3.5hr PE case study...
Fellow monkeys....
I have my first ever PE interview coming up thats 3.5hrs long; 3 statement model build from an empty excel and to produce a memo also from scratch.
How complex can I expect this LBO model to be given the timing. Also, is there a format/checklist of sections I should be including in the memo (thinking more like a PE investor vs banking)
Thanks very much :)
Is it from a 10-K? Or will they prepare a fake “CIM”?
Believe it's from a public company (from how they were talking) and I'll be given things like management presentation and broker notes- the only other thing I was told was that no multiple case scenarios would be needed!
Is the CIM usually harder than the public name?
PF has a great 10-K style model walkthrough I would study up on this video ahead of interview
How long is your memo?
Not sure how long it should be...they said using a PPT or even a word doc is fine as long as all the information is all there
bump
Haven't failed a single case study stage in my career so far for associate or SA roles:
My approach: focus primarily on the operating model; this is the main thing anyone will ask you about. Be really confident in your revenue model (buliding out ARR into revenue), and how you derive gross margins. Usually you are given a market-study of sorts; read it carefully and thoroughly. Fundamentally; cases are to test your ability to think about businesses not modelling skills (there are usually model tests for that). Would just bulid a very simple model with unitranche debt, no BS, no dividends, no add-ons, truly no complexitiies outside of maybe a mgmt. rollover if you have the time. Spend half the time on the broader operating model (revenue down to EBITDA) and understanding the business. You should be able to do a LBO more than easily enough in ~ 105 minutes.
Cheers man, and for the memo- how would you go about structuring it i.e key sections and things to touch on?
They mentioned they want to see me think like a PE investor vs just banking
Business overview slide (overview of situation and what the business does maybe with some simple graphs) -> investment merits (list 2-3 minimum) -> investment risks (2-3 minimum) -> process suggestions (what multiple range to bid at entry, structure of deal, S&U, etc.) -> model outputs with sensitives (probaly more than 1 slide). If not enough time to make this in PPT, just put it all in word docs, if they let you. Note: this was all for senior associate stuff; if I was doing associate recruiting, would just do a word doc for sure and put really simple bullets for business description, purchase price multiple, investment highlights, and investment risks. Think focus for assoicates is more technical horsepower, and what I described is overkill.
Helpful way to think about stuff is just think about what you'd put on a CIM. It's basically the marketing doc for a company; so applies well as to what would go on an IC memo. Given model write-up needed; spend 20-30 minutes on this / really thinking about this, try to do a really simple model in 80-90 minutes if you can (again no complexities, just an LBO model that works). Model just has to pass the works bar, main thing really is case debrief and write-up, which requires you to actually fully read and understand the material.
what firm is this for? who is hiring right now?
bump
Guy above gave a really comphrensive answer. Not sure why this is being bumped.
You must be new here. Everything gets bumped
Which fund type / geography is this for?
Hey OP - if you have taken the test already curious to see how your experience was? What was the background of the fund? Seems atypical to have a 3.5 model test.
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