PE associate interviews: 4-hour LBO

markb's picture
Rank: Baboon | 130


can anyone share his experience with the long version of the modeling case study for PE associate positions? I found some info here but was wondering more specifically about the PE lbo model.

How detailed are the requirements given to the candidate?
How detailed and deep should the model be?
Which schedules to include?

I still have in vivid memory the LBO test I had for my current job which consisted of a rather straightforward LBO requirements where I was not required to produce any (advanced) schedules... but it was also only 1h test.

Would appreciate any advice on what to focus on for preparation and if there has been another post on that.


Comments (8)

Dec 27, 2014

Every firm gives different modeling tests, so it's hard to predict. As long as you can build a three statement model and are familiar with how different schedules work, then you should be OK if you're practicing. The one piece of advice that I'll add is that as you model, you should be thinking about stuff not only from a technical, modeling perspective but also from a business/investment perspective - do these assumptions make sense, why/why not, how would you describe this investment opp, would you invest?

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Dec 29, 2014

Hey @"CHItizen" thanks for that. definitely agree that one needs to look as much at the assumption as at the mechanics, if garbage comes in, garbage comes out.
in my post i was more after the mechanics part. agreed that 3statement model is key (surprisingly many people we have for interviews are still getting it wrong). i guess i need to dig deeper in the various schedules (debt/amort) and practice doing the model under time constraints.

Dec 29, 2014

Sure thing. The reason I bring up assumption mechanics is because usually after the modeling test, there will be a review with some guys at the firm (which reminds me - a 4 hour modeling test may actually be something like a 3 hour test with a one hour review). First they'll usually ask you to walk through how you built it (don't forget to print format). Then they usually start asking questions about your assumptions and why you chose them. Sometimes they give you the assumptions to work with, so in those cases, they'll ask you whether you think their assumptions make sense and how you would modify them if you weren't forced to take their assumptions.

Dec 29, 2014

thanks. that helps. and great tip not to forget adjusting the printing format !

Dec 29, 2014

I only heard of 2-hr LBO tests, not 4 hours. They will probably share with you an old CIM and have you complete two tasks: 1. case study and 2. model.

Dec 30, 2014

I had an LBO test that was longer than 2 hours (ended up taking about 4 hours in total, including the review) - they gave industry research/primers and also a short summary deck on the company. There weren't any financial projections, so you had to analyze the research + company notes to come up with your own. I didn't really expect that going in, but looking back, it was a pretty neat exercise to give to candidates.

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Dec 31, 2014

Yeh, i think that is what i had in mind: c 3 hours modeling + 1h presentation... they give you all the stuff @CHItizen mentioned and you need the build the model.

Jan 3, 2015