up where I will be given a public company, 5 hours and a blank excel. I am expected to present my investment findings to a small group of people in a primarily special situations focused investment firm. They look at equity, debt and anything in between.
I was wondering if anybody had any advice on what type of modeling to focus on, how to structure the case study, things to focus on and any general tips. I haven't been given much guidance so no idea if i will be given trading prices of the capital structure, any research outside the public filings, comps etc.
I am not sure what to expect - I was thinking a debt schedule / DCF / LBO and providing findings on what I think the waterfall recovery value looks like through tranches while making investment judgment on the business would be reasonable (model + 2 page memo). With 5 hours, should I be going through all the credit docs and doign a full covenant layout too?
Any help is much appreciated especially as I think about what I can accomplish in 5 hours (which seems like a good amount of time).
Hey Monkey4729, I'm the WSO Monkey Bot...do any of these help:
Or maybe the following WSO members have something to say: Markov @Daniel-Strohl" @tiger2012"
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bump
What is a covenant layout?
I personally wouldn't use a DCF / LBO approach for something like this. Approach it like you would any credit analysis...figure out the business first, and then assess the entire capital structure for where you'd position yourself for the best value. Where would you go long, and where would you go short. Personally wouldn't suggest pitching a cap. structure arb trade unless there is something in the documents that makes it clear a very certain transfer of value will occur between two securities (personal bias though).
You have a lot of time, make sure you do a careful read of the credit agreement / indenture. If you have five hours they may give you a situation that is more complicated than appears. Maybe there will be a HoldCo / OpCo complication that you'll need to figure out. I can think of a couple situations at the moment that could make for a good five hour interview case study.
business model and inflexion points first. cap structure and everything else second.
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