PE modelling tests - dumb q
So for on-cycle, we gotta do these tests. Now, in my (limited) experience, it seems like the marginal increase in accuracy of doing a full LBO as opposed to doing a simpler one (ie skip transaction BS, 3 statement, D&A schedule for financing fees) basically gets you the same IRR and MoM — especially if u just include a senstivity table. So my question is, how in dept do our models need to be? Is it common for PE firms to ask for a full blown LBO or do they just give u an hr ish and u make the basic one. Would love to get some color on this cause I’m struggling to see the point of doing a full LBO in these tests when I can reach the same conclusions without it. Thank you in advance for any help:)
No one is asking you to build a 3-statement model, D&A schedule, etc. because they expect your MOIC/IRR calculations to be more accurate. They want to see that you are capable of doing it so that when you start the job firms don't need to spend the time training you to do it.
With that being said, most on-cycle modeling test (from what I've seen) are 1-2 hours long and generally half pre-built
Suprised to hear oncycle has a lot of templated out / half built models.. At the more technical MF would one expect a higher likelihood of building out from scratch?
templates are annoying too, let a mf cook goddamn
Dumb question: are we supposed to do the model tests on laptops or monitors w/ keyboard and mouse?
^ Was wondering about this as well
Every model test I've done (about 4-5 of them, Infra PE), basically consisted of them sending you a prompt or occasionally a mostly blank template spreadsheet via email and telling you to send back what you have at the end of the 1h/1.5h period scheduled for it. So either is fine, depending on what you have on hand - I've done one on only the laptop at a coffeeshop before due to a packed schedule.
I am assuming in oncycle you do it on their laptop in office, meaning no pre-set shortcuts / optimized task bar. That is how I am practicing
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