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Comments (27)

Sep 16, 2020 - 7:09pm

Did first round last year so I can give some insight assuming process is still the same.

It was a 30-45 minute call where we first began with the typical behavioral questions (Why Bain Capital, What are your interests, tell me about yourself, etc.). Then I was given a market sizing question, which led to determining if a company would be a good acquisition or not. It was based on a real Bain Capital acquisition (if I remember correctly, Chuck E. Cheese).

I first had to determine the market value for Chuck E. Cheese, and then determine if Chuck E. Cheese has a profitable business model or not, and if Bain capital should invest in them.

I'll be happy to answer any follow up questions you may have. I can also speak on the super day process as well. Good luck!

Sep 16, 2020 - 9:20pm

This is awesome! Will definitely rep the market sizing stuff, seems that that is key. Anything good to focus on what makes the business profitable or tips with the sizing?

I will be sure to followup in the case of a super day, really appreciate it!

Array

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Sep 16, 2020 - 9:28pm

I believe it started out as something like "forecast the amount of revenue Chuck E. Cheese makes annually." (The market sizing part)

From there I was asked something along the lines of "if I wanted to acquire Chuck E. Cheese, what factors would I consider?" And then I was given some data, and we walked through the case in that sense. I was given things such as annual growth rate, operating costs, revenues, etc.

There's nothing in particular that you would need to know beforehand besides knowing how to go through cases. Similarly to any MBB case, if you are able to tackle consulting cases and know basic financial terminology, you'll do fine. Good luck!

Most Helpful
Sep 20, 2020 - 2:07am

Bain Capital Credit Interview Prep

1) Read loan market updates (weekly/Q) - LCDcomps.com / LevFin Insights (LFI)

2) Loan products (RC/TLA/1L TLB/2L TL/Unitranche) - get comfortable distinguishing btw lender/investor, general characteristics

  • -Revolver/Term Loan A (banks, less leverage, covenants, 5yr tenor, pricing is lower, amort on TLA)
  • -Term Loan B: 1st Lien TLB / 2nd lien TLB / Unitranche (institutional investors, more lev, possibly cov-lite, higher pricing, 1% amort - 1L/2L - no amort, etc.)

3) Direct Lending vs. Broadly Syndicated - Execution Strategy - know the diff considerations from borrower perspective

  • certainty of funds, speed of execution, albeit at a higher price/fees most likely, deal w/ 1 lender vs. a group of lenders, etc.) - read Direct Lending primer

4) Underwriting Fees & Flex - LBO: RC / 1L TLB / 2L TL. Typical fees and flex, normal market:

  • RC/1L 2.25% (125 bps flex)
  • 2L 2.75% (150 bps flex)
  • Privately placed 2L 0.25% to 0.50% UW Fee (priv placed much more common today)

Bain Credit - also acts as Underwriter in say an M&A/LBO deal say that Bain is also the Sponsor to- gets underwriting fees (why not?). So it may not hurt to know that. look thru my comments thread I detailed fees and flex somewhere. It might be in 1 of these 2 links actually:

https://www.wallstreetoasis.com/forums/tla-vs-tlb-maturity-and-leverage#comment-2071053

https://www.wallstreetoasis.com/forums/oid-in-leveraged-loans

Hit me up if you want me to send you anything to prep. Good opportunity - make it count.

Sep 20, 2020 - 5:01am

Great material shared by Loanboy043 above. Forgot to mention that it will be very beneficial to understand the ins and outs of credit/debt, as well as doing research on the type of debt structuring Bain Capital is known for. Definitely try to exhibit this knowledge during the case interviews

Sep 20, 2020 - 5:13am

For risks/mitigants aka Credit Strengths/Weaknesses, see Moody's and S&P rating action reports (free - I suggest creating a login).

Here's S/W from Moody's and S&P for eResearch Technologies - Nov-19 (B/B3),

Capital Structure

RC/1L/2L TL structure

RC $200 / 5yr

1L TLB $1,155 / 7yr

2L TL (Priv Placed) $395/ 8yr

Credit & Operating Statistics

EBITDA $210

5.5x / 7.4x leverage

Strengths - Moody's

1) significant  customer concentration (albeit across a number of different clinical trials), 
2) strong market position in the niche electronic based clinical outcome assessment market, 
3) solid growth prospects driven by favorable industry fundamentals, 
4) solid EBITA margins 
5) high revenue visibility provided by contract backlog.
6) meaningful growth in the backlog in the last 6m indicates that the company has largely overcome the operating challenges
7) revenue growth coupled with cost saving initiatives will drive earning expansion 
 a) Moody's projects will reduce Debt/EBITDA to <7.0x in 2020 

Weaknesses

1) very high financial leverage - PF Moody's Adj. Debt/EBITDA:  7.9x 
2) elevated financial risk associated with private equity ownership evidenced by aggressively high initial debt levels following the proposed LBO
3) aggressive track record of growth through debt-funded acquisitions. 
4) significant  customer concentration (albeit across a number of different clinical trials)
5) risk that larger better capitalized companies could choose to pursue developing their own electronic clinical outcome assessments. 
6) recent revenue declines related to integration of the 4 recent acquisitions, to extend into early 2020. 

Strengths - S&P

1) moderate customer concentration (top 2 customers account for 15% of its revenue, albeit across mullple individual studies), 
2) revenue growth of ~11% in 2020 on
3) strong and improving bookings and 
4) favorable industry dynamics following revenue declines in 2019 due to pla􀆞orm integraton  issues. 
5) We expect strong growth in the electronic clinical outcome assessment (eCOA) industry 
6) expansion in other areas as management seeks to grow its new Imaging and Digital Patent segments
7) maintain EBITDA margin of 30% in 2020
8) $30-$40 of FCF in 2020

Weaknesses - S&P

1) small scale
2) specialized focus on providing eCoa, imaging, cardiac safety, and respiratory services to large pharma companies and contract research organizatons (CROs) for clinical trials. 
3) moderate customer concentration (top 2 customers = 15% of revenue, albeit across multple individual studies), 
which makes it 
4) sensitve to industry, regulatory, or key
customers shi􀅌s. 
5) very high leverage, which we expect to be around 9x for 2019
6) limited history of generatng material FCF
7) risk it will underperform base case scenario

Triggers - Upgrade/Downgrade

Upgrade

S&P

 1) consistently strong revenue growth
2) free cash flow of $30 million or more.

Moody's

1) meaningful profitable revenue growth
2) commitment to less aggressive financial policies, such that
3) Debt/EBITDA is sustained <6.0x
4) FCF/Debt is maintained: >5%.

Downgrade

S&P

1) revenue growth is anemic
2) improvement in margins fails to meet our expectatons such that 
3) FCF to debt will fall below 2% b/c of
  a) integraton issues, 
  b) a drop in bookings, 
  c) increasing competton, 
  d) contnued high restructuring, integraton, and transacton costs, 
  e) or acquisitons or debt funded dividends that raise the company's cash interest expense
 

Moody's

1) operating performance deteriorates, 
2) FCF weakens
3) does not reduce leverage
4) Liquidity deterioration, 
5) Aggressive financial policies or 
6) EBITA / Interest: <1.25x

Oct 5, 2020 - 4:53pm

I saw on linkedin that someone accepted an offer on friday...not sure how many they've given out. I had my superday this past friday and haven't heard anything yet

Oct 5, 2020 - 5:51pm

Lol I think I saw the post you are referencing, I have yet to hear but have heard definitely by the 9th, still not sure why it has taken so long.

Array

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