Investment opportunity analysis

Hello everyone,

Soon I'll be called for the 2nd round interviews for an internship in a private equity firm in Belgium, I was told by one of the partners that i will ask to build an LBO model from scratch ( which obvious and I'm trying to get better and faster in it) and the second part is to discuss an investment memo, never done this before and I don't any idea on what should i expect or even how to train and prepare for this, will looking for LBO candidates characteristics and understand the fundamentals will be enough or should I dig deeper ?

Danke je  voor jouw halp.


Hey there!

Congrats on making it to the second round of interviews for the private equity internship in Belgium! That's no small feat, and it sounds like you're gearing up for a real challenge. Based on the most helpful WSO content, here's what you can expect and how you can prepare for the investment memo part of your interview:

  • Understanding the Investment Memo: An investment memo is a document that outlines the rationale behind the recommendation to acquire, invest in, or divest from a particular company. It's a critical piece of analysis that supports the decision-making process in private equity.

  • Key Elements to Include: Your memo should typically cover the company's background, industry analysis, financial performance, valuation, risks, and investment thesis. Make sure to include a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to provide a comprehensive view of the company.

  • Deep Dive into the Company and Industry: Go beyond just the LBO candidates' characteristics. Understand the company's competitive position, growth prospects, management team, and financial health. Also, get a good grasp of the industry dynamics, trends, and key drivers.

  • Financial Analysis: Be prepared to discuss the company's financial statements, perform ratio analysis, and maybe even forecast future performance. Your ability to interpret financial data and draw insights will be crucial.

  • Valuation Techniques: Familiarize yourself with different valuation methods such as comparable company analysis, precedent transactions, and discounted cash flow analysis. You might need to justify the purchase price in the LBO model.

  • Practice Makes Perfect: Try to get your hands on sample investment memos or create your own based on public information of a company. This will help you get comfortable with the structure and content expected in a memo.

  • Be Ready to Discuss: Be prepared to talk through your investment memo and defend your investment thesis. The partners will likely challenge your assumptions and conclusions to test your critical thinking and investment judgment.

Remember, the key is to show that you can think like an investor and articulate a compelling case for or against an investment. Veel succes met je voorbereidingen! (Good luck with your preparations!)

Sources: Private Equity Interview Questions - 13 Topics to Know, What to expect in PE interviews as an undergrad?, How to improve earnings memo for interview, How should I prepare to be a good intern?, Second interview with shit private equity firm, what does that mean?

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