LBO Case study: 3 hours from scratch LBO model and 120 page deck to analyze
I have an upcoming interview with a top PE fund and they are asking for a LBO model from scratch and 7 page deck on findings/reccomendation. They provide 120 pages of management interview/company overview. How would you tackle this?
1.5 hours for LBO model without BS, just cash flow to get return sensitivities
.5-1.0 hours to refine operating model and top line growth assumptions and testing some value creation initiative sensitivities.
.5-1.0 hours to create slides and refine findings?
How long do you guys take to do short from LBO model?
Also would it be ok to exlclude a full three statement model since its only 3 hours?
People focus way too much on model - make sure it’s working properly (lfcf test) and then move onto the next steps. What matters is your ability to have a view on the business and more importantly to not fuck up. Keep it simple, play within the guidelines
Not to reopen a can of worms but what is the LFCF test being referenced? Thanks
Sum of LCFC thru forecast period = BoP Net Debt - EoP Net Debt (assuming you are sweeping excess CFs)
Perfect - thank you. knew of this test but wasnt sure it had a formal name
A short-form LBO with no balance sheet shouldn't take any longer than one hour. We give full 3 statement LBO tests in an hour. I'd practice the simple model until you can do it in your sleep so you can nail that piece first, then work through the slides and tweak assumptions from there.
If you prep, you can get a simple model completed from scratch in 45 minutes. Maybe an hour if you want to double check or they add in some bells and whistles. Just use the CIM assumptions or use a simple revenue growth rate with sensitivities on the growth rate (no detail revenue build)
I would take 10 minutes and skim quickly through materials to get a basic sense of what the business is and so you can have context for the model / can think about business while modeling. Knock out the model. Then dive in and try to understand the business. Make a list of thesis / highlights and risks. Maybe list out some diligence questions as you read through. Make sure you leave time to just sanity check that nothing is obviously busted on the slides / model.
Good luck!
Thanks for all the responses, took 2 hours to build the model from scratch. The CIM they provided was a 150page pdf and I didn't really have enough time to digest the information on the 3 main product lines. Think if the company built LCD screens, mobile, computer and tv screen product lineup each with market analysis and factory analysis outlook etc.
Ended up submitting the model and a very hastily readied 10 slide deck.
Didn't get the offer - they said the model was fine but wanted more analysis of the business.
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