PE take home case study with no previous experience? HELP!!

First off, congrats on moving to this round. Second, work backwards. Identify the parameters and see what information you have. Generally, you’ll be given some materials which will help you make some assumptions.

I generally assume the following:

1. Cash free and debt free deal

2. Revenue to grow at industry growth (that is, they keep the same market share while the industry growth serves as their basis of top line expansion) or revenue grows at GDP.

3. Costs grow at inflation or GDP.

4. Whatever you don’t know, just put a comment in the cell saying “Assuming X” or “I assumed y”.

5. Debt priced at SOFR+700 (in this market, where SOFR is like 3.5-4.0%).

6. At least two tranches of debt - revolver (undrawn at close) and Term Loan (50% LTV or ~half of the purchase price.

7. NWC (if you can do working Capital days, great - average the historicals. If you can’t, % of revenue and add a comment and move on)

8. Exit in 5 years, do the deal if you at least 2x invested money in five years. That is, hurdle is 15% IRR.

Regarding how to approach this, given your lack of experience, I would try and do the least complex thing that works. Use a template from one of the online sites’ (personally, I used Wall St Prep’s Standard one to prep for my role) LBO and plug the assumptions and try and think through what changes and why.

Have some questions prepared to ask them about the opportunity and be able to go line by line and have something you can say for each so you’re not a sitting duck when they press you for why this looks a certain way.

Remember - simple is better. Breathe and do not overcomplicate or panic. All of this, even for a new person, can take under 3 hours if you are calm. Make assumptions and keep going (sense check to see if you can back into assumptions if your results seem outrageous and double check your work at the end). A complete model is better than nothing (if you assume something, have at least a one liner defending it). Don’t BS if they ask something you can’t piece together. Say “Good question, I don’t know off the top of my head. I can revert after this call with my findings”.

Good luck! I’ve been there - even if this opportunity doesn’t work, there are plenty out there and the one you end up with is normally the one best suited for you - even if you don’t know it at the time. You’ll do great and keep at it!