Let’s walk through a typical question from a private equity interview case study pdf.
Prompt:
Step 1: Entry Enterprise Value $50 * 10.0x = $500
Step 2: Initial Debt $50 * 6.0x = $300 (Assuming no cash on BS, Equity = $200)
Step 3: Exit EBITDA Year 0: $50 Year 1: $52.5 Year 2: $55.1 Year 3: $57.9 Year 4: $60.8 private equity interview case study pdf
Step 4: Exit Enterprise Value $60.8 * 9.0x = $547.2
Step 5: Debt Paydown This is the nuance. You need cumulative Free Cash Flow. Assume EBITDA - Interest - Taxes - CapEx (simplified).
Step 6: Exit Equity Value Exit EV ($547.2) - Ending Debt ($188) = $359.2
Step 7: MOIC & IRR Initial Equity = $200. Exit Equity = $359.2. MOIC = 1.80x (or 80% return). IRR over 4 years: Approx 16% (1.8^(1/4)-1 = ~16%). Let’s walk through a typical question from a
Why this matters: If you forgot debt paydown, exit equity would be $547.2 - $300 = $247 (1.24x MOIC, 5% IRR). You would be rejected.
Structure:
The most common format. You receive a PDF with 5-10 pages of financials (P&L, Balance Sheet, Cash Flow) and a few operational footnotes.
This is the first page of your PDF. It tells the partner how you are buying the company. Step 1: Entry Enterprise Value $50 * 10
When the recruiter sends you the PDF, you will be tempted to open Excel immediately. Stop. Spend the first 30 minutes just reading and annotating.
Create a "Risk Register" on a piece of paper. Look for these three killers in the PDF:
Once you identify these, your model becomes defensive. You will get more credit for flagging the risk of a liquidity crunch than you will for a perfectly formatted Excel sheet.