Private Credit Case Study w/o traditional background
Hi - New to posting here but would greatly appreciate any help y'all can offer. I have been in ABS structured finance for the past 3 years and realized a while back that I want to move to corporates. I have been self studying with the lens of interview questions but not long case studies. Through A LOT of networking I have a few conversations going with middle market private debt investing funds. However, the next step seems to be a weekend case study where the fund provides a CIM and expects 3 statement analysis/DCF/finding comps and presenting an investment recommendation. I need to find my own comps, assumptions etc. Deliverables are the modeling files and a 15-20 page deck/memo. Could someone please provide some structure on how to study for this in the next 2-3 weeks? How to coherently present and link all the analysis above?
Try to find some CIMs and do your own case on each. If you can't then find a 10-K. Assuming this is a vanilla direct lending shop, just assume that your are doing an LBO or a refi. Cover the following
Executive Summary and Key Investment Thesis - What is the deal, what security are you investing in, why does the company and your deal make sense
Sources & Uses and Transaction Overview
Structure, Key Terms (i.e. Senior/ Mezz. vs. uni vs. something else - tailor this to this company's DNA). Look up market and pricing trends these days (if your audience is more AM then have a view on relative value)
Strengths
Weaknesses and Mitigants - what is the risk and why do you think it makes sense to take
Company Overview - understand what it does, key products, value proposition, supply chain
Industry Overview - Trends, Headwinds, Tailwinds - why is this a compelling space to be in
Valuation - Plenty of online resources to learn this. If just a weekend, my advise would be keep the 80/20 rule in mind. Depends on your geography and the firm you are interviewing for (your post says US, India). Most direct lenders in the US, aren't going to quiz you on how you unlevered beta - at least I don't think so. My point is you may have a pretty valuation but if you can't speak qualitatively to this business and your thesis, then that's not great - balance it all. Obviously show Loan to Value stats etc. Public companies will talk about their competitors; try to get Cap IQ access if possible.
Areas of further DD - what else will you need? What other questions do you want to ask consultants?
Historical Financials
Model - also have a reasonable downside case (not world falling apart). Show credit stats and ratios like Interest coverage, Gross and Net Leverage, FCCR, what covenants will you put on
Can include management team commentary, if relevant
Search around this website there are examples of actual hedge fund memos - while not the same as PE /PC, can be helpful to see.
Also, ask your contacts for guidance as you prep. Say was wondering if you can discuss your underwriting process or what do you normally include in materials, how deep do you go on valuation etc.
Also meant to add have a view in inflation, labor cost challenges etc -basically all the stuff that is important these days. Know how the revenue is structured - contractual or otherwise - the usual fundamental analysis. Maybe do one of these LBO case study courses - can be good prep.
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