How do I prep for 3-4h Model Case studies as a consultant?

I know technicals, I can do LBOs (e.g., WSO examples, PF up to LVL4, etc.) but I now have a final round coming up with a 3-4h Model Case study. 

Quiet anxious about that, I have thought about prepping the following: 

  • Having a simple 4-5 Pager template in mind I can populate at the end of the case (i.e., business overview, transaction returns & sensitivities, market outlook, competition, risks)
  • Prepping more operating model builds; those have been SUPER simple on all LBO prep providers (e.g., "Business Unit A sells 5k units and grows volume by 10% and price by 5%")

I'm a bit afraid of industry specific nuances. The fund I am involved with is not a software player but they constantly asked me about my knowledge of software metrics (i.e., what figures would you look at in a FDD, etc.) even though I never done software/tech at my MBB.

Can someone chime in a bit here? Thinking about this already makes me nervous.

4 Comments
 

To tackle a 3-4 hour model case study effectively, here's a structured approach based on the most helpful WSO content:

1. Preparation Before the Case Study

  • Template Familiarity: Your idea of having a 4-5 pager template is excellent. Ensure it includes:
    • Business Overview: Key revenue drivers, market position, and growth potential.
    • Transaction Returns & Sensitivities: IRR, MOIC, and sensitivity analysis on key KPIs.
    • Market Outlook & Competition: Industry trends, competitive landscape, and benchmarks.
    • Risks: Highlight operational, financial, and market risks.
  • Practice Operating Models: Focus on building simple, functional models. For example:
    • Revenue drivers → Top-line → Adjusted EBITDA → Free Cash Flow.
    • Incorporate sensitivities for volume, pricing, and cost assumptions.
  • Industry-Specific Metrics: Since the fund has a focus on software metrics, brush up on:
    • Key SaaS Metrics: ARR, churn rate, CAC, LTV, and gross margin.
    • FDD Insights: Look at retention rates, customer cohorts, and scalability potential.

2. During the Case Study

  • Hour 1: Understand the Problem
    • Read all provided materials (e.g., SEC filings, investor presentations, sell-side research).
    • Take detailed notes on revenue/cash flow drivers, KPIs, and any nuances in the business.
  • Hours 2-3: Build the Model
    • Start with a basic structure: Revenue → EBITDA → FCF.
    • Add functionality for sensitivity analysis to test different scenarios.
    • Avoid overcomplicating—focus on clarity and accuracy.
  • Hours 3-3.5: Develop Your Pitch
    • Use your notes to craft a concise investment thesis.
    • Compare your model outputs to any guidance or consensus estimates provided.
  • Hours 3.5-4: Finalize and Write-Up
    • Populate your 4-5 pager template with key findings, valuation, and recommendations.
    • Include a checklist of "next steps" for further diligence.

3. Addressing Industry-Specific Concerns

  • If you're unfamiliar with software/tech metrics, focus on understanding the basics:
    • Revenue Growth: Subscription vs. one-time sales.
    • Profitability: Gross margin trends and scalability.
    • Retention: Churn and customer lifetime value.
  • Highlight your ability to adapt and learn quickly. If asked about software metrics, frame your response around transferable skills and logical frameworks.

4. Mindset and Execution

  • Stay calm and structured. Break the case into manageable chunks as outlined above.
  • Focus on delivering a clear, actionable recommendation rather than perfection.
  • Remember, the goal is to demonstrate your thought process, not just technical skills.

By following this approach, you'll be well-prepared to handle the case study confidently. Good luck!

Sources: How would you approach a 4 hour case study?, Case Prep, "Leaving IB Soon, Final Rants" - The Follow-Up, Private Equity Recruiting Walkthrough – My Experience

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 
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