Is it an auto rejection if my BS doesn’t balance on an LBO modeling test?
Going through recruiting for this MM PE firm. Into the 2nd round and Had a live LBO modeling test and 3 hours to finish everything. I pretty much got all the outputs done: returns analysis, sensitivities, etc. The only problem is that I couldn’t get my balance sheet to balance for the life of me. It wasn’t for off but I just ran out of time.
My question is that is this pretty much an auto rejection? How big of a deal is it in these fast paced LBO tests? I haven’t done many of these so I’m not sure if it’s just completely unacceptable or not. For what it’s worth I think I did well on the rest of the model.
I mean, it’s legit the most important, fundamental thing about modeling. Make sure you balance sheet BALANCES. Many places will definitely reject you for something like this. Depends on how far into the process you are and how strong your connections and network at this fund is.
Depends on why it's not balancing - if it's one small error that had an outsized effect vs multiple errors / something inherently poor with the architecture IMO
Would disregard the magnitude of the check. But ultimately the other poster is correct, if it doesn't balance, the returns/sensitivies/investment recommendation is all irrelevant since the numbers are wrong to some degree and therefore the integrity of the modelling effort was wasted
In what happened w/ 2022 on-cycle via the 90 min paper LBO's it is 100% over if you're not perfect mechanically. But in longer ones that are 3h+ or 24hs etc, assuming there is the opportunity for a model debrief call, if you demonstrate strong understanding of return drivers / cash flows / investment thesis and talk to the qualitative points of the deal/company well, I think you will still be fine
Just want through on cycle. Both myself and other analysts I know received UMM/MM offers with balance sheets that didn't balance lol
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