PE Case Study Test - Secondaries Help
Hi,
I have a 2 hour case study test with a PE Secondaries Firm for an analyst role (no expectations of having previous PE/secondaries experience). The brief from the recruiter has been really light - I've been told it will not be a modelling test / LBO which I'm more used to, but rather determining a value for the portfolio / at fund level and not the individual assets / companies.
I haven't found many resources online for this - does anyone have any experience of this or tips to approach? The time allowance is really throwing me as well, as not sure what's expected if they don't expect a model, unless there's additional questions they'll ask alongside this
Thanks
Spitballing. You’ll prob get the models for a few
Of the deals in the portfolio, you may get the 13 week cash flow, and what the 100 day add value plan was for the deal. From there you’ll need to do your assumptions for a new valuation.
Totally off here my man
Hey there!
Based on the most helpful WSO content, it seems like you're stepping into a bit of a unique challenge. But don't worry, I've got some tips that might help you navigate this.
In a PE Secondaries Firm, you're often dealing with LP interests, which means you're looking at the value of the portfolio or fund level, not the individual assets or companies. This is a bit different from the usual LBO models you might be used to.
Here's a possible approach:
Understand the Portfolio: You'll likely be given information about a few deals in the portfolio. Take the time to understand these deals, the cash flow, and any value-add plans that were in place.
Make Assumptions: Based on the information you have, you'll need to make assumptions for a new valuation. This might involve predicting future performance based on past data, or making educated guesses about market trends.
Analyze: Use your assumptions to analyze the portfolio and determine its value. Remember, you're looking at the big picture here, not individual assets.
Justify Your Valuation: Be prepared to explain your reasoning. Your assumptions and analysis should lead logically to your valuation, and you should be able to defend it if questioned.
Remember, the goal here isn't to build a detailed model, but to determine a value for the portfolio. It's a different kind of challenge, but with some careful thought and analysis, I'm sure you'll do great. Good luck!
Sources: Ask me anything - MM PE Associate, 1 year in, Secondary PE Modeling, 2-hour Modeling Test for HF (Fundemental Equities) - What to expect?, How to prepare for after IB analyst program
I work in secondaries. I would expect to do a waterfall model on top of some fund level analyses. Make sure you can take an intermediate cap table along with some shareholder documents and quickly map out what each class gets paid out at various exit valuations. Learn some of the math behind how the distributions are calculated.
Make sure you also understand all the different possible terms of preferred stock like liquidation preference, participation, cumulative / non cumulative dividends etc.
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