Modeling Test Expectations - Boutique Analyst

Based on previous WSO threads, here are some insights and advice for your upcoming 90-minute case study for an analyst role at a small boutique firm:

Common Modeling Tests:

1. Three-Statement Model:

   • Given your background in Corp Dev, it's likely you might encounter a three-statement model. This involves linking the income statement, balance sheet, and cash flow statement.
   • Ensure you are comfortable with building these models from scratch and can handle any adjustments or assumptions that might be required.

2. DCF (Discounted Cash Flow):

   • Since you have experience with DCFs, it's possible this could be part of the test. Be prepared to calculate the present value of future cash flows and understand the assumptions behind WACC and terminal value.

3. LBO (Leveraged Buyout) Model:

   • While LBO models are common in private equity, they can also appear in investment banking tests. Given the niche industry and the size of the firm, it might be less likely but still possible.
   • If you need to prepare for an LBO, focus on understanding the structure of Sources & Uses, building out assumptions, and memorizing debt schedule formulas. Practice with templates and reach out to friends in PE for more challenging examples.

4. Comps Analysis:

   • Comparable company analysis is another common task. Be ready to pull together relevant financial metrics and multiples for peer companies.

PowerPoint Aspect:

• Teaser Page:
  • Creating a teaser page or a brief presentation summarizing the key points of your model is a likely task. This could involve highlighting the investment thesis, key financial metrics, and any strategic recommendations.

Preparation Tips:

• Practice with Templates:

  • Utilize financial modeling templates available on WSO to practice. This will help you get familiar with the structure and flow of different models.

• Review Financial Modeling Courses:

  • Consider reviewing courses from the WSO Academy, such as the Excel Modeling Course, Financial Statement Modeling, and LBO Modeling Course. These can provide a solid foundation and advanced techniques.

• Understand the Industry:

  • Given the niche industry, ensure you understand the specific financial metrics and drivers relevant to that sector. This will help you make more accurate assumptions and build a more tailored model.

Useful Resources:

• LBO Model:

  • https://macabacus.com/lbo-model/introduction</a">Macabacus LBO Model Introduction
  • https://www.wallstreetprep.com/knowledge/advanced-lbo-modeling-test-4-h…</a">Wall Street Prep Advanced LBO Modeling Test
  • https://breakingintowallstreet.com/biws/kb/leveraged-buyouts-and-lbo-mo…</a">Breaking Into Wall Street LBO Models

• Merger Model:

  • https://macabacus.com/merger-model/introduction</a">Macabacus Merger Model Introduction
  • https://www.wallstreetprep.com/knowledge/financial-modeling-quick-lesso…</a">Wall Street Prep Accretion/Dilution Model

By focusing on these areas, you should be well-prepared for your case study. Good luck!

Sources: Preparation for 2 hour LBO modelling test, An Analyst / Associate's Checklist, Guide to Lateraling in 2021, Analyst Modeling Test