Unit Economics / Capital Structure Interview Questions
Hope everyone is safe from the snow or the rain -
I was looking for some advice on popular DD/credit interview questions:
- When you are asked to figure out the unit economics of a certain business, does this mean think about the revenue/costs down to the unit level (per subscriber, per bottle, per ounce of gold) and spread out items like G&A across the total unit base?
- Any tips or DOs/DON'Ts for this part?
- Any tips on what to do when you encounter a business you've literally never heard of or thought about?
- If you look at a cap stack and have to explain where you would invest (if at all), what are some key points to think about?
- Where does value break? Appropriate multiple for the business? What is the duration to catalyst (e.g. maturity)?
- What is the value of the collateral? Is the tranche secured? How much are you expected to know about debt docs in a 3,4-hour case study?
- Anything else?
- How do you quantify and compare risks vs. yield? Should you try to evaluate probability-weighted asymmetry in worst-case scenario vs. best case scenario? Any rule of thumb or dos/don'ts for interview purposes?
Sorry for the long-winded question. Happy Tuesday!