PE Case Study Challenge
I had a few questions about a case study I had to do a few days ago while interviewing for an internship position at a PE fund.
After getting all of the qualitative stuff out of the way, I figured I would go ahead and create an lbo model. However, the document they gave me was only 6 pages long and did not have all of the information -- the case study was from a Harvard Business course.
One thing that bugged me was the Interest expense. The company in question used "$5.8m senior debt @ 12%"and "$2.25m Sellers debt @ 7%, 5 years" to finance 86% of it. Would the interest expense be around ~$855,000 annually?
Aside from that, when i got to the NWC, i hit a wall. I looked through the document again and there was no balance sheet provided. The only thing provided was a finance statement that included Revenue, Cost of Sales, Operating Expenses, Adj. EBITDA, and Capex (maintenance and growth).
Is it impossible to proceed with an LBO Model? Should I have just stuck to a more qualitative side and pointed out the nice and steady growth in EBITDA and stable EBITDA Margin of 40%?
Many thanks!
Couple thoughts:
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