Firms with the sweatiest modeling tests?
Curious for those who have interviewed at large shops, which of those have had extremely challenging modeling tests. Was it a take home test / timed test, and what made it so rigorous? Seems like a fairly standard modeling test includes a DCF and maybe a couple tier waterfall. Outside of this, what things made your test so challenging? Layering on multiple pieces of debt, asset conversion (hotel to multi), etc. Have heard that Brookfield has a pretty rough tests, so curious to hear about any others.
Based on the most helpful WSO content, here are some insights into firms and their challenging modeling tests:
Brookfield: Known for rigorous tests, often involving complex scenarios like asset conversion or layering multiple pieces of debt. Their tests are considered tough due to the granularity and depth required.
Megafund REPE Shops: These firms often administer highly detailed exams. Examples include building debt schedules, waterfalls, and handling promote structures. Some tests may include tricky cash flow offsets for debt costs, making them more challenging.
Infrastructure Investment Roles: These roles can involve modeling tests that diverge from traditional buyout processes. Examples include sculpting long-term debt, calculating returns/sensitivities, or modeling concession-based assets like toll roads. These tests often require a mix of project finance and traditional LBO-style modeling.
Private Equity Firms: Many PE firms require full LBO modeling tests under timed conditions. The difficulty often lies in the expectation to think critically like an investor, not just a banker. Some firms also include case interviews that mirror consulting-style problem-solving.
Boutiques and Larger Banks: During FT recruiting, candidates have reported being hit with advanced technical questions and modeling tests. These can include accretion/dilution, merger math, IRR/MOIC formulas, and TEV multiples. Some tests combine multiple elements (e.g., LBO, DCF) into a single timed session.
Sector-Specific Challenges: Certain sectors like infrastructure and real estate are noted for their complex modeling due to the need for both financial/cash flow models and asset models. These tests often require handling industry-specific metrics and regulatory considerations.
If you're preparing for these tests, focus on mastering LBOs, DCFs, and advanced accounting concepts. Practice under timed conditions and familiarize yourself with sector-specific nuances to improve your chances of success.
Sources: Interviewing For Infrastructure Investment Roles, Case Studies & Modeling Tests: How Exactly Are They Administered?, https://www.wallstreetoasis.com/forum/real-estate/megafund-repe-modeling-test?customgpt=1, Q&A: MBB BA/AC/A headed to UMM this summer and guide to off cycle PE recruiting for consultants, Q&A: Former Strategy& associate
Del
SVP Global, TPG
I did a Brookfield one a couple years ago and the test itself wasn’t bad, it was the time they gave for it. They gave 90 mins to do a resi acq + value add model with a 3 tier equity waterfall. There were a good amount of inputs and trying to write dynamic formulas for everything killed my time. For comparison I had a very similar test somewhere else but it had 4 hour time limit.
Generally if the time constraint doesn't meet the ask, they're looking to see how far you get and how detailed it is. There may only be one or two of a hundred that actually complete it and then they accept the ones that were next closest to move forward. At the end of the day no one cares if it took you 3 hours to build a model or an hour and half if the rest of your candidacy is strong.
I took the Altus Groups, (Blackstone's team) test. I was allowed an hour and had some multiple-choice questions. The modeling was a joke.
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