3 Hour Modelling Test

For a 3-hour modeling test in a lateral investment banking position, based on the most helpful WSO content, here’s what you can expect:

1. 3-Statement Model + DCF or LBO:

   • Many lateral tests involve building a 3-statement model from scratch, often paired with a DCF or LBO analysis.
   • You may be asked to link the income statement, balance sheet, and cash flow statement while ensuring everything ties out correctly.

2. Time Constraints:

   • The test is designed to assess your ability to work efficiently under pressure. Focus on logical assumptions and simplicity rather than overcomplicating the model.

3. No Templates:

   • Unlike your day-to-day work, you won’t have access to pre-built templates. Be prepared to build everything from the ground up.

4. Additional Features:

   • Some tests may include a sensitivity analysis, returns table, or other "bells and whistles" to showcase your technical skills.

5. Qualitative Component:

   • You might be asked to provide a brief write-up or slides summarizing your findings, such as key drivers, valuation insights, or investment recommendations.

6. Common Scenarios:

   • For IB roles, the test could lean towards a DCF or M&A scenario. If it’s PE-focused, an LBO model is more likely.

Preparation tips: - Practice building 3-statement models and DCFs/LBOs within tight timeframes. - Review key technical concepts like linking statements, calculating free cash flow, and understanding valuation metrics. - Familiarize yourself with Excel shortcuts to save time.

Good luck!

Sources: Lateral Hire analyst modelling test., 2-hour Modeling Test for HF (Fundemental Equities) - What to expect?, Analyst lateral hiring MS - modeling test, Ask me anything - MM PE Associate, 1 year in, Investment Banking Lateral Analyst Modeling Test