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Based on the most helpful WSO content, modeling tests for lateral hires, including those at firms like Houlihan Lokey (HL), often focus on core financial modeling skills. These tests typically include tasks such as:

  1. DCF (Discounted Cash Flow) Analysis: Building a DCF model from scratch or completing a partially built one.
  2. LBO (Leveraged Buyout) Modeling: Constructing an LBO model, which may include assumptions, debt schedules, and IRR calculations.
  3. 3-Statement Modeling: Creating or adjusting a model that integrates the income statement, balance sheet, and cash flow statement.
  4. M&A (Merger & Acquisition) Modeling: Performing accretion/dilution analysis or other M&A-related tasks.
  5. Comps Analysis: Working with trading or transaction comparables.

The tests are often time-constrained, so efficiency and accuracy are critical. Logical assumptions and simplicity in your approach can make a significant difference. If you're preparing, the WSO Elite Modeling Package or the free modeling lessons offered on WSO could be valuable resources.

Sources: I'm noticing a pattern, do most of the top IB offers go to attractive chicks?, An Honest reflection from my first Summer Analyst role: The Good, The Bad, The Ugly (mainly bad and ugly), Insight on Houlihan Lokey's Houston Group?, Analyst lateral hiring MS - modeling test, Houlihan Lokey AN Bonus and Base Bump?

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