Never modeled what to do for VP recruiting
I was a consultant then I went to a firm kind of like Bain Cap where they staff 2 associates and the other associate I worked with was a banker who did the model. I did CIM models all the time but never went past that. I know modeling pretty well just didn't get reps. If you asked me to fully model a every line in a 10K it would take me a while I'd have to figure out how to get some things to work. I closed one platform and one add-on during my 2y. What should I do. In terms of everything else I crushed it at work, did all the process management stuff super well and ran a tight ship.
Brother. Do you not know how the three financial statements link?
Pray for whatever associate gets staffed with them…. and for the firm. There won’t be 2 VPs on each deal. So much entitlement these days…. I can’t model but any advice recruiting for PE VP?
OP - my advice is to do another associate stint and learn to model.
Very bad career management to get yourself in this position. Are you still at the firm? The obvious thing to do is to get as many reps as you can and review stuff other people have done. It’s not rocket science and you’ll be fine but it not great obviously as you’ve also figured out. Imagine you’d get staffed with VP who has no clue how to do commercial due diligence or financial due diligence and see what you’d think
If you’ve only been in private equity for 2 years then shouldn’t you have at least 1 more year until you’re eligible for the VP promo? If you’ve recently worked on a live deal model with another associate then maybe ask them to walk you through it then spend time on your own studying it. Could also spend time looking at models for other recent deals your team has worked on. I’m just an ASO 1 but this is how I’d approach it.
Stay where you are and really prioritize modeling this year. Ask your team for more reps.
You may be able to sneak into interviews and even offers without modeling tests because people will just assume you can model, and they don't really do modeling tests at this level. That said I would not recruit until you have reasonable modeling experience, as you will be essentially useless at your new place and probably pushed out quickly. You just need to learn this skill
At my shop you’d stand a chance (quite a well known one within finance where the name is thrown around this site a lot), Associates do all the models so if you could fake the ability to review models for a few years then you might survive if you have a good Associate. Time to see the size of your balls OP…
But how ?? You have to answer some in depth questions that would be tough to totally fake unless you just let your associate handle everything
You’ll have to do a model+presentation for VP interview case studies.
It’s not rocket science, you can figure it out. If you’re a consultant, did you not do PE side market work where you had to define a TAM and attribute the key growth/demand drivers?
You're somewhat lucky in that a typical PE case study is more likely to resemble a CIM-case type model vs. a 15 page operating model. That said, you will 100% need to know the right things you’ll want to sensitive for… that’s just basic investment acumen frankly, less to do with modeling skills.
Problem is I just didn't do the 15 page operating models, I did a million CIM models and would sensitize drivers to underlying things, but it never got more than idk, a few extra pages breaking 4-5 product lines into each of their price x volume lever by geography and stuff like that, where you just project out past trends and if you're lucky break it into like real or not real growth. That's kind of it, so I don't really know what goes into the 15 page model. I've done some isolated parts and can figure things out (like deferred waterfall for software, have done that, even if I haven't built the full 15 page model).
That's essentially where I'm at. I could for sure do a case study no problem, it's not like I never learned what I needed to know to participate in meaningful conversations on the job.
Dude, you’re getting in your head. It’s not rocket science. It’s accounting and 6th grade arithmetic.
Spend a few hours going through Macabacus so you know how a 3 statement model works. Take a few 10Ks and build a statement linked model where the balance sheet balances. It’ll be slow and clunky at first and then you’ll get the hang of it. It’ll take 3-4 reps. You can literally spend a day on macabacus, a full day on the first 10k. Following weekend a day each on 2 additional 10Ks. Should give you a good feel for how everything flows and model mechanics etc. Note: unless you’re doing FIG, you will never have to build a 3 statement model.
Next, do a few LBO models from scratch.
Thats the end of it. That Associate you worked with at BainCo or wherever? He probably did the above exercises to prep for PE interviews/case studies because up until when he was recruited he likely never did a real model.
As for the the projection case? Unless you’re stupid, you can figure it out. Be thoughtful. What do you think they will grow based on FORWARD LOOKING market growth, market share? Volume, pricing etc.
It’s common sense and very basic. Not at all rocket science. Plenty of stupid people can do what you’re describing. Unless you have an IQ 80, you should be able to figure it out. If your IQ > 80 and you can’t do it, you’re not willing to put in a pretty modest level of time/work or your over complicating it. It’s not particle physics.
Do you leg work, put in some elbow grease. Stop making more of it than it actually is.
For the record, most PE math can be done on the back of a napkin. We do the model for the sake of being thorough and seeming more precise than we actually are.
I would spend the next year only modeling.
I think you may be underestimating how much you need to do this.
It isn’t just modeling - these model reps are critical to building the investing skills.
I think you come out of the other end of the MF/UMM modeling trial by fire with a much stronger ability to evaluate any investment opportunity because at the end of the day it’s just math.
there's a lot of prep courses online. clearly you did something right if youre recruiting for VP
Modeling is extremely core to the job. I'm not talking about the mechanics about how to model. I'm talking about the intuition about what the key bets are and how that translates into returns. You need that grasp to fundamentally price risk - that is the basically the core of the job. The quarterbacking DD/doc negotiation is important - but at the end of the day, evaluating risk/reward is what will break or make you as an investor (and that has to do with the math).
Yea I hear you. Problem is I've never made more than a 150-200 line operating model. I just don't know what's happening in those mega 15-page models. And most of the modeling just used basic assumptions for the balance sheet and cash flow other than add backs here and there based on what our FDD guys told us. I am just not sure what the delta is here.
It's being able to intuit the math more than anything, as ibhopeful532 mentioned, not the mechanics. Someone who has solid modeling reps will intuitively know how to distill IRR/equity value/EBITDA bridges in complicated transactions into easy-to-understand outputs. They'll be able to create creation multiple build-downs to understand what you're actually paying for in a complicated transaction. And then mechanically understand how to implement add-on M&A, dividend recaps, divestitures (how it flows through 3 fin statements), new sensitivity tables... that sort of thing.
Surely there’s a ton of online resources and courses you can look into?
That way you can at least get the basics down. It’s not the hardest thing in the world.
From the looks of it and the way you describe your experience, looks like you are almost there. Once you get the core modelling stuff down (e.g. op model breakdowns, core LBO tab, etc.) the rest is just adding random transaction idiosyncratic stuff, build 15 different scenario analyses, bridges, etc.. You just need a good grasp of accounting/finance to know where and how to add this stuff and the model grows like this over time to 15 tabs. None of it is rocket science and as you know it is not like you will need to produce the 15 tabs model in 2 days (at least from my experience at my fund).
It sounds like half the battle is this mental hurdle of "I don't know what I don't know." Few ideas come to mind:
After you've done some/all of these, you can flip over to VP mode. Take another existing detailed model built by a peer (ideally a deal that you loosely understand or know enough about), check the entire model (figure out what your approach will be, guaranteed you'll find something wrong even if was an official platform deal model), and document what feedback you'd give on busts, assumptions, approach, etc.
Do you know how actual model mechanics work? Do you know in detail how S&Us work, QoD schedules etc.? The operating model part is easy and the rest is bullshit “15 tabs” - for fucking what?
holy shit
HAHAHAHAHAHAHAH whatt
Tons of really good advice in this thread. Obviously this is something you want to learn ASAP. A lot of people forget that it isn’t simply enough to get a job … if you are under qualified there is a very real risk that you lose the job after you start.
That said, a fair number of VP case studies will be take home case studies where you have a few days to prepare the materials, including a model. Surely you can figure it out if you aren’t under time pressure? While possible, far less likely that someone will sit you down at a computer and watch you model live … or even give you a few hours to knock out a model while onsite (although this does happen).
Despite some of the taunts on this thread, this is not the first time I've heard this happen to an associate at Bain Capital (though the ones I knew wanted to leave PE anyway). Best of luck.
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