FOF Modeling Test Question

I'd guess the LBO will be pretty vanilla. If you can build a three-statement operating model with a cash sweep for debt paydown and put in a MOIC / IRR, you'll be fine. Possibly you could be asked to build a sensitivity table.

If you're asked to write an investment memo and you aren't given some sort of framework to fill out, I'd go with the following and try to work in these details if they're available in the materials you're given:

• Transaction overview: Include commentary on who the GP is with whom you'd be co-investing (is this a typical deal for them or outside their strike zone), what you think of valuation, alignment, etc.
• Industry overview: headwinds/tailwinds for the industry, secular trends, etc.
• Company overview: Include commentary on the business model, top/bottom line, margins, potential for value creation, how the company stacks up within the industry, etc.
• Investment highlights: 3-5, using data to back up your highlights
• Investment considerations: 3-5, using data again and also include any mitigating factors to the risks you're bringing up
• Any next steps on diligence, other information you'd want to see, questions you'd have for the company/GP, etc.
• Returns analysis if the memo ties back to the model that you were asked to build