Growth equity interview format
Got an IV at a MM GE-focused firm. 2 hours on zoom with them and a case study given to me the day before. Sounds like it will be ~5 hours of work. What should I expect? Is it appropriate to ask them if there is modelling?
I have heard it could be: a DCF, three statement analysis / projection, LBO (which seems weird, but is honestly preferable)
For reference: I am a consultant and will need to learn some of this stuff.
Did you hear directly from them that it would be a DCF, 3S, or LBO? I personally would be surprised if the case study was focused on a DCF or LBO if you are interviewing for a growth equity role. I think the 3S analysis is fair game though. I would say the typical growth equity case study is going to judge your investment rationale. They'll give you a potential company to invest in and ask whether or not you would invest and why. The key points to highlight would be the metrics they potentially will provide, the industry the company operates in, and the key risks of the investment.
Ultimately, this all depends on the growth equity fund you are interviewing for as they can give whatever they believe is important to evaluate you. Maybe I am wrong and they do test you on a DCF and LBO. But from my experience and talking to others in the industry, you never build a DCF or LBO for growth equity. It's impossible to build an accurate DCF on a company in high growth mode with unpredictable cash flows. It's also unlikely you would want to lever a growth company since they're usually unprofitable and have unpredictable cash flows.
This is really helpful. Thank you. They didn't ask any technical questions in the first round--which surprised me--so I imagine it is not a core focus (or, on the other hand, it could become one lol). 3S is where I will focus I think.
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