Growth Equity Case Study Interview

Hey Guys,

I have an interview with a German Tech Focussed Growth Equity Investor and it is a back to back interview with an Associate and an Investment Manager. I have been told that the interview will have case studies. May I know if the case studies would be of LBO type or the ones that happen in consulting?

Thanks in Advance.

Region

Comments (5)

 
Mar 25, 2020 - 3:00pm

Well it probably won't be the LBO type since it's unlikely they do LBOs ;)

Here's my firm's "case interview" approach, not sure what others in the industry do but I think it's a decent approximation of the skillset you need to be good at the job:

  • Identify an industry the candidate knows reasonably well based on past projects, deals, etc. (we don't hire undergrads, so easy to find something)

  • Ask them to talk through why the industry is exciting, what risks there are in it, who the incumbent players / solutions are -- basically seeing how thoughtful they can be about market dynamics and if they can approach a space as we would

  • Some brain-teaser type math, like asking them to estimate bottoms-up TAM for the space

  • Discussions of what financial / operating metrics you could expect to see in an industry like this -- what would sales cycles look like and why, what would you expect gross margin to be, etc.

  • If they flag any specific companies in the space, go a level deeper with those -- why is Company X's approach to the space unique, what's defensible, who would they be most likely to win with and why

 
Mar 27, 2020 - 2:23pm

You should also be prepared to interview the interviewer. If you could ask anything about a company to make an investment decision, what would you want to know ? Think about things line management, market size/growth, burn rate and competition.

To be honest, I've heard of both consulting and LBO-type cases so you should prepare for both. Also have a few companies in mind that you'd like to invest in and be prepared to speak about some sectors that you particularly like (e.g. AI, blockchain, health tech, mobility, recruitment software, etc.).

 
Mar 27, 2020 - 8:10pm

The replies you've got are quite good. Overall it's unlikely growth equity shops will have LBO models, especially in the tech sector where multiples are sky high (well a bit less now with Covid).

You should research the company you're going for and see what their investment criteria are. For example, if they tend to take control positions, then do prepare LBO models. Moreover, you can understand if they use leverage, B2B vs B2C, geographic focus...

Make sure to brush up on multiples and know the sectors they invest in well. Furthermore, may be obvious, but understand what drives multiples -e.g. higher growth, larger companies, niche sectors...

Most important of all, they will want to see you think like an investor, so have an idea in mind of what you look for in companies and be ready to defend it.

Good luck!

 
  • Prospect in 
Apr 9, 2020 - 3:36pm

OP Update:

Hey guys!

Thanks a lot for all your comments. Really helpful.

So this is how my interview went.

**Interview with the Investment Manager: **
A few minutes of introduction and fit based questions. Then we jumped into the case. I was shown the first three slides of an investment teaser which consisted of the target's market, overview of the product and names of major customers. I had to question the interviewer on the Strategic fit and growth potential of the target and understand the company in general, and then provide my views on it, strictly from a strategic point of view. This went on for 7-10 minutes.

After that I was shown the income statement of the target for the last 5 years and I had to find out the points of concern. After I found them out, I had to make two assumptions on what could have happened, for each point - one that could favour the company's growth and one that would hinder.

Finally, I was given the revenue projections and investment criteria, exit targets etc.. and was asked to calculate if this would be a good investment financially.

**Interview with the associate:
**
This was more chilled down, compared to the previous interview. This was right after my first interview. There were a few fit based questions and then we started discussing on which sub sector I would like to focus, if I join the firm. Afte that, I was asked about my views on the existing investments and we had quite a long discussion. Finally I had to talk about a few targets where the firm could invest in. So overall, this was a usual interview you would like to expect.

Also, this was for an internship and not a full time position. I got the offer and I have accepted it too. Thanks again everyone for your insights. They were of great help :)

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