Paper LBO Timing

Hi guys,

For those of you who've been through PE recruiting - how long does it typically take you to do a paper LBO (a full paper LBO, inclusive of all 5 year FCF calculation etc)?

How long should you take?

Is the interviewer just sitting in front of you the whole time waiting for you to finish?

Been taking me 10-12 minutes to do the practice ones... Need to get faster.

Thanks for thoughts.

 
Best Response

I would be willing to guess the examples you are doing are more difficult than what you will get in an interview. Most of the time I gave stuff like this:

Assume you buy and sell a company for 6x EBITDA using 3x leverage and 0% cash sweep. Interest is 10% on debt.

Company has $100m sales in year 1, growing $20mm per year. Assume 20% EBITDA margin in year 1 and 50% operating leverage on incremental sales growth in the future (company adding $2mm a year in EBITDA). Assume depreciation of $5mm a year that is also equal to capex spend and change in working capital each year 10% of sales growth ($2mm). 50% tax rate.

That should take you about 1 min to go through sources and uses and then 2-3 mins to get cumulative cash flow, which is all you need to give me a return.

 

be flexible. i've had 30 min interviews and 25 of those minutes were spent on paper LBO. this is a case where interviewer stopped me after every assumption and asked why i made those assumptions. i've also had paper lbo that took 5 minutes and i've had paper lbos that lasted 30 seconds. when i started walking the interviewer through as i was doing the problem he stopped me and said you clearly know what you are doing there's no need to complete this.

 

Quasi non illum et voluptates quae. Harum aspernatur voluptatem non quia. Consequatur itaque et rerum consequatur. Eum ullam doloremque voluptate voluptatem velit quis. Porro dolore delectus nihil quis enim adipisci expedita.

Nihil et ut ex dignissimos facilis quibusdam ab. Quis nemo rerum ut autem magni nam. Quis ut excepturi quod consectetur est. Porro voluptatem qui nihil quia. Eius voluptatum natus exercitationem fugiat alias voluptatibus.

Career Advancement Opportunities

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • Warburg Pincus 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

April 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (90) $280
  • 2nd Year Associate (205) $268
  • 1st Year Associate (387) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (314) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”