Hi fellow monkeys
I am in the process for an analyst position at PE, I first passed a phone interview, and was invited for a 1-1 in person interview at their offices. At one point the gave me a laptop and a keyboard and I was given 30' to do an easy modeling exercise
It seems that I did well and the next stage of the process is to build a model from scratch and present this to the partners. Well, the problem is that I have no idea how to build a model, I have IB and did not want to move to PE yet, however I unexpectedly landed an interview at a PE that I really like so I want to try this seriously
I have taken some models from work and I want to start building them from scratch but I have no idea if I should approach this differently. What will they want me to do? Just build a 3 statement LBO model and give the IRR? and if so, how do I learn to do this in 2 days?
I want to try, even though I seem this kind of impossible...
Thanks!
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Well first thing is that if you’ve been in IB for 6 months then you should be able to build a three statement model. If you can do that, then you’re almost there. At that point all you need to do is build your sources and uses, plug in the debt terms you’re given (or be thoughtful if they don’t give you any) and flow that through so you can distribute cash post debt pay down. You may have to contemplate cash sweeps, PIK accrual, etc but the resources above should be able to teach you that in 20 minutes.
Once you’ve got everything linked up and LFCF then it’s just a matter of distributing to equity/calculating exit value and running sensitivities on IRR and MOIC.
They’re probably looking for two things: 1. Can this person build the model and have it all linked up correctly with a few minimum bells and whistles but nothing insane (though some funds get aggressive here) and 2. Did they put some thought into the forecast and can they defend their assumptions? 1 is table stakes but 2 is what can separate you from the pack so be sure to really think about if the revenue growth/margin uplift makes sense and can be backed up.