PE Interview - Need to learn modeling in 2 days

Hi fellow monkeys

I am in the process for an analyst position at PE, I first passed a phone interview, and was invited for a 1-1 in person interview at their offices. At one point the gave me a laptop and a keyboard and I was given 30' to do an easy modeling exercise

It seems that I did well and the next stage of the process is to build a model from scratch and present this to the partners. Well, the problem is that I have no idea how to build a model, I have <1 experience in IB and did not want to move to PE yet, however I unexpectedly landed an interview at a PE that I really like so I want to try this seriously

I have taken some models from work and I want to start building them from scratch but I have no idea if I should approach this differently. What will they want me to do? Just build a 3 statement LBO model and give the IRR? and if so, how do I learn to do this in 2 days?

I want to try, even though I seem this kind of impossible...
Thanks!

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Comments (15)

Most Helpful
Jan 25, 2019

macacabus's LBO modeling tutorial. It's free.

    • 3
Feb 6, 2019

love this kind of answers

Thanks a lot!

Jan 25, 2019

Macabacus is way overkill. You need to prioritize. Their model has far too many bells and whistles to learn cold in a matter of days. I have done many modeling tests and never needed that level of detail. I would recommend the WSO full LBO guide or the Multiple Expansion LBO. These are skinnied down and any competent person should be able to replicate from memory well enough to get a pass given a few days time

"Rage, rage against the dying of the light."

    • 1
Jan 25, 2019

x2 multiple expansion

Start with WSO, buy it, do the first three, then jump to ME

Jan 26, 2019

I would start with the easy Multiple Expansion LBO before everything else. When you have the basic concepts down, then do their more advanced one

Macabacus too complicated for me

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Feb 6, 2019

Thanks I'll consider buying the WSO modeling prep pack, certainly the maccabacus model test seems too complicated

Jan 30, 2019

yeah i seriously co-sign the multiple expansion LBO. go to the "training LBO section"

Jan 26, 2019

I would say that the first LBO module in BIWS is fairly comprehensive and accesible. Shouldn't take you longer than 5 hours to complete and it touches upon everything (including paper LBOs).

Jan 26, 2019

Well first thing is that if you've been in IB for 6 months then you should be able to build a three statement model. If you can do that, then you're almost there. At that point all you need to do is build your sources and uses, plug in the debt terms you're given (or be thoughtful if they don't give you any) and flow that through so you can distribute cash post debt pay down. You may have to contemplate cash sweeps, PIK accrual, etc but the resources above should be able to teach you that in 20 minutes.

Once you've got everything linked up and LFCF then it's just a matter of distributing to equity/calculating exit value and running sensitivities on IRR and MOIC.

They're probably looking for two things: 1. Can this person build the model and have it all linked up correctly with a few minimum bells and whistles but nothing insane (though some funds get aggressive here) and 2. Did they put some thought into the forecast and can they defend their assumptions? 1 is table stakes but 2 is what can separate you from the pack so be sure to really think about if the revenue growth/margin uplift makes sense and can be backed up.

Feb 6, 2019

Thanks for the advice. Great comments, I appreciate them

Yes, I think I am able to do a basic 3 statements model but I have never done one by myself and I doubt I will be able to do it entirely in the allotted time. Hope I have enough time to practice because I know it is going to be a model on a very specific industry and industry knowledge will be necessary

Jan 26, 2019

As long as it's not O&G or FIG then I think you'll be okay. Industry knowledge will definitely be useful (especially if you know the industry pretty well) but generally speaking an LBO for healthcare is mechanically the same as a tech LBO

Jan 26, 2019

Echo the above. Do not waste your time on macabacus that is way too complicated and overkill. Ask your friends who did banking -> pe to send example case studies to you and the model answers. You just need to be able to do a 3 statement model I highly doubt it'll be too complex given it's an analyst role.

Feb 6, 2019

Agree with the comments above that simplicity is everything here. Worst thing you can do is use a "real world" model, i.e. something that someone did for actual work on the job. That will always be less intuitive than one that's taught in a course format. Be willing to spend a few hundred bucks on one of the short courses mentioned in the comments above. You need to learn this stuff eventually anyway, it's a drop in the bucket to help your career.

Feb 6, 2019

I ended up using a real-life model for a specific project that an ex-colleague sent me over. It is true that the specificities and singularity of the model made it hard for me to really understand the basic structure but I was given a very similar model in the interview. Overall, I agree with your point, I didn't have the cash though anyway

Thanks!

Feb 7, 2019
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