Hi all - have an upcoming model test and I am trying to tailor my practice to what I should expect.
I was told I’ll have 90 minutes to build a full LBO from scratch based on a CIM.
Let me know if I’m missing something here, but given I’ll be basing it on a CIM not sure how I’d build a B/S? Maybe HH meant a full LBO as just IS / FCF / Debt Schedule?
Any thoughts here would be super helpful.
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Based on the most helpful WSO content, here's what you need to know for a 90-minute LBO model test:
Focus on Simplicity: In a time-constrained test, prioritize building a straightforward and intuitive model. Avoid overcomplicating with unnecessary details like OID, asset step-ups, or NOLs unless explicitly required.
Key Components to Include:
Balance Sheet Considerations: If you're not explicitly asked to build a full balance sheet, focus on linking the IS, FCF, and debt schedule. A full B/S might not be necessary unless specified.
Use Logical Assumptions: Since you'll be working off a CIM, make reasonable assumptions for revenue growth, margins, CapEx, and working capital changes. Highlight these assumptions clearly in your model.
Sensitivity Analysis: If time permits, include a simple sensitivity table for key variables like exit multiple and leverage to showcase your understanding of the model's drivers.
Practice: Review LBO templates and practice building models from scratch. Resources like the WSO Free Modeling Series or precedent models from colleagues can be invaluable.
Remember, the goal is to demonstrate your ability to build a functional and logical model under time pressure. Good luck!
Sources: PE Interview - Need to learn modeling in 2 days, Top Financial Modeling Courses - List of Top Financial Analyst Courses, 7 Practical Buyside Recruiting Tips for IBD Analysts, EBITDA vs. Operating Cash Flow vs. Free Cash Flow, 1st Yr Banking Analyst Open for Questions
Have a few example cases, d.m.
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