3-4 hours model test, what should i expect?

Hi everyone, I have a PE interview coming next week. it's my first time to do PE interview and I really want some advice on how I can prepare for it.
I was told i need to do a 3-4 hours modeling test in their office. It's a case study and I need to finish a model and write a brief investment memo. It is a big buyout fund and they are recruiting for their newly raised growth fund.

my question is:
1. Will it be an LBO test? I only prep for LBO...not sure if I can do DCF or other models...
2. How simplified should the model be? Do i need to include a balance sheet, or I can just include basic parts like working capital and long lived assets to build a CFS?
3. How many time should I spend on the model? I tried to practice on a case and it took me 4 hours to finish a model..

Thanks a lot and really appreciate your help!

 
Best Response

Hey, never seen a PE ask for DCF. DCF is pretty worthless.

  1. Likely to be more in-depth LBO, maybe they'll ask multiple parts, e.g., add in dividend recap
  2. They'll tell you how they want the model -- there's no way for me to predict. Given it's a longer test, likely to be more complicated. Generally speaking, BS and working capital are least important for LBO test, but since yours is longer, again they may ask for it.
  3. That is too long. You should be able to cruise through the model 2 hours max.

Check out multipleexpansion.com if you need help. It's been making the rounds and has pretty good LBO template.

 

thanks! that's very helpful!

I also have a similar question. i am trying to practise with the IMs i have, but most of them don't include very detailed financials, only one or two page including some basic items of IS, BS and CFS. i.e: most of them only include part of B/S with no information on share structure, or only have a brief BS on cash-free-debt-free basis. will the case in the interview similar to this? or it will be more like 10Ks with tons of information to build a complete LBO?

thanks~

 

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