LBO Modeling case study (from recent and actual interview)

Monkeys -

Hope you're all making the most of the COVID time. With so many people seeing deal flow slow down/dry-up, I'm sure there are a number of you who have some more free time than normal. In the spirit of trying to help my fellow monkeys interested in a role on the buy-side, thought I'd share an actual interview case study exercise with you all.

As background, prior to many shelter-in-place orders (late February), I was interviewing for a Corp Dev M&A Associate role and was asked to prepare a case study to model out returns for a proposed acquisition target. The case study was based on an actual company the firm had previously screened to acquire.

They sent me a CIM and single slide prompt (outlined below). Can't easily share my model as it has a lot of identifying notes included that make it hard to send without some major reformatting (added info to demonstrate assumptions, footnotes, etc). But the redacted case prompt is below.

For reference, the role was for an Associate on a Corp Dev team (hence the 10-year perspective). I'd plan on taking no longer than 1-2 weeks, which was what I was given, to pull together deliverables. Since I can't send you the CIM, I'd suggest pulling a public company that matches the type of companies you'd ideally be working with as proxy.

Ultimately, the company called me back the night before my final round to say that due to COVID, the company instated a hiring freeze and would not be able to move forward with hiring me (or anyone). Currently networking while studying for my GMAT in case it takes longer than hoped to return to normal.

If anyone is aware of IB/PE firms in Chicago/NYC that are looking for an experienced Analyst (lvl 2-3), would be happy to connect offline.

Good luck and let me know if I can help.

Case Study deliverables (redacted): Based on a review of the CIM and publicly-available information, please prepare a succinct memo (5-7 slides) covering key aspects of the acquisition, including: 1) A one-page business overview of XXX 2) A one-page overview of the industry and competitive landscape 3) 5 (or fewer) data points or trends that you view as supportive of making the investment 4) 5 (or fewer) data points of trends that concern you about making the investment 5) Base case forecast based on historical performance 5a) Include a summary of key assumptions used in creating the base case 5b) Please be prepared to share your LBO model with us 6) Valuation recommendation and returns sensitivity 6a) Show 10-year returns on an unlevered and levered bases (for the latter, assume 3x leverage is available) 6b) Key variables to be sensitized are purchase price, EBITDA CAGR, exit multiple (assume range of 6-8x), and leverage 7) 5 (or fewer) high-priority data requests and types of analyses you would run to support your views on the investment