Paper LBO Timing
Hi guys,
For those of you who've been through PE recruiting - how long does it typically take you to do a paper LBO (a full paper LBO, inclusive of all 5 year FCF calculation etc)?
How long should you take?
Is the interviewer just sitting in front of you the whole time waiting for you to finish?
Been taking me 10-12 minutes to do the practice ones... Need to get faster.
Thanks for thoughts.
http://www.interviewprivateequity.com/paper-lbo-model-example-how-to-do… this guide may help you bring that time down
Thanks.
How long does it usually take people to do the full paper LBO? 10 minutes? Considering a 30 minute interview, 10 mins seems long to do a paper lbo
In my experience, they usually walk through it with you, or if they see you're speeding through it, they just cut to the chase. They don't want to just sit there watching either. Faster is better obviously, but most important thing is to get it right.
Usually the numbers are super easy, so like adding and subtracting single digits or like a 50% tax rate to make things easy. Should take a few mins to get through.
What part is holding you up?
Got it, thanks.
I'm doing practice questions and its mostly the mental math thats the lag in time. E.g. a tax rate of 35% (instead of an easy 50%) etc.
George_Banker How long did you take to do the paper LBO? Also, did you round numbers to nearest 0 or 5 digit?
I would be willing to guess the examples you are doing are more difficult than what you will get in an interview. Most of the time I gave stuff like this:
Assume you buy and sell a company for 6x EBITDA using 3x leverage and 0% cash sweep. Interest is 10% on debt.
Company has $100m sales in year 1, growing $20mm per year. Assume 20% EBITDA margin in year 1 and 50% operating leverage on incremental sales growth in the future (company adding $2mm a year in EBITDA). Assume depreciation of $5mm a year that is also equal to capex spend and change in working capital each year 10% of sales growth ($2mm). 50% tax rate.
That should take you about 1 min to go through sources and uses and then 2-3 mins to get cumulative cash flow, which is all you need to give me a return.
be flexible. i've had 30 min interviews and 25 of those minutes were spent on paper LBO. this is a case where interviewer stopped me after every assumption and asked why i made those assumptions. i've also had paper lbo that took 5 minutes and i've had paper lbos that lasted 30 seconds. when i started walking the interviewer through as i was doing the problem he stopped me and said you clearly know what you are doing there's no need to complete this.
Aperiam quia corporis voluptates saepe. Culpa beatae provident voluptas natus. Et aut alias est culpa cupiditate. Eaque ex consectetur veritatis ipsa dolor sunt cumque.
Non impedit officiis eum quod. Sunt earum ab possimus facere ullam id. Quia laboriosam et autem quam necessitatibus beatae illo non.
Dolore animi nostrum ex rem incidunt nihil. Dolorem at sapiente quia possimus eligendi. Quis ab provident nam tempore. Possimus qui laudantium provident est.
Omnis perspiciatis earum aperiam ut est. Repellat quod natus harum animi odit. Provident dolore quod commodi eos. Numquam delectus non harum fugiat esse perferendis quam. Quod qui molestiae maxime ut harum porro ipsum. Libero rerum consequatur animi at.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...