Hi All,
Is a one hour PE associate modeling test during the interview process more likely to ask for full 3 statements built out, or rather a "short form" LBO (operating model, LFCF, debt schedule & returns)? Thanks in advance and curious to her your thoughts.
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Likely the latter / would be consistent with what our fund does
Thank you for the insight. One quick follow-up: In the "short form" LBO tests you've seen, are there case-by-case items (which affect returns) that you would particularly see frequently? Examples being div recaps, management options, equity roll, etc.
Fair to assume some of that might show up (more on latter two than div recaps from what I've seen) or you might have to build out some sensitivities or cases
The one that I practiced with was a simple full statement model, which if you get down will let you complete any model in an interview. It was an old model that a MF used to use - gave you a PDF full of assumptions and you have to build it all from scratch in 1 hr.
That being said, I interviewed at 2 MFs before accepting my offer - first MF had a super simple paper LBO (no calculator, but no principal debt pay down so you can just sum the cash flows at the end and interest is constant), second one was a 1 hr excel LBO that was based on a template/similar to the one that HSP sent out through TTS. I.e. the model was built out and you had to fill in certain things. Honestly felt way super easy to me after building them from scratch. Didn’t have a full balance sheet which was nice.
I would suggest learning how to do the whole thing - it’s a marginal amount of work to learn the extra steps for the BS, but will help you actually understand what you are doing which is super important because you are going to get different assumptions and need to know how to change things.
SB’d - thank you!
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