Moelis Interviews
First-Rounds and Superdays for Moelis NY M&A are this week.
Does anyone have any specific insights/thoughts or advice for interviews?
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First round is all techs. They like to ask LBO questions.
Like finding IRR / Paper LBOs?
Agreed. Got LBO and also some restructuring related qs
Pretty standard interview. Know your technicals, polish your story, ask good questions
Ah yes, my first superday ever junior year.... I got rickety rekt....3 specific questions I remember below.
Other than that, your standard accounting 3-statement walk-throughs, DCF walk-through, etc. I think there was one multi-year 3-statement walk-through but I don't remember the specifics. Something like purchasing PP&E with debt and how it flows in years 0, 1, and 2. I had 2 rounds, first technical and second behavioral.
Generally, know your deals fucking cold. I messed this part up at the start, and it only got worse from there. Doesn't help that I started sweating profusely lol.
1) What are 8 ways to increase returns in an LBO?
2) You have a company with $200 TEV and $300 Debt, what is the equity value? Can equity value go negative? What does that mean? (Pretty sure I royally fucked this one up...)
3) Walk through model you built during SA. (They went very deep into the weeds/numbers in my experience.....possibly also because I was kinda BSing my way through it....badly...)
Edit: Forgot to mention the deal I was talking about was from a past summer internship at a family office where I built a very simple LBO....If you are going to talk LBO, you need to be uber prepared....
Woah what did you say for the 8? Here are my ideas: 1. Lower purchase price 2. Increase leverage 3. Decrease CapEx 4. Grow revenue 5. Exit at a higher multiple 6. Do a dividend recap 7. Use lower yield debt with minimal debt repayment, like Term B loans, and invest the extra cashflow in something high yield. 8. Increase margins by decreasing operating expenses.
Anyone have feedback? I’d be grateful to know if these are alright answers, especially my #7.
Those are correct. I think the answer instead of your 7. was optimize working capital in terms of reducing inventory days / AR days, etc. to boost cash flow conversion. Your 7. certainly seems acceptable, but I'd be cautious providing a more nuanced answer like that, as you could get drilled on it.
What, exactly, is an LBO?
Taking a stab at the equity value question - assuming no cash equity value would technically be -100, but an important note here is that book value of equity can go negative, but market value can't as you aren't able to have a negative share price. Basically means the company is being funded with debt opposed to equity. - company likely has been operating at a loss for a while or has issued dividend recaps if it's an LBO
Yep, this is correct. “Option value” (as in there is a chance the company will be worth more than 300 sometime and the overage is owned by equity holders) and illiquidity keep equity worth something (i.e. >0) in the market.
When do most people tend to learn these topics? I just finished freshman year and I could really only answer the 3 statement walkthroughs thoroughly and the DCF partially. I guess it's time to start prepping if I only have a year.
You're fine. I didn't know what a DCF or the 3 statements were until my sophomore fall. I grinded technicals starting winter break -> recruiting
Didn't start prepping seriously until December. From prepping December until now (5-6 months), I believe I now have a thorough understanding of basic to mediocre questions from any of the core topics including Rx (can answer 80-90% of technicals asked in the EB/BB interviews I've had so far)). The only questions I can't answer immediately were likely designed to be trickier.
In short, you're fine. I think it's overkill to start prepping technicals as a freshman... in terms of finance, your time would be better spent reading about companies / preparing stock pitches on your own time / investment clubs, etc.
anyone have insight to how LA interviews are?
Just had my first round 2 hours ago
2 behaviorals into 10-15 technicals...
Grueling but hoping to hear back tonight for superday
bump
were they really lbo focused?
I had like 3 inverted bond yield questions and i pulled answers out my ass at that point.
I knew it means that short term investments yield higher returns than long term investments of the same risk profile which usually indicates a recession. Couldn't explain the reasons why it could happen very well
Had a few basic LBO questions (out of the guide)
Accounting questions that weren't out of the guide but if you understood the concepts from the guide, very straightforward.
Will there be more first rounds for NY?
bump
Just had my first round today. When do we expect to hear back for superday?
How many Behaviorals were there?
Literally just tell me about yourself then all technicals
I can shed light on my first round. Analysts were super sharp but nice.
Behaviorals - story and 1 more about my resume then straight to technicals Accounting - multi-step question not from the guides then 1 PIK question EV/TEV- know TSM well M&A/LBO scenarios- give you some info (a multiple, ebitda, rollover equity, debt) about companies and asked for % return or % owned
Gl everyone
which office is this?
What's TSM?
treasury stock method
No need to say the question you got or anything like that, but in the context of enterprise value, what is the relevance of treasury stock method? (referring to your wording "EV/TEV-know TSM well). Do you mean to calculate total diluted shares so you can divide equity value by it?
TSM is about knowing how many options are in the money and how many can be repurchased to get DSO
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