Month of Interview:
March
Industry Detail:
Investment Banking
How long did the interview process last?:
1-2 months
2nd Year Analyst
Group/Division/Type:
Generalist
What did the interview consist of?:
Phone Interview
Group Interview
How did you get the interview?:
Employee Referral
What were the most difficult or unexpected interview questions asked?:
A paper LBO is exactly what it sounds like: modeling an LBO and calculating returns using only a paper and pencil.
You might be allowed to use a calculator, but you might not. So it’s best to assume you’ll have to do all the math in your head.
Given that, I have 2 guidelines:
One, SIMPLIFY your assumptions as much as possible. But be transparent and call out when you simplify something. You can say it’s something you would go into more detail if you had more time (or a computer).
Two, use round numbers to make estimates easier to compute in your head. If you are dealing with decimals, round them. Say you’re doing this to simplify calculations and it shouldn’t change the answer about whether to invest. Again, you can say you’d go into more detail if you had more time, or a computer.
It’s definitely OK to use round numbers and simplify assumptions. In fact, it’s highly recommended.
That is MUCH better than trying to be a superhero and calculate to the 2nd decimal place on everything and then making MISTAKES.
Mistakes in a paper LBO easily snowball and blow up your calculations.
You can end up with results that make no sense. And that’ll just make you look stupid. Those situations don’t result in offers.
No votes yet
Overall, how would you describe your interview experience?:
Positive
Please describe the interview / hiring process.:
TD off-cycle investment banking interview. It was for 2-3 positions for their various industry IB groups.
Overall, how difficult was the interview?:
Difficult
Official Undergrad School Name:
Overall Undergrad GPA:
4.7
Undergrad Class Year (or expected):
2008
Degree 1:
BCom or BComm
Major 1:
Accounting
Varsity Athlete:
No
Millitary Program (ie. ROTC):
No
Race:
Asian
Sex:
Male
Outcome of Interview:
No Offer
Year of Interview:
2016
Why did you choose to decline the offer? (optional):
Did not receive offer.
How did you answer each of these questions (please be specific)?:
PE Capital is considering a purchase for 5.0x LTM EBITDA. LTM Revenue is $500M. PE Capital will borrow 60% of the purchase price and invest 40% equity capital. The weighted average interest rate for all debt is estimated at 8%.
The credit agreement provides that $30M must be amortized annually. PE Capital plans to use all excess free cash to pay down principal.
TargetCo’s revenue is expected to grow organically 7% annually for the next 5 years, at which time PE Capital plans to sell the company. The company’s biggest revenue drivers are electronics and household products.
Over the last few years, TargetCo has fairly consistently booked EBITDA margins of ~20%. Capital expenditure hovers around 5% of revenue annually. Net working capital is roughly 3% of revenue per year. The company depreciates ~80% of its CapEx each year. The company’s tax rate is 40%.
Whew! I just threw a lot of facts at you.
In your PE interview, your paper LBO case might be simpler, or it might be more complicated. It might have lots of extraneous information. It might be a 3-page print out with 80% irrelevant details.
The point is, it can take lots of different forms. So whatever it is, you’re gonna have to quickly organize the facts and pull out the critical pieces of info you need.
Forums: