what is a private equity case study

Private Equity Case Study: Example, Prompts, & Presentation

Private equity case studies are an important part of the private equity recruiting process because they allow firms to evaluate a candidate’s analytical, investing, and presentation abilities.

In this article, we’ll look at the various types of private equity case studies and offer advice on how to prepare for them.

This guide will help you ace your next private equity case study, whether you’re a seasoned analyst or new to the field.

Types Of Private Equity Case Studies

Case studies are very common in private equity interviews, and they are a key part of the overall recruiting process.

While you’re extremely likely to encounter a case study of some kind during your recruiting process, there is considerable variety in the types of case studies you might face.

Below I cover the major types:

Take-home assignment

In-person lbo modeling assignment.

For this case study, you’ll get some company information (e.g. a 10-K or a CIM) and be asked to assess whether or not you’re likely to invest.

Generally, you’ll get between 2-7 days to prepare a full presentation or investment memo with your recommendations that you’ll present to the interviewer. To support your investment recommendation, you’ll be expected to complete a full LBO model . The prompt may give certain details or assumptions to include in the model.

This type of test is most common during “off-cycle” hiring throughout the year, since firms have more time to allow you to complete the assignment.

This is pretty similar to the take-home assignment. You’re given company materials, will build a financial model, and decide whether you would invest.

The difference here is the time you’re given to complete the case. You’ll generally get between two to three hours, and you’ll typically complete the case study in the firm’s office, though some firms are becoming newly open to completing the assignment remotely.

In this case, you’ll typically only complete an LBO model. There is usually no presentation or investment memo. Rather, you’ll do the model and then have a short discussion afterward.

This is a shorter, more condensed version of an LBO model. You can complete a paper LBO with a piece of paper and a pen. Alternatively, you may be asked to discuss it verbally with the interviewer.

Rather than using an Excel spreadsheet, you use an actual sheet of paper to show your calculations. You don’t go into all the detail but focus on the essence of the model instead.

In this article, we’ll be focusing on the first two types of case studies because they are the most widely used. But if you’re interested, here is a deep dive on Paper LBOs .

Private Equity Case Study Prompt

Regardless of the type of case study you’re asked to do, the prompt from the interviewer will ultimately ask you to answer: “would you invest in this company?”

To answer this question you’ll need to take on the provided materials about the company and complete a leveraged buyout model to determine whether there is a high enough return. Generally, this is 20% or higher.

Usually, prompts also provide you with certain assumptions that you can use to build your LBO model. For example:

Pro forma capital structure
Financial assumptions
Acquisition and exit multiples

Some private equity firms provide you with the Excel template needed for an LBO model, while others prefer you to make one from scratch. So be ready to do that.

Private Equity Case Study Presentation

As you’ve seen above, if you get a take-home assignment as a case study, there’s a good chance you’re going to have to present your investment memo in the interview.

There will usually be one or two people from the firm present for your presentation.

Each PE firm has a different interview process, some may expect you to present first and then ask questions, or the other way around. Either way, be prepared for questions. The questions are where you can stand out!

While private equity recruitment is there to assess your skills, it’s not all about your findings or what your model says. The interviewers are also looking at your communication skills and whether you have strong attention to detail.

Remember, in the private equity interview process, no detail is too small. So, the more you provide, the better.

How To Do A Private Equity Case Study

Let’s look at the step-by-step process of completing a case study for the private equity recruitment process:

Step 1: Read and digest the material you’ve been given. Read through the materials extensively and get an understanding of the company.
Step 2: Build a basic LBO model. I recommend using the ASBICIR method (Assumptions, Sources & Uses, Balance Sheet, Income Statement, Cash Flow Statement, Interest Expense, and Returns). You can follow these steps to build any model.
Step 3: Build advanced LBO model features, if the prompts call for it, you can jump to any advanced features. Of course, you want to get through the entire model, but your number 1 priority is to finish the core financial model. If you’re running out of time, I would skip or reduce time on advanced features.
Step 4: Take a step back and form your “investment view”. I would try to answer these questions:
What assumptions need to be present for this to be a good deal?
Under what circumstances would you do the deal?
What is the biggest risk in the deal? (e.g. valuation, growth, and margins).
What is the biggest driver of returns in the deal? (e.g. valuation, growth, and debt paydown).

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How To Succeed In A Private Equity Case Study

Here are a few of my tips for getting through the private equity fund case study successfully.

Get the basics down first

It’s very easy to want to jump into the more complex things first. If you go in and they start asking you to complete complex LBO modeling features like PIK preferred equity, getting to that might be on the top of your list.

But I recommend taking a step back and starting with the fundamentals. Get that out the way before moving on to the complicated stuff.

The fundamentals ground you, getting you through the things you know you can do easily. It also gives you time to really think about those complex ideas.

Show nuanced investment judgment; don’t be too black-and-white

When giving your investment recommendation for a private equity fund you shouldn’t be giving a simple yes or no.

It’s boring and gives you no space to elaborate. Instead, go in with what price would make you interested in investing and why. Don’t be shy to dig in here.

Know where there is a value-creation opportunity in the deal, and mention the key assumptions you need to believe to create that value.

Additionally, if you are recommending that the investment move forward then bring up things you would want to know before closing a deal. You can highlight the key risks of the investment, or key things you’d want to ask management if you could meet with them.

At the end of the day, financial modeling is a commodity skill. Every investor can do it. What will really set you apart is how you think about the deals, and the nuance you bring to analyzing them.

You win by talking about the model

Along those lines, you don’t win by building the best model. Modeling is just a check-the-box thing in the interview process to show you can do it. The interviewers need to know you can do the basics with no glaring errors.

What matters is showing that you can discuss the investment intelligently. It’s about bringing a sensible recommendation to the table with the information to back it up.

How Do I Prepare For A Private Equity Case Study?

There is no one-size-fits-all when it comes to preparing for a private equity case study. Everyone is different.

However, the best thing you can do is PRACTICE, PRACTICE, and more PRACTICE!

I know of a recent client that successfully obtained an offer from multiple mega funds . She practiced until she was able to build 10 LBO models from scratch without any errors or help … yes, that’s 10 models!

Now, whether it takes 5 or 20 practice case studies doesn’t matter. The whole point is to get to a stage where you feel confident enough to do an LBO model quickly while under pressure.

There is no way around the pressure in a private equity interview. The heat will be on. So, you need to prepare yourself for that. You need to feel confident in yourself and your capabilities.

You’d be surprised how pressure can leave you stumped for an answer to a question that you definitely know.

It’s also a good idea to think about the types of questions the private equity interviewer might ask you about your investment proposal. Prepare your answers as far as possible. It’s important that you stick to your guns too when the situation calls for it, because interviewers may push back on your answers to see how you react..

You need to have your answer to “would you invest in this company?” ready, and also how you got to that answer (and what new information might change your mind).

Another thing that gets a lot of people is limited time. If you’re running out of time, double down on the fundamentals or the core part of the model. Make sure you nail those. Also, you can make “reasonable” assumptions if there’s information you wish you had, but don’t have access to. Just make sure to flag it to your interviewer

How important is modeling in a private equity case study?

Modeling is part and parcel of private equity case studies. Your basics need to be correct and there should be no obvious mistakes. That’s why practicing is so important. You want to focus on the presentation, but your calculations need to be correct first. They do, after all, make up your final decision.

How can I stand out from other candidates?

Knowing your stuff covers the basics. To stand out, you need to be an expert in showing how you came to a decision, a stickler for details, and inquisitive. Anyone can do the calculations with practice, but someone who thinks clearly and brings nuance to their discussion of the investment will thrive in interviews.

Private equity case studies are a difficult but necessary part of the private equity recruiting process . Candidates can demonstrate their analytical abilities and impress potential employers by understanding the various types of case studies and how to approach them.

Success in private equity case studies necessitates both technical and soft skills, from analyzing financial statements to discussing the investment case with your interviewer.

Anyone can ace their next private equity case study and land their dream job in the private equity industry with the right preparation and mindset. If you’re looking to learn more about private equity, you can read my recommended Private Equity Books.

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Private Equity Interviews 101: How to Win Offers

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Private equity interviews can be challenging, but for most candidates, winning interviews is much tougher than succeeding in those interviews.

You do not need to be a math genius or a gifted speaker; you just need to understand the recruiting process and basic arithmetic.

Still, there is more to PE interviews than “2 + 2 = 4,” so let’s take a detailed look at the process:

How to Network and Win Private Equity Interviews

The Private Equity recruiting process differs dramatically depending on your current job and location.

Here are the two extremes:

Investment Banking Analyst at a Bulge Bracket or Elite Boutique in New York: The process will be highly structured, and interviews will finish at warp speed. In some ways, your bank, group, and academic background matter more than your skill set or deal experience. This one is known as the “on-cycle” process.
Non-Banker in Another Part of the U.S. or World: The process will be far less structured, it may extend over many months, and your skill set and deal/client experience will matter a lot more. This one is known as the “off-cycle” process.

If you’re in between these categories, the process will also be in between these extremes.

For example, if you’re at a smaller bank in NY, you may complete some on-cycle interviews, but you will almost certainly also go through the off-cycle process at smaller firms.

If you’re in London, there will also be a mix of on-cycle and off-cycle processes, but they tend to start later and move more slowly than the ones in NY.

We have covered PE recruiting previously ( overall process and what to expect in the on-cycle process ), so I am not going to repeat everything here.

Interviews in both on-cycle and off-cycle processes test similar topics , but the importance of each topic varies.

The timing of interviews and start dates, assuming you win offers, also differs.

The Overall Private Equity Interview Process

Regardless of whether you recruit in on-cycle or off-cycle processes, or a combination of both, almost all PE interviews have the following characteristics in common:

Multiple Rounds: You’ll almost always go through at least 2-3 rounds of interviews (and sometimes many more!) where you speak with junior to senior professionals at the firm.
Topics Tested: You’ll have to answer fit/background questions, technical questions, deal/client experience questions, questions about the firm’s strategies and portfolio, market/industry questions, and complete case studies and modeling tests.

The differences are as follows:

Timing and Time Frame: If you’re at a BB/EB bank in NY, and you interview with mega-funds, the process starts and finishes within several months of your start date at the bank (!), and it moves up earlier each year. Interviews at the largest firms start and finish in 24-48 hours, with upper-middle-market and middle-market firms beginning after that.

By contrast, interviews start later at smaller PE firms, and the entire process may last for several weeks up to several months.

Importance of Topics Tested: At large funds and in the on-cycle process, you need to complete modeling tests quickly and accurately and spin your pitches and early-stage deals into sounding like real deals; at smaller funds and in off-cycle interviews, the reasoning behind your case studies/modeling tests and your real experience with clients and deals matter more.

Firm-specific knowledge and fitting your investment recommendations to the firm’s strategies are also more important.

Start Date: You interview far in advance if you complete the on-cycle process, and if you win an offer, you might start 1.5 – 2.0 years later. With the off-cycle process, you start right away or soon after you win the offer.

Private Equity Interview Topics

There is not necessarily a correlation between the stage of interviews and the topics that will come up.

You could easily get technical questions early on, and you’ll receive fit/background and deal experience questions throughout the process.

Case studies and modeling tests tend to come up later in the process because PE firms don’t want to spend time administering them until you’ve proven yourself in previous rounds.

However, there are exceptions even to that rule: For example, many funds in London start the process with modeling tests because there’s no point interviewing if you can’t model.

Here’s what to expect on each major topic:

Fit/Background Questions: “Why Private Equity?”

The usual questions about “ Why private equity ,” your story , your strengths/weaknesses , and ability to work in a team will come up, and you need answers for them.

We have covered these in previous articles, so I’ve linked to them above rather than repeating the tips here.

Since on-cycle recruiting takes place at warp speed, you’ll have to draw on your internship experience to come up with stories for these questions, and you’ll have to act as if PE was your goal all along.

By contrast, if you’re interviewing for off-cycle roles, you can use more of your current work experience to answer these questions.

While these questions will always come up, they tend to be less important than in IB interviews because:

In on-cycle processes, it’s tough to differentiate yourself – everyone else also did multiple finance internships and just started their IB roles.
They care more about your deal experience, whether real or exaggerated, in both types of interviews.

Technical Questions For PE

The topics here are similar to the ones in IB interviews: Accounting, equity value and enterprise value , valuation/DCF, merger models, and LBO models.

If you’re in banking, you should know these topics like the back of your hand.

And if you’re not in banking, you need to learn these topics ASAP because firms will not be forgiving.

There are a few differences compared with banking interviews:

Technical questions tend to be framed in the context of your deal experience – instead of asking generic questions about the WACC formula , they might ask how you calculated it in one specific deal.
More critical thinking is required. Instead of asking you to walk through the financial statements when Depreciation changes, they might describe companies with different business models and ask how the financial statements and valuation would differ.
They focus more on LBO models, quick IRR math , and your ability to judge deals quickly.

Most interviewers use technical questions to weed out candidates , so poor technical knowledge will hurt your chances, but exceptional knowledge won’t necessarily get you an offer.

Talking About Deal/Client Experience

This category is huge, and it presents different challenges depending on your background.

If you’re an Analyst at a large bank in New York, and you’re going through on-cycle recruiting, the key challenge will be spinning your pitches and early-stage deals into sounding like actual deals.

If you’re at a smaller bank, and you’re going through off-cycle recruiting, the key challenge will be demonstrating your ability to lead, manage, and close deals .

And if you’re not in investment banking, the key challenge will be spinning your experience into sounding like IB-style deals.

Regardless of your category, you’ll need to know the numbers for each deal or project you present, and you’ll need a strong “investor’s view” of each one.

That’s quite a bit to memorize, so you should plan to present, at most, 2-3 deals or projects.

You can create an outline for each one with these points:

The company’s industry, approximate revenue/EBITDA, and multiples (or, for non-deals, estimated costs and benefits).
Whether or not you would invest in the company’s equity/debt or acquire it (or, for non-deals, whether or not you’d pursue the project).
The qualitative and quantitative factors that support your view.
The key risk factors and how you might mitigate them.

If you just started working, pick 1-2 of your pitches and pretend that they have progressed beyond pitches into early-stage deals.

Use Capital IQ or Internet research to generate potential buyers or investors, and use the company-provided pitch materials to come up with your projections for the potential stumbling blocks in the transaction.

For your investment recommendation, imagine that each deal is a potential LBO, and build a quick, simple model to determine the rough numbers, such as the IRR in the baseline and downside cases.

For the risk factors, reverse each model assumption (such as the company’s revenue growth and margins) and explain why your numbers might be wrong.

If you’re in the second or third categories above – you need to show evidence of managing/closing deals or evidence of working on IB-style deals – you should still follow these steps.

But you need to highlight your unique contributions to each deal, such as a mistake you found, a suggestion you made that helped move the financing forward, or a buyer you thought of that ended up making an offer for the seller.

If you’re coming in with non-IB experience, such as internal consulting , still use the same framework but point out how each project you worked on was like a deal.

You had to win buy-in from different parties, get information from groups at the company, and justify your proposals by pointing to the numbers and qualitative factors and addressing the risk factors.

Firm Knowledge

Understanding the firm’s investment strategies, portfolio, and exits is very important at smaller firms and in off-cycle processes, and less important in on-cycle interviews at mega-funds.

If you have Capital IQ access, use it to look up the firm.

If not, go to the firm’s website and do extensive Google searches to find the information.

Finding this information should not be difficult, but the tricky point is that firms won’t necessarily evaluate your knowledge by directly asking about it.

Instead, if they give you a take-home case study, they might judge your responses based on how well your investment thesis lines up with theirs.

For example, if the firm makes offline retailers more efficient via cost cuts and store divestitures, you should not present an investment thesis based on overseas expansion or roll-ups of smaller stores.

If they ask for an investor’s view of one of your deals, they might judge your answer based on your ability to frame the deal from their point of view.

For example, if the firm completes roll-ups in fragmented industries, you should not look at a standard M&A deal you worked on and say that you’d acquire the company because the IRR is between XX% and YY% in all scenarios.

Instead, you should point out that with several roll-ups, the IRR would be between XX% and YY%, and even in a downside case without these roll-ups, the IRR would still be at least ZZ%, so you’d pursue the deal.

Market/Industry

In theory, private equity firms should care about your ability to find promising markets or industries.

In practice, open-ended questions such as “Which industry would you invest in?” are unlikely to come up in traditional PE interviews.

If they do come up, they’ll be in response to your deal discussions, and the interviewer will ask you to explain the upsides and downsides of your company’s industry.

These questions are more likely in growth equity and venture capital interviews, so you shouldn’t spend too much time on them if your goal is traditional PE (for more on these fields, see our coverage of venture capital interview questions and the venture capital case study ).

And even if you are interviewing for growth equity or VC roles, you can save time by linking your industry recommendations to your deal experience.

Case Studies and Modeling Tests

You will almost always have to complete a case study or modeling test in PE interviews, but the types of tests span a wide range.

Here are the six most common ones, ranked by rough frequency:

Type #1: “Mental” Paper LBO

This one is closer to an extended technical question than a traditional case study.

To answer these questions, you need to know how to approximate IRR, and you need practice doing the mental math.

The interviewer might ask something like, “A PE firm acquires a $150 EBITDA company for a 10x multiple using 60% Debt. The company’s EBITDA increases to $200 by Year 3, $225 by Year 4, and $250 by Year 5, and it pays off all its Debt by Year 3.

The PE firm sells its stake evenly over Years 3 – 5 at a 10x EBITDA multiple. What’s the approximate IRR?”

Here, the Purchase Enterprise Value is $1.5 billion, and the PE firm contributes 40% * $1.5 billion = $600 million of Investor Equity.

The “average” amount of proceeds is $225 * 10 = $2,250, and the “average” Exit Year is Year 4 (no need to do the full math – think about the numbers – and all the Debt is gone).

So, the PE firm earns $2,250 / $600 = 3.75x over 4 years. Earning 3x in 3 years is a ~45% IRR, so we’d expect the IRR of a 3.75x multiple in 4 years to be a bit less than that.

To approximate a 4x scenario, we could take 300%, divide by 4 years, and multiply by ~55% to account for compounding.

That’s ~41%, and the actual IRR should be a bit lower because it’s a 3.75x multiple rather than a 4.00x multiple.

In Excel, the IRR is just under 40%.

Type #2: Written Paper LBO

The idea is similar, but the numbers are more involved because you can write them down, and you might have 30 minutes to come up with an answer.

You can get a full example of a paper LBO test, including the detailed solutions, here .

You can also check out our simple LBO model tutorial to understand the ropes.

With these case studies, you need to start with the end in mind (i.e., what multiple do you need for an IRR of XX%) and round heavily so you can do the math.

Type #3: 1-3-Hour On-Site or Emailed LBO Model

These case studies are the most common in on-cycle interviews because PE firms want to finish quickly.

And the best way to do that is to give all the candidates the same partially-completed template and ask them to finish it.

You may have to build the model from scratch, but it’s not that likely because doing so defeats the purpose of this test: efficiency.

You’ll almost always receive several pages of instructions and an Excel file, and you’ll have to answer a few questions at the end.

The complexity varies; if it’s a 1-hour test, you probably won’t even build a full 3-statement model .

They might also ask you to use a cash-free debt-free basis or a working capital adjustment to tweak the Sources & Uses slightly.

If it is a 3-hour test, a 3-statement model is more likely (the other parts of the model will be simpler in this case).

Here’s a free example of a timed LBO modeling test ; we have many other examples in the IB Interview Guide and Core Financial Modeling course .

IB Interview Guide

Land investment banking offers with 578+ pages of detailed tutorials, templates and sample answers, quizzes, and 17 Excel-based case studies.

Type #4: Take-Home LBO Model and Presentation

These case studies are open-ended, and in most cases, you will not get a template to complete.

The most common prompts are:

Build a model and make an investment recommendation for Portfolio Company X, Former Portfolio Company Y, or Potential Portfolio Company Z.
Pick any company you’re interested in, build a model, and make an investment recommendation.

With these case studies, you must fit your recommendation to the firm’s strategy rather than building a needlessly complex model.

You might have 3-7 days to complete this type of case study and present your findings.

You might be tempted to use that time to build a complex LBO model, but that’s a mistake for three reasons:

The smaller firms that give open-ended case studies tend not to use that much financial engineering.
No one will have time to review or appreciate your work.
Your time would be better spent on industry research and coming up with a sold investment thesis, risk factors, and mitigants.

If you want an example of an open-ended exam like this, see our private equity case study article and follow the video walkthrough or article text.

Your model could be shorter, and your presentation could certainly be shorter, but this is a good example of what to target if you have more time/resources.

Type #5: 3-Statement/Growth Equity Model

At operationally-focused PE firms, growth equity firms, and PE firms in emerging markets such as Brazil , 3-statement projection modeling tests are more common.

The Atlassian case study is a good example of this one, but I would change a few parts of it (we ignored Equity Value vs. Enterprise Value for simplicity, but that was a poor decision).

Also, you’ll never have to answer as many detailed questions as we did in that example.

If you think about it, a 3-statement model is just an LBO model without debt repayment – and the returns are based on multiple expansion, EBITDA growth, and cash generation rather than debt paydown .

You can easily practice these case studies by picking companies you’re interested in, downloading their statements, projecting them, and calculating the IRR and multiples.

Type #6: Consulting-Style Case Study

Finally, at some operationally-focused PE firms, you could also get management consulting-style case studies, where the goal is to advise a company on an expansion strategy, a cost-cutting initiative, or pricing for a new product.

We do not teach this type of case study, so check out consulting-related sites for examples and exercises.

And keep in mind that this one is only relevant at certain types of firms; you’re highly unlikely to receive a consulting-style case study in standard PE interviews.

A Final Word On Case Studies

I’ve devoted a lot of space to case studies, but they are not as important as you might think.

In on-cycle processes, they tend to be a “check the checkbox” item: Interviewers use them to verify that you can model, but you won’t stand out by using fancy Excel tricks.

Arguably, they matter more in off-cycle interviews since you can present unique ideas more easily and demonstrate your communication skills in the process .

What NOT to Worry About In PE Interviews

The topics above may seem overwhelming, so it’s worth pointing out what you do not need to know for interviews.

First, skip super-complex models.

As a specific example, the LBO models on Macabacus are overkill; they’re way too complicated for interviews or even the job itself.

You should aim for Excel files with 100-300 rows, not 1,000+ rows, and skip points like circular references unless they specifically ask for them (for more, see our tutorial on how to remove circular references in Excel )

Next, skip brain teasers; if an interviewer asks them, you should drop discussions with the firm.

Finally, you don’t need to know about the history of the private equity industry or much about PE fund economics beyond the basics.

Your time is better spent learning about a firm’s specific strategy and portfolio.

PE Interview X-Factor(s)

Besides the topics above, competitive tension can make a huge difference in interviews.

If you tell Firm X that you’ve already received an offer from Firm Y, Firm X will immediately become far more likely to give you an offer as well.

Even at the networking stage, competitive tension helps because you always want to tell recruiters that you’re also speaking with Similar Firms A, B, and C.

Also, leverage your group alumni and the 2 nd and 3 rd -year Analysts.

You can read endless articles online about interview prep, but nothing beats real-life conversations with others who have been through the process.

These alumni and older Analysts will also have example case studies they completed, and they can explain how to spin your deal experience effectively.

PE Interview Preparation

The #1 mistake in PE interviews is to focus excessively on modeling tests and technical questions and neglect your deal discussions.

You can avoid this, or at least resist the temptation, by turning your deals into case studies.

If you follow my advice to create simplified LBO models for your deals, you can combine the two topics and get modeling practice while you’re preparing your “investor’s views.”

If you’re working full-time in banking, use your downtime in between tasks to do this , outline your story , and review technical questions.

If you only have 10-15-minute intervals of downtime, break case studies into smaller chunks and aim to finish a specific part in each period.

Finally, start preparing before your full-time job begins .

You’ll have far more time before you start working, and you should use that time to tip the odds in your favor.

The Ugly Truth About PE Interviews

You can read articles like this one, memorize PE interview guides, and get help from dozens of bank/group alumni, but much of the process is still outside of your control.

For example, if you’re in a group like ECM or DCM , it will be tough to win on-cycle interviews at large firms and convert them into offers no matter what you do.

If the mega-funds decide to kick off recruiting one day after you start your full-time job in August, and you’re not prepared, too bad.

If you went to a non-target school and earned a 3.5 GPA, you’ll be at a disadvantage next to candidates from Princeton with 3.9 GPAs no matter what you do.

So, start early and prepare as much as you can… but if you don’t receive an offer, don’t assume it’s because you made a major mistake.

So You Get An Offer: What Next?

If you do receive an offer, you could accept it on the spot, or, if you’re speaking with other firms, you could shop it around and use it to win offers elsewhere.

If you’re not in active discussions with other firms, you’re crazy if you do not accept the offer right away.

If You Get No Offer: What Next?

If you don’t get an offer, follow up with your interviewers, ask for feedback, and ask for referrals to other firms that might be hiring.

If you did reasonably well but came up short in a few areas, you could easily get referrals elsewhere .

If you did not receive an offer because of something that you cannot fix, such as your undergraduate GPA or your previous work experience, you might have to consider other options, such as a Master’s, MBA, or another job first.

But if it was something fixable, you could take another pass at recruiting or keep networking with smaller firms.

To PE Or Not to PE?

That is the question.

And the answer is that if you have the right background, you understand the process, and you start preparing far in advance, you can get into the industry and win a private equity career .

And if not, there are other options, even if you’re an older candidate .

You may not reach the promised land, but at least you can blame it on someone else.

Additional Reading

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

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49 thoughts on “ Private Equity Interviews 101: How to Win Offers ”

Brian, What about personality tests? What is their importance in the overall hiring process eg if you get them as the last stage?

They’re not that important, and even if you do get them, you can’t really “prepare” in any reasonable way (barring a brain transplant to replace your personality and make it more suitable for the firm). It’s also highly unusual to get one in the final stage – a firm doing that is probably just paranoid that you are secretly a serial killer and they want to rule out that possibility.

Hey- for the Fromageries Bel case study, can’t quite make sense of the Tier 4 management incentive returns, what’s the calculation for each tier? Would think it’s Tier 2 less tier 1 * tier 1 marginal profit

Tier 4 is based on a percentage of all profits *above* a 2.5x equity multiple. Each tier below it is based on a percentage of profits between specific multiples, which correspond to specific EUR proceeds amounts.

I have an accounting background (CPA & several years removed from school) and a small amount of finance experience through internships. I’m interviewing for a PE analyst position and managed to get through the first round of interviews. The firm itself doesnt just hire guys with a few years of banking, their team is very diverse with some backgrounds similar to mine.

The first round interview was a mix of technical questions plus a lot about myself and my experience. No behavioral questions. The first round was with an associate for 30 minutes, the second round is an hour with a partner. I managed to answer a lot of the questions about LBO models and what types of companies are good LBO candidates. Thanks to your website for that.

Any advice for a second round interview for a guy like me who doesnt have deal making experience or much experience in finance? Will the subsequent interviews after the first round be more technical-based questions? Or do they lean more on technical questions in round 1 to weed out candidates?

They will usually become more fit-based if they’ve already asked a lot of technical questions in earlier rounds. I would focus on your story and answers to the Why PE / Why This Firm / Are you sure you want to switch?-type questions.

Is it likely too difficult to access the on-cycle process from the CLT office of an In-Between-a-Bank that it would make more sense to focus one’s energy on the MM/LMM? Is the new era of Zoom making geography/distance less of a factor or is the perceived prestige of NY still an obstacle?

Location is somewhat less of a factor now, but it still matters, and working from home will not continue indefinitely into the future. It will be very difficult to participate in on-cycle recruiting at the mega-funds if you’re working in Charlotte at Wells Fargo if that’s your question, but plenty of MM funds are realistic.

What are some of the larger funds that you would consider realistic?

There are dozens of funds out there (it’s not like bulge bracket banks or mega-fund PE firms where there’s only a defined set of 5-10), so I can’t really give you a specific answer. My recommendation would be to look up people who worked at WF on LinkedIn and see the types of funds they are now working at.

I remember I saw a video of yours (might have been YouTube) where you explained the PE process. You talked about do pe firms really add value and then you went over how when a pe firm buys a company, they do a little “trick” where they create a shell company to acquire the target so the debt isn’t on the pe firms books. I’ve been looking all over for this video. Do you know which video I’m referring to?

Yes, that is no longer in video form. It’s still in the written LBO guide but the video from the old course was removed because it was way too long and boring for a video and was better explained in text.

Hi Brian, can you elaborate more on ‘Understanding the firm’s investment strategies, portfolio, and exits’ when you talk about smaller firm and off-cycle processes, simliar point came up under *Type 5*: you must fit your recommendation to the firm’s strategy rather than building a needlessly complex model. What exactly should I pay attention on? I felt funds I checked their investment strategy descirption are pretty broad, and they invest in various type of deals, say even in one industry, they do different purchase range. Also, when talking about growth equity, you mentioned you can practice case by picking companies you’re interested in, downloading their statements, projecting them. What if they are not public companies, how can I get those information? Are you recommending only those companies with 20F available? Or can you just elaborate more on how can I follow your instruction? Thanks

All you can do is go off their website and possibly a Capital IQ description if you have access. See if they focus on growth, leverage for mature companies, operational improvements, or add-on acquisitions and pick something that fits one of those.

You can pick public companies for growth equity or find a public company that is similar to a private one the firm has.

Hey Brian! I have an interview with a family office for a private equity analyst position. The firm is small and not much about it online. I haven’t had much time to prepare as it was not an interview I was expecting. What would you say the most important elements to focus on are for the interview considering the time constraint? I am an undergrad, third year, second internship. (first internship was for a large construction/developer as project coordinator, not finance based)

Focus on your story, the firm’s portfolio companies and strategies, and a few investment ideas you have for specific sectors. Technical questions are fine, but you probably won’t have much time to prepare at the last minute.

How would PE interviews / Technical questions look like for straight out of undergrad PE role look like

e.g Blackstone internships, Goldman Merchant Banking internships etc

Similar to IB ones, with a focus on LBOs?

Largely the same, but less emphasis on deal experience and deal-related questions at the undergraduate level. They may ask slightly more questions on LBOs, but at the undergrad level, they assume you know very little, so questions will span a wide range of topics.

Have you written or seen similar articles on PE operating partner interviews?

No, sorry. There’s hardly any information on that level of interview online because you can’t really make an interview guide or other product to prepare for it, and most people at that level would need 1-on-1 coaching more than a guide. My guess is that they will focus almost exclusively on your past experience turning around and growing businesses and assess how well you can do it for their portfolio companies. They’re not going to give you LBO modeling tests or case studies.

“Next, skip brain teasers; if an interviewer asks them, you should drop discussions with the firm”

Could you please elaborate on this? Almost every IB interview includes brain teasers so I am wondering why a PE interview shouldn’t?

Brain teasers are not that common in IB interviews in most regions unless you count any math/accounting/finance question as a brain teaser. They are far more common in S&T, quant fund, and prop trading interviews.

The point of this statement is that it’s OK if an occasional brain teaser comes up, but if the interviewer asks you brain teasers for 30 minutes, which have exactly 0% correlation to the real work in PE, you should leave because it’s a sign that the people working at the firm are idiots who don’t know how to conduct proper interviews or test candidates.

This is helpful. I find myself at a fix, I do not think I have had the right exposure, although in a BB I support teams with standard materials in a particular industry group in M&A. However I have interviews with a top global PE next month. Any guidance on how should I prepare for it ?

Thanks in advance

Follow everything in this article… practice spinning/discussing your deals… practice LBO questions and simple case studies.

Brian – thank you for your concise and candid remarks. do you have any insights or advice for someone with 5yrs of BB ECM & DCM experience now at a top full-time MBA program looking to break in?

It’s going to be very difficult if you just have capital markets experience and you’re already in business school. You should probably move to an M&A or strong industry team at a large bank (BB or EB) after business school and then go into private equity from there. It’s tough, but still easier than trying to move into PE directly out of an MBA program with only capital markets experience.

My next interview will highly likely involve a statement/growth equity modeling case. I tried to find the Atlassian Case interview but i am unable to open the link.

Would it be possible to share an example case or more information on that topic?

Many thanks,

The Atlassian case study is all we have. I don’t know why you can’t open the files, but I just tried and they seemed to work. Maybe try again or use a different browser.

Hi M&I team,

I have an opportunity to interview for an Analyst level opening at a boutique PE fund. This is a shop that has just started operations so I am directly communicating with the Partner. I doubt they have any structured recruitment process at this stage of their existence. He asked me to send some written work (memos and spreadsheets) on any public listed co that demonstrates my understanding of investing (basic balance sheet analysis, ratio analysis, valuation multiples).

So I am just wondering what to do? Should I work on projections and prepare a DCF model or do something simpler? I’d really appreciate your guidance on this.

Thanks again for the amazing work you’ll have been doing!

Yes, just create simple projections, a simple valuation/DCF, and maybe a simple LBO model since it is a PE fund that intends to buy and sell companies.

Could you provide some advice for preparing interviews for principal investing role ?

Thank you in advance Laura

We don’t really focus on that, but the articles on private equity and funds of funds on this site might be helpful.

Just wanted to say thank you! After reading everything on this site including all the CV and interview material I have managed to transition from a second year engineering undergrad with no prior experience/spring weeks/insight days, into an intern at Aviva Investors (UK buy side) within the space of one year.

The information you have posted is invaluable and “breaking in” is definitely doable with the right mindset and appetite for rejections!

Thanks again.

Thanks! Congrats on your internship offer.

Hi Brian/Nicole – Im an Economics student from the UK in 3rd year out of a 4 year course at a semi-target college, with 2 finance internships done up until now(not FO). I plan on doing a Msc Finance when I finish and eventually break into IB or Sales/Trading (I know I still haven’t decided which one I really want more). Through a family friend I have an offer to do a short internship this summer in NY in a post-trade regulatory commission. As this isn’t actually sitting at a trading desk experience, or anything related to IB should I decide to go down that road, would this add genuine value to my CV ? How are internships in regulatory commissions looked at for students looking to break into sales/trading? Surely even having any NY Finance experience on the CV will add more substance over here in London when going for internships compared to the majority of UK students who don’t? Appreciate any advice on this matter, Thanks!

I don’t think it would help much because you already have 2 non-FO internships, and a regulatory internship would be yet another non-FO internship. If it’s your best option, you can take it, but you would be better off getting something closer to a real front-office role.

Hey Brian. I am graduating after this semester going into Management consulting (Deliote, AT Kearny, Accenture)but I’m hoping to make a switch into either IB or PE after a couple years. I have one search fund internship which was enough to get me a few 1st and second round ib/pe FT interviews but no offers.My plan is to get into the best online MSF program I can and switch into Finance once I’m done. Do you think, given how close I was to getting in my 1st try, a high GPA from a reputable MSF and good experience in consulting will be enough or should I try to somehow get an IB internship before I apply?

I think you will probably need another internship just before the MSF starts or while it is in progress, not necessarily in IB, but something closer to it. Otherwise you’ll get a lot of questions about why you went from the search fund to consulting.

Thanks. As far as my story is concerned, is it better to do another finance internship before consulting so it’s search fund->ib->consulting->MSF (or MBA not sure)? I only ask because I may be able to get on some m&a projects with the consulting firm and my story could be when exposed to those deals, I realized how big my passion for finance was and that’s when I decided to get my MSF and switch to IB.

No, I think that would make less sense because then you would have to explain why you went from IB to consulting… and are now trying to go back to IB. Saying that you got exposed to M&A deals during the consulting experience would be a better story (and you would still ideally pair it with a transaction-related internship before/during the MSF).

Got it, thanks!

Probably missing something here, but for the first example, where does the 300% and 55% come from?

300% = 4x multiple. If compounding did not exist, we could just say 300% / 4 = 75% annual return. Because of compounding, however, the actual return does not need to be 75% per year in order for us to earn 300% by the end of 4 years. Instead, it can be a fair amount less than that, and we’ll still end up with 300% at the end.

To estimate the impact of compounding, you can multiply this 300% / 4 figure by a “compounding factor,” which varies based on the multiple and time period, but which is around 55% for a 4x return over a standard holding period.

Do you mind explaining how you can estimate a “compounding factor” such as with the 55% here?

There’s no easy-to-calculate-using-mental-math way to get this for all scenarios, but you can memorize quick rules of thumb (based on actual numbers and looking at the ratios) for 3 and 5-year periods and extrapolate from there. I don’t really think it’s worth doing that in-depth, though, because you just have to be roughly correct with these answers.

Do you think you will do a hedge fund interview guide similar to the one you have here?

Potentially, yes, but it’s much harder to give general guidelines for HF interviews because they’re completely dependent on your investment pitches. Also, interest in HFs has declined over the years (we no longer receive as many questions about them).

On that mental paper LBO question, how is the company able to pay off 900 of debt by year 3? It sounds like proceeds from the sale will have to be used in order to fully pay off the debt because EBITDA alone only adds up to 525, and that’s assuming there’s no interest.

Favorable working capital… NOLs… asset sales… the Konami code or other cheat codes. The point is not the numbers but the thought process.

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Best Private Equity Case Study Guide + Excel Model + Example

The most important part of the private equity interview is the case study round. After meeting a few people and going through a number of interviews, you will most likely get hit with a case study where you have to analyze whether a company is a good leveraged buyout target or not.

Your performance during the private equity case study round will determine whether or not you will get an offer. It is the most important part of the interview process, so you need to make sure you are well prepared and create a work product that sets you apart from the other candidates you are competing against.

Private Equity Case Study Example + Full LBO Excel Model

Private Equity Case Study Example + Model

It’s hard to know how to complete a full private equity case study if you don’t actually have experience working in private equity. With just an investment banking background or someone who is straight out of undergrad, you just don’t have the experience to understand how to structure and write a good case study.

Make sure you get access to a full private equity case study that was used in a real interview. You can use this as a reference on how to write your response and build the LBO model with all the key outputs.

Get access here before reading on. It becomes much easier to build a proper LBO model and complete a case study when you can refer to one that is already fully completed.

The case study was written by a private equity professional and includes a:

Real Private Equity Case Study Example and Response
Full Detailed LBO Excel Model

How is a Private Equity Case Study Structured

The private equity interview process is a lot more structured relative to hedge fund interviews. Most interviews happen during “on-cycle” recruiting your first six months in investment banking right out of undergrad. This is the best time to land an offer as you have dozens upon dozens of firms that are fighting to get the top talent to work at their firms. People will land offers after a matter of days after answering the basic private equity interview questions because of all this competition.

Unlike hedge fund case studies , private equity case studies are a bit different as it depends on if you are interviewing during the rush of on-cycle recruiting where firms fight for talent. You can expect the case study to be structured in either three ways:

LBO Modeling Test

If you are going through the crazy all-out blitz of private equity interviews during on-cycle recruiting, you will like get either of the first two types of case studies, the modeling test and/or the paper LBO.

For an interview that is done outside of this period and at most of the smaller middle-market funds, you may get a longer take-home case study that is more comprehensive. It really just depends on the firm and how they conduct interviews.

1. LBO Modeling Test

The LBO modeling test is used in person during on-cycle recruiting very frequently. Usually when on-cycle interviews start, you’ll get invited along with other candidates to do a modeling test over the course of a few hours, then proceed with the usual interviews either before or after.

There is no reason why anyone can’t pass the modeling test. All it takes is practice after practice, just like how you’d get good at anything else. Back when I was an investment banking analyst, the only way I would learn how to do anything was by looking at previous models done by prior analysts saved on the shared drive and recreating those models from scratch over and over again. It’s the best way to learn how to get good at any type of Excel model – looking at precedent then recreating from scratch.

Wall Street Prep was another tool I used back during my investment banking analyst days. There is a course that was specifically created for Private Equity interviews and LBO modeling that teaches you everything you need to know. It was the best resource I was able to find to get prepared for private equity interviews and teaches you how to complete a full LBO model step-by-step from start to finish.

Start preparing today and sign up for the course below if you really want to break into private equity. I promise you will have a very low chance of landing a private equity offer if you do not know the basics of how to build an LBO.

Get 15% off if you use the coupon code in the link below:

Private Equity Masterclass: Step-By-Step Online Course

A Complete LBO and PE Training Program. Whether you’re preparing for an LBO Modeling test or you want to learn to build an LBO model and become a better PE professional, this course has you covered.

Special Offer: Get 15% Off On Wall Street Prep’s Private Equity Course

2. Paper LBO

The paper LBO is used during interviews to make sure you have spent the time to learn the basics of how an LBO works. Usually, you are given a set of assumptions, a pen/paper and asked to work through a paper LBO live during the interview without the help of a computer or calculator.

You need to be able to walk through how to:

Calculate the purchase price
Calculate sources and uses
Build a simple income statement and projections
Build to levered free cash flow
Calculate the exit value, IRR and multiple on invested capital

The Wall Street Prep course above walks through how to do all this in detail and provides a few paper LBOs that you can use for practice.

3. Private Equity Take-Home Case Study + Written Memo

Now the full-blown take-home case study is the hardest and most in-depth analysis a private equity firm can ask of you during interviews. Outside of on-cycle recruiting, this is the most common type of case study that is given. Most firms will give you a week to work on it independently at home.

This case study round is the most important part of the interview. If you do not have a well-written case study with a good backup model that you can present to the interviewer, you will not get an offer.

The majority of case studies will ask either two questions:

Look into XYZ company and tell us whether it’s a good LBO target
Find an attractive LBO target and give us your thoughts

To answer the first question, you need to screen a universe of public companies and find one that could be an attractive target. You need to find a business that has the following characteristics:

Growing market dynamics – markets that have structural tailwinds is a good place to start
Strong competitive advantages – study Porter’s Five Forces if you haven’t already
Stable recurring cash flows – business is going to be levered up in a buyout so it needs to have positive EBITDA and stable cash flows to pay off interest payments
Low working capital / capex needs

Quickly eliminate all companies in your screen that have:

Negative EBITDA
High capex needs (capex is >75% of EBITDA)
High valuation (EV/EBITDA is > 15x)

You can quickly eliminate companies in your screen that have negative EBITDA or high capex needs. Once you’ve found your target company (or if already given one), then you can start working on the actual meat of the case study.

Steps to Finish a Private Equity Case Study

This guide will walk you through all the steps required to complete a case study, from start to finish. You will learn everything from what documents you need to download, to how to build the LBO/model with all the key outputs, to how to actual write a good memorandum/presentation, to all the common mistakes to avoid.

Download and organize all documents in one folder
Research the industry to understand trends and key metrics
Read the filings and take notes
Input financials in Excel and build the LBO model
Work on the presentation / memo

1. Download and organize all documents in one folder

You want to have everything in one folder that you can quickly access. Key websites to use for company filings are:

www.sec.gov/edgar/searchedgar/companysearch.html – for direct access to filings
www.Bamsec.com – access to filings in an organized fashion
You want to save down (at the very least) the latest 10K and the prior four 10Qs, last four transcripts, earnings releases, investor presentations and supplements
Other sources if you have access to them: Bloomberg, CapIQ, FactSet
Sell-side research – sell-side research is how you gauge market expectations and quickly understand the business. Most initiating coverage reports will give a good overview of the company, its strengths, weaknesses and competitive landscape. Ask around for others to send you research if you don’t have direct access
Other write-ups online – read all of the articles on Seeking Alpha and look at ValueInvestorsClub.com. Research on Seeking Alpha is usually very bad, but there may be articles that do a good job summarizing any fundamental pressures / tailwinds

2. Research the industry to understand trends and key metrics

If you have access to sell-side research, then go through the latest industry analysis for your target company or initiating coverage reports. When a sellside research firm initiates coverage, they write up a very in-depth review of the company. These reports provide a very good summary of a company and the industry it’s in with all relevant metrics.

If you don’t have access to sell-side research, then go through prior investor presentations of the company or any of its peers. There should be an industry/market overview and benchmarking metrics vs. peers in these presentations.

If you do not understand what is happening in the industry that the company is in, you will not know if there are any big headwinds or tailwinds that are directly impacting the company. A lot of private equity LBOs focus on growth and consolidation within an industry, so you need a good understanding of the market and what the growth opportunities are.

3. Read the filings and take notes

Create a new word document to copy and paste anything notable that you read. You can create sections in your notes for company overview, revenue / cost drivers, fixed versus variable costs, industry tailwinds/headwinds, key questions for items you don’t understand or need to follow-up with management on, etc.

The most important part of every 10K/10Q is the management’s discussion and analysis section (MD&A). This is where the company talks in detail about how the business has performed over the quarter/year relative to prior year’s performance. You should focus on the sections of the MD&A that talk about the revenue and cost drivers. Make a table in Excel and copy and paste commentary every quarter on what impacted revenue growth and margins (COGS and SG&A). Once you lay it all out in Excel, the fundamental picture of the Company becomes clearer and you can see what has had a major impact on recent results.

The most important thing you should read are the transcripts and investor presentations. Management usually gets into more detail on the overall strategy and key tailwinds / headwinds of the business. Additionally, you can gauge what the sell-side is most focused on in the Q&A section at the end of every transcript.

Lastly, read the risk section of the latest 10K to note what the Company finds to be the biggest risks to its overall performance. Pay close attention to the top few items listed here as you want to see what the structural/secular challenges are to the business.

4. Input financials in Excel and build the LBO model

Since private equity interviews can start very quickly after you start your first job in investment banking, most do not know how to properly build an LBO model. Every single private equity firm builds an LBO when looking at any investment. If you want to work in private equity, you need to make sure you spend time understanding an LBO, how it works and how to build one in your sleep.

Like I mentioned before, sign up for Wall Street Prep if you don’t know how to build an LBO. It’s the best resource available to learn how to build a LBO model and provides step-by-step instructions using a real public company example.

5. Work on a presentation or write a memo

Once you have done all the research and finished the modeling, you need to create outputs in a presentation or word doc format. The interviewer may specify what kind of output they prefer, but if not than do what you most comfortable with.

This presentation/memo will be what your interviewer will focus on, so the outputs need to be nicely formatted just like how you create outputs in investment banking. Formatting may not seem that important to you, but showing that you can present analysis in a clean, formatted manner without errors is what will set you apart from your peers.

Continue reading below to learn everything you need to know on what to include in this presentation or memo.

Private Equity Case Study Presentation / Memo

Background and company overview.

If you had to screen to find a company, briefly summarize the criteria you used to choose your company. List the financial metrics and any other factors you used when making the decision.

Then you need to summarize what that company does in around five sentences. If you were provided the company to analyze, the interviewer already knows what the company does so no need to go that much in depth as you can describe more in person if asked. Make sure to describe how the company makes money (a revenue breakdown), where they make money (what markets drive the most revenue), who their customers are (customer concentration), etc.

This is the easiest section as you can open up the latest 10K and within the first few pages there is a business description section that outlines what the company does. You should also check the latest investor presentations (if available) and sell-side research initiating coverage reports as they usually give good overviews of the company.

You need to make sure you yourself understands what the company does and what the revenue and cost drivers are. Anybody can copy the business descriptions written by the Company and sell-side research. You should make sure you know the company well enough to be able to talk about it without looking at your notes.

Investment Thesis/Highlights

Here you list out the top reasons why a company is a good leverage buyout target or not. The most common investment highlights discussed in a potential target can be:

Attractive market dynamics due to XYZ reasons – could be due to fragmented market / consolidation opportunities, growing market dynamics, geographic expansion lack of competition, etc.
Multiple ways to win – private equity firms love businesses that don’t just rely on one avenue of growth, so point out all the different ways value can be created either through revenue growth, expense rationalization, multiple expansion, etc.
Recurring revenues – leverage buyout targets need to have steady cash flows since the business is going to be levered up in an acquisition and so cash flows need to be steady to support high recurring interest payments on the debt. Revenues need to be stable, recurring and non-cyclical in nature.
Asset-light business – Also, PE firms like businesses that are asset-light (low capital expenditures or working capital requirements) and have low variable costs (little need to increase the expense base to grow revenues, also known as operating leverage).
Valuation – if a company is underappreciated in the public markets and trades at a low valuation relative to peers, then returns can be very high if you can somehow grow/fix the business and make it more attractive at exit in the future. High LBO returns come from both growing cash flows and multiple expansion. Usually, you want to assume the same exit multiple (the multiple you sell the business for) in your model compared to your entry multiple (the multiple you purchased the business for). Purchasing a business at a high multiple and selling it at a lower multiple in the future will lead to significantly lower returns and can be a big risky.

Like I mentioned earlier, make sure you understand Porter’s Five Forces to understand the main competitive advantages/disadvantages a business can have.

Recommendation to Investment Committee

Summarize whether or not you think the company you chose to analyze (or were provided) is a good LBO target or not. Everything depends on the purchase price, so if you mention that it is not a good LBO target then make sure to describe why and at what price do you think makes the deal attractive.

Financials/Return Summary

Your LBO model should have summary outputs that describe how attractive the deal looks from a financial perspective. At minimum, you need to show:

Returns at various prices
Sources and uses
Pro forma capitalization
Sensitivity table on returns, showing IRR/MOIC at various premiums and exit multiples
5-year levered free cash flow bridge
Main model assumptions

The private equity case study example shows you all of these outputs and more, which you can replicate for your model.

Here you talk about the main risk factors and any potential unexpected events that would cause the firm to lose money on its investment. Look in the Risk Factors section of the 10K or sellide research to understand what the main risks are to the business. Analyze the most important risk factors to see if they have any merit and the potential implications to your analysis if the risk factor is realized. Examples of risks include technology disruption, realization of synergies / other cost savings initiatives, commodity price changes, wage or cost inflation in general, cyclicality/seasonality, changes to regulations, etc.

Outstanding Diligence Questions

Depending on the company, there may or may not be very detailed information on the company in public filings. Usually the bigger the market capitalization, the better the disclosures are.

You want to show the interviewer a list of diligence items you would still want to ask from the company to better understand the business. These questions should be around unit economics, profitability by segment/region, strategic plan over the next five years, cost structure plans/initiatives, etc.

Model Output/Exhibits

Either in a separate PDF or in the exhibits, you want to have a full output of the entire LBO model. At most private equity firms, associates print out the full model to discuss key assumptions with others on the deal team and to make sure everything is working properly. Make sure your Excel is nicely formatted and is already in print format.

The model should have all the outputs described above as well as full detailed 3-statement financials, revenue build and the levered free cash flow waterfall.I know this seems like a lot of work, but it’s the minimum that you need to do for a take home private equity case study.

General Tips and Common Mistakes to Avoid

Get Access to a Real Private Equity Case Study Example + Excel Model

If you need an example case study used in an real interview, then get instant access to one in the link below. You can use this as a reference as you complete a case study to make sure you are building the LBO model correctly, having all the key outputs, and learning how to put it all together in a written memo.

Check your model for errors

One of the worst things you can do is send a model that has a huge bust that changes all the outputs and return metrics. It’s the quickest way to get axed during the interview process, so make sure you spend time going through each cell of your model after completion to make sure there are no errors.

Spend time properly formatting the case study

Being able to cleanly present your analysis is a very important skill in private equity. Most firms create decks and go to investment committee to present a deal, so you need to show that you can format properly and present financials in a clean manner.

There are a ton of people applying for the same job as you are, so you need to figure out a way to differentiate yourself. If you were previously or currently an investment banker, then you should have no problem properly formatting the Excel model and the memorandum.

Understand the firm’s investment style

Every private equity firm has their own approach to making investments. Make sure that you understand the types of investments the firm likes to make and the key qualities to look for.

Then if given a case study, point out these key qualities. It’s good to show that you can analyze investments in a similar manner as the private equity firm you are interviewing at if possible.

Prepare for the most common private equity interview questions

Private equity is one of the most sought career paths and one of the Best Paying Jobs in Finance and Wall Street . There are so many young, smart, Ivy League educated investment bankers trying to break into private equity, so you must make sure you stand apart from the crowd in both your case study and when answering the most common private equity interview questions .

Don’t lie or try to bullshit if asked a question you do not know the answer to

The problem with a lot of smart people in this industry is that they are reluctant to say “I don’t know” and tend to talk as if they know what they are talking about. Interviewers will easily see through the bull shit as they likely know the company well and have heard others talk about the company.

Be a “straight shooter.” Be honest if you do not know the answer to a question and say you will follow-up with the interviewer. That said, you should know the company and industry inside out before presenting the case study and be confident when you speak about facts that you know are true.

Memorize key metrics

When discussing the case study in person with the interviewer, make sure you are an expert in the company and can answer questions on the spot without having to reference your written case study. Key metrics you should know off the top of your head include EBITDA, capex, interest, margins, market cap, total enterprise value, leverage, valuation metrics, valuation metrics versus peers, IRR/MOIC, etc.

How to prepare for the case study in a private equity interview

If you're interviewing for a job in a private equity firm , then you will almost certainly come across a case study. Be warned: recruiters say this is the hardest part of the private equity interview process and how you handle it will decide whether you land the job.

“The case study is the most decisive part of the interview process because it’s the closest you get to doing the job," says Gail McManus of Private Equity Recruitment. It's purpose is to make you answer one question: 'Would you invest in this company?'

In most cases, you'll be given a 'Confidential Information Memorandum' (CIM) relating to a company the private equity fund could invest in. You'll be expected to a) value the company, and b) put together an investment proposal - or not. Often, you'll be allowed to take the CIM away to prepare your proposal at home.

“The case study is still the most decisive element of the recruitment process because it’s the closest you get to actually doing the job. Candidates can win or lose based on how they perform on case study. People who are OK in the interview can land the job by showing the quality of their thinking, ” says McManus. “You need to show that you can think, and think like an investor.”

"The end decision [on whether to invest] is not important," says one private equity professional who's been through the process. "The important thing is to show your thinking/logic behind answer."

Preparing for a PE case study has distinctive challenges for consultants and bankers. If you're a consultant, you need to, "make a big effort to mix your strategic toolkit with financial analysis. You need to prove that you can go from a strategic conclusion to a finance conclusion," says one PE professional. Make sure you're totally familiar with the way an LBO model works.

If you're a banker, you need to, "make a big effort to develop your strategic thinking," says the same PE associate. The fund you're interviewing with will want to see that you can think like an investor, not just a financier. "Reaching financial conclusions is not enough. You need to argue why certain industry is good, and why you have a competitive advantage or not. Things can look good on paper, but things can change from a day to another. As a PE investor, hence as a case solver, you need to highlight and discuss risks, and whether you are ready or not to underwrite them."

Kadeem Houson, partner at KEA consultants, which specialises in hiring junior to mid-level PE professionals, says: “If you’re a banker you’re expected to have great technical skills so you need to demonstrate you can think commercially about the numbers you plugged in. Conversely, a consultant who is good at blue sky thinking might be pressed more on their understanding of the model. Neither is better or worse – just be conscious of your blank spots.”

A good business versus a good investment

For McManus, one of the most important things to consider when looking at the case study is to understand the difference between a good business and a good investment. The difference between a good business and a good investment is the price. So you might have a great business but if you have to pay hugely for it it might not be a great business. Conversely you can have a so-so business but if you get it a good price it might make a great investment. “

McManus says as well as understanding the difference between a good business and a good investment, it’s important to focus on where the added value lies. This has become a critical element for private equity firms to consider as competition for assets has become even more fierce, given the amount of dry powder that funds now have at their disposal through a wide array of funds. “Because of the competition for transactions generally you have to overpay to win a deal. So in the case study it’s really important you think about where the value creation opportunity lies in this business and what the exit would be,” says McManus.

She advises candidates to be brave and state a specific price, provided you can demonstrate how you’ve arrived at your answer.

Another private equity professional says you shouldn't go out on a limb, though, and you should appear cautious: "Keep all assumptions conservative at all times so as not to raise difficult questions. Always highlight risks, downsides as well as upsides."

Research the fund – find the angle

One private equity professional says that understanding why an investment might suit a particular firm could prove to be a plus. Prior to the case study, check whether the fund favours a particular industry sector, so that when it comes to the case study, you can add that to the investment thesis. “This enables you to showcase you have read up on the firm’s strategy/unique characteristics Something that would make it more likely for the fund you’re interviewing with winning the deal in what’s a very competitive market, said the PE source, who said this knowledge made him stand out.

However, the primary purpose of the case study is to test the quality of your thinking - it is not to test you on your knowledge of the fund. “Knowing about the fund will tick an extra box, but the case study is about focusing on the three most critical things that will drive the investment decision,” says McManus.

You need to think through these questions and issues:

We spoke to another private equity professional who's helpfully prepared a checklist of points to think about when you're faced with the case study. "It's a cheat sheet for some of my friends," he says.

When you're faced with a case study, he says you need to think in terms of: the industry, the company, the revenues, the costs, the competition, growth prospects, due dliligence, and the transaction itself.

The questions from his checklist are below. There's some overlap, but they're about as thorough as you can get.

When you're considering the industry, you need to think about:

- What the company does. What are its key products and markets? What's the main source of demand for its products?

- What are the key drivers in that industry?

- Who are the market participants? How intense is the competition?

- Is the industry cyclical? Where are we in the cycle?

- Which outside factors might influence the industry (eg. government, climate, terrorism)?

When you're considering the company, you need to think about:

- Its position in the industry

- Its growth profile

- Its operational leverage (cost structure)

- Its margins (are they sustainable/improvable)?

- Its fixed costs from capex and R&D

- Its working capital requirements

- Its management

- The minimum amount of cash needed to run the business

When you're considering the revenues, you need to think about:

- What's driving them

- Where the growth is coming from

- How diverse the revenues are

- How stable the revenues are (are they cyclical?)

- How much of the revenues are coming from associates and joint ventures

- What's the working capital requirement? - How long before revenues are booked and received?

When you're considering the costs, you need to think about:

- The diversity of suppliers

- The operational gearing (What's the fixed cost vs. the variable cost?)

- The exposure to commodity prices

- The capex/R&D requirements

- The pension funding

- The labour force (is it unionized?)

- The ability of the company to pass on price increases to customers

- The selling, general and administrative expenses (SG&A). - Can they be reduced?

When you're considering the competition, you need to think about:

- Industry concentration

- Buyer power

- Supplier power

- Brand power

- Economies of scale/network economies/minimum efficient scale

- Substitutes

- Input access

When you're considering the growth prospects, you need to think about:

- Scalability

- Change of asset usage (Leasehold vs. freehold, could manufacturing take place in China?)

- Disposals

- How to achieve efficiencies

- Limitations of current management

When you're considering the due diligence, you need to think about:

- Change of control clauses

- Environmental and legal liabilities

- The power of pension schemes and unions

- The effectiveness of IT and operations systems

When you're considering the transaction, you need to think about:

- Your LBO model

- The basis for your valuation (have you used a Sum of The Parts (SOTP) valuation or another method - why?)

- The company's ability to raise debt

- The exit opportunities from the investment

- The synergies with other companies in the PE fund's portfolio

- The best timing for the transaction

BUT: keep things simple.

While this checklist is important as an input and a way to approach the task, w hen it comes to presenting the information, quality beats quantity. McManus says: “The main reason why people aren’t successful in case studies is that they say too much. What you’ve got to focus on is what’s critical, what makes a difference. It’s not about quantity, it’s about quality of thinking. If you do 30 strengths and weaknesses it might only be three that matter. It’s not the analysis that matters, but what’s important from that analysis. What’s critical to the investment thesis. Most firms tend to use the same case study so they can start to see what a good answer looks like.”

Houson agrees that picking out the most important elements in the case study are more important than spending too much time on an elaborate model. “You don’t necessarily need to demonstrate such technical prowess when it comes to building the model. But you need to be comfortable about being challenged around the business case. Frankly it’s better to go for a simple answer which sparks a really interesting conversation rather than something that is purely judged from a technical standpoint. The model is meant to inform the discussion, not be the discussion itself.”

Softer factors such as interpersonal skills are also important because if the case study is the closest thing you’ll get to doing the job, then it’s also a measure of how you might behave in a live situation. McManus says: “This is what it will be like having a conversation at 11am with your boss having been given the information memorandum the day before. Not only are the interviewers looking at how you approach the case study, but they’re also looking at whether they want to have this conversation with you every Tuesday morning at 11am.”

The exercise usually takes around four hours if you include the modelling aspect, so there is time pressure. “Top tips are to practice how to think in a way that is simple, but fit for purpose. Think about how to work quickly. The ability to work under pressure is still important,” says Houson.

But some firms will allow you do complete the CIM over the weekend. In that case on one private equity professional says you should get someone who already works in PE to check it over for you. He also advises getting friends who've been through case study interviews before to put you through some mock questions on your presentation.

But McManus says this can lead to spending too much time and favours the shorter method. “It’s fairer and you can illustrate the quality of your thinking over a short space of time.”

The case study is conducted online, and because of Covid, so too are many of the follow-up discussions, so it’s worth thinking about how to present yourself on zoom or Teams. “Although a lot of these case studies over the last couple of years have been done remotely, in many ways that’s even more reason to try to bring out a bit of engagement and personality with the people you’re talking to."

“ There’s never a right or wrong answer. Rather it’s showing your thinking and they like to have that discussion with you. It’s the nearest you get to doing the job. And that cuts both ways – if you don’t like the case study, you won't like doing the job. “

Contact: [email protected] in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

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Private Equity Sache Study: Example, Prompts, & Presentation

Private equity case student are an important separate of the private equity recruiting process because they allow firm to evaluate a candidate’s analytical, investing, and presentation abilities.

In this article, we’ll look the the various types is private equity case studies and offer advice on how to prepare used them.

This guide will online you ace our following private equity case study, whether you’re an seasoned analyst or new on this field.

Genres Of Secret Equity Case Learn

Case studies are very common in private equity interviews, and it can a key part of that overall recruiting process.

When you’re extremely possibly in encounter ampere lawsuit study of some kind during your recruiting process, there is appreciable variety in which types of case studies you might face. Private Equity Workshop Materials

At I cover of major types:

Take-home assignment

In-person lbo modeling assignment.

For this rechtssache study, you’ll get some company information (e.g. a 10-K or a CIM) and be asked go assess whether oder not you’re likely at invest.

Generally, you’ll get between 2-7 days to prepare a comprehensive presentation or investiture reminder over your recommendations that you’ll present to the interviewer. To support your investment recommendation, you’ll be expected to complete a full LBO prototype . The prompt may give constant details or assumptions to inclusion in aforementioned model.

This artist of test is most common during “off-cycle” hiring over the year, since firms have more time to allow you to complete the assignment.

This will pretty similar to that take-home assignment. You’re given company select, will build a financial model, and decide whether you would invest. Private Equity Presentations: Are Of Tall Tales?

The difference here a the period you’re given up complete the case. You’ll generally get between two to three hours, press you’ll typically complete the case study in the firm’s office, though einige firms are becoming newly open to completing the assignment remotely. Showcase Objective. • This presentation is planned to deploy a high level review of the economic structure of Private Equity (“PE”) fund investments.

In save case, you’ll typically with complete einen LBO model. There is usually no presentation instead investment notation. Rather, you’ll do the model and then have a short discussion afterward.

This is a brief, more dense version of an LBO model. You can complete a paper LBO with a piece of hard and a pen. Alternatively, thou may exist asked to discuss it verbally with the interviewer.

Rather than through an Excel spreadsheet, you use can actual sheet are paper to show autochthonous calculations. You don’t go into all the detail but focus on the essence about the model instead. NB Privately Equity Partners: Company Presentation

In this article, we’ll be focusing the the first-time second types of case studies because group are the most widely used. And if you’re interested, here is ampere deep fall on Paper LBOs .

Private Equity Case Examine Prompt

Regardless of who type of case study you’re asked up do, the prompt from the interviewer will ultimately ask you till rejoin: “would you invest within this company?” Private Equity Workshop Presentation ... Examples of Waterfall Finance ... A recently example: consistently strong execution management.

To answer this question you’ll need toward make on the provided materials about to company and complete a leveraged buyout model to determine whether there is a high enough return. Generally, this is 20% button higher.

Usually, prompts also provide you with certain assumptions that you bucket use to build your LBO model. For examples:

Pro forma capital built
Financial assumptions
Acquisition and exit multiples

Some individual net firms provide you in the Excels template needed for an LBO model, when additional prefer you for make one from scratch. To be complete to achieve that.

Private Equity Case Study Presentation

As you’ve seen above, if you get a take-home assignment as a case study, there’s a fine chance you’re left to have to present your investment comment in the interview.

There will usually be one or twin people from the resolute present for your presentation.

Each PE resolute has a different ask proceed, some could expectations you to introduce first additionally when ask questions, instead the other type about. Either method, be prepared by questions. The questions are where you ca stand out!

While private equity employee a there the assess your skills, it’s did all about my findings or what your model said. The interviewers are also looking at your communication competencies and whether you have strong caution to detail. Private equity investiture deck powerpoint presentation slides

Remember, are the home company interview process, no detail is too small. So, the more you provide, aforementioned better.

How To Do A Private Equity Case Study

Let’s look along the step-by-step process to completing a box study for the home equity personnel process:

Step 1: Read and digest this material you’ve been given. Read through of materials extensively also get an understanding of which company.
Step 2: Build adenine bases LBO models. I recommend using that ASBICIR method (Assumptions, Sources & Uses, Balance Leaves, Total Statement, Cash Flow Statement, Support Expense, and Returns). You can followed these steps to construct any model.
Step 3: Build advance LBO model features, if the prompts call for it, you can jump to any advanced features. Of course, you want to get through the entire scale, but your number 1 priority is to finish the core financial print. If you’re running out of time, I would skip with reduced time on advanced functionality.
Step 4: Take a step endorse and form your “investment view”. I would tries to answer above-mentioned questions:
What assumptions need to be present for this to being a good deal?
Under what circumstances would you do one deal?
Something is the biggest risk in the dealer? (e.g. valuation, growth, and margins).
Get is the biggest truck concerning returns in the deal? (e.g. valuation, growth, and debt paydown).

How To Succeed In A Confidential Equity Case Study

On are a few of my tips for getting through that private common fund case study successfully.

Get the basics down first

It’s high easy to want to jump under an more complex thingies initially. If you go in and they start asking you to complete complex LBO modeling features like PIK preferred equity, getting to that might be turn the top of your list.

But I recommend taking a step back the starting with the fundamentals. Received that out one pathway before moving on until one complicated stuff.

The fundamentals earth you, getting you through the things you know you can do easily. It also gives her time to indeed think about those sophisticated ideas.

How nuanced investment judgment; don’t be too black-and-white

When giving your investment recommendation by a private shareholders fund them shouldn’t be giving a simple yes or no.

It’s boring and presents you cannot space to elaborate. Instead, go in with what pricing would make you interested in investing and why. Don’t being shy to grave in here. NB Individual Equity Mates Update

Know where there is a value-creation opportunity in the deal, and mentioned the key assumptions thou need to believed to create that value.

Additionally, if you is recommended that the participation move forward when carry up things you would require to know before closures a deal. You may highlight the press risks of the investments, or key things you’d want to ask management if you may meet with them. of disclosures and fairness of show; and (c) are being provided ... [See Investment included Private Operating Companies used example.

At the end von the day, financial mold your a commodity skill. Every capitalist can does it. Whatever will really fixed you apart is select you think about the deals, and the nuance you taking to analyzing them. Illustrative financial statements: Home Shareholder

Your winning per talking about the model

Along these cable, yours don’t triumph by building this best model. Modeling is just a check-the-box thing int the interview process to shows you can accomplish it. The poll need on know you can do the basics with no glaring errors.

Whats matters lives showing that you can discuss the investment intelligently. It’s about bringing a sensible recommendation to the tab at the information up back it up.

As Do I Prepare For A Private Equity Case Study?

There a no one-size-fits-all when it comes to preparing for a individual equity case study. Everyone remains different.

However, the best thing you can go is PRACTICE, PRACTICE, and other TRAINING!

I know of a recent patron that successfully obtained an offer from multiple mega resources . She practice until she was competent to built 10 LBO models from scratch without either errors conversely help … yes, that’s 10 models!

Now, about it takes 5 alternatively 20 practice kasten studies doesn’t matter. The whole point is to get to a set location you feel confident enough to do an LBO model quickly while under pressure. Learn about different types by private equity case studies and how to excel included them. Aforementioned guide coverage prompts, presentations, and homework tips

There is no way around that pressure in a private company interview. The heat will be on. So, yourself need to prepare yourself on that. You need to felt confident to yourself and your capabilities. Private Shareholders Casing Study: Example, Prompts, & Presentation

You’d be surprising how pressure can leaves you stumped for an answer to a question that you definitely know.

It’s also an great idea to how about the types of questions the private equities interviewer might beg you about your investment make. Prepare your answers as way as available. It’s important that you stick to autochthonous rifles also when aforementioned situation calls for it, because interviewers allow push back on your returns to see how you react..

Yourself need to have your answer to “would it invest in dieser company?” ready, and also how you got to that answer (and what new information might change your mind).

Another thing that gets a lot von people is restricted time. If you’re running out of date, double down on the rudiments or the main part about the model. Make sure you nail those. Also, you can make “reasonable” premises if there’s information you want you had, but don’t have access into. Just make sure to flag it to your interviewer Apex 10 VC Pitch Decks, Examples and Templates

Instructions major is modeling to a private equity case study?

Sculpt is part and parcel of private shareholder case surveys. Your basics what to be correct furthermore there should may no obvious bug. That’s why practicing is to major. You want to focus up the presentation, but your calculations need to be correct first. They do, after select, make up their final decision.

How can I stand out off other candidates?

Knowing insert stuff covers the basic. To stand out, you need to be an subject in showing how you came to a decision, a adherent for details, press inquisitive. Anyone can do the calculations with habit, but individual who thinks clearly furthermore brings nuance to their diskussion of the financial will thrive in interviews.

Intimate equity case studies are adenine difficult but necessarily part of the private equity recruiting process . Candidates can demonstrate their analytic abilities and impress potential employers by understanding to various types the sache studies and how to approach them.

Success in private equity suitcase studies necessitates twain technical and soft skills, from evaluate economic statements to talk the participation case with your interviewer.

Anyone can ace ihr continue private equity case study and land their dream job are the private equity industry with aforementioned right preparation additionally spirit. If you’re looking to learn more nearly private impartiality, you can read my recommended Private Capital Sell.

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Faculty & Research

Private Equity in Action: Case Studies from Developed and Emerging Markets

Private Equity in Action takes you on a tour of the private equity investment world through a series of case studies written by INSEAD faculty and taught at the world's leading business schools. The book is an ideal complement to Mastering Private Equity and allows readers to apply core concepts to investment targets and portfolio companies in real-life settings. The 19 cases illustrate the managerial challenges and risk-reward dynamics common to private equity investment.

The case studies in this book cover the full spectrum of private equity strategies, including:

Carve-outs in the US semiconductor industry (LBO) Venture investing in the Indian wine industry (VC) Investing in SMEs in the Middle East Turnaround situations in both emerging and developed markets. Written with leading private equity firms and their advisors and rigorously tested in INSEAD's MBA, EMBA and executive education programmes, each case makes for a compelling read.

As one of the world's leading graduate business schools, INSEAD offers a global educational experience. The cases in this volume leverage its international reach, network and connections, particularly in emerging markets.

Claudia Zeisberger

Senior Affiliate Professor of Entrepreneurship and Family Enterprise

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Private Equity: A Casebook

Format: Print
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About The Authors

Paul A. Gompers

Victoria Ivashina

Richard S. Ruback

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Kashat: navigating the uncertainties of the egyptian fintech market, funderbeam: teaming up or going alone.

Biomanufacturing Decentralization by Stämm By: Paul A. Gompers, Jenyfeer Martínez Buitrago and Mariana Cal
Kashat: Navigating the Uncertainties of the Egyptian Fintech Market By: Paul A. Gompers and Ahmed Dahawy
Funderbeam: Teaming Up or Going Alone? By: Paul A. Gompers, Elena Corsi and Orna Dan

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What Is Private Equity?

Understanding private equity, private equity specialties, private equity deal types, how private equity creates value, why private equity draws criticism.

Private Equity FAQs

The Bottom Line

Government & Policy

Private Equity Explained With Examples and Ways to Invest

What you need to know about this alternative investment class

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

Gordon Scott has been an active investor and technical analyst or 20+ years. He is a Chartered Market Technician (CMT).

Private equity describes investment partnerships that buy and manage companies before selling them. Private equity firms operate these investment funds on behalf of institutional and accredited investors .

Private equity funds may acquire private companies or public ones in their entirety, or invest in such buyouts as part of a consortium . They typically do not hold stakes in companies that remain listed on a stock exchange .

Private equity is often grouped with venture capital and hedge funds as an alternative investment . Investors in this asset class are usually required to commit significant capital for years, which is why access to such investments is limited to institutions and individuals with high net worth .

Key Takeaways

Private equity firms buy companies and overhaul them to earn a profit when the business is sold again.
Capital for the acquisitions comes from outside investors in the private equity funds the firms establish and manage, usually supplemented by debt.
The private equity industry has grown rapidly; it tends to be most popular when stock prices are high and interest rates low.
An acquisition by private equity can make a company more competitive or saddle it with unsustainable debt, depending on the private equity firm's skills and objectives.

In contrast with venture capital , most private equity firms and funds invest in mature companies rather than startups . They manage their portfolio companies to increase their worth or to extract value before exiting the investment years later.

The private equity industry has grown rapidly amid increased allocations to alternative investments and following private equity funds' relatively strong returns since 2000. In 2022, private equity buyouts totaled $654 billion, the second-best performance in history. Private equity investing tends to grow more lucrative and popular during periods when stock markets are riding high and interest rates are low and less so when those cyclical factors turn less favorable.

Private equity firms raise client capital to launch private equity funds , and operate them as general partners, managing fund investments in exchange for fees and a share of profits above a preset minimum known as the hurdle rate .

Private equity funds have a finite term of 10 to 12 years, and the money invested in them isn't available for subsequent withdrawals. The funds do typically start to distribute profits to their investors after a number of years. The average holding period for a private equity portfolio company was about 5.6 years in 2023.

Several of the largest private equity firms are now publicly listed companies in the wake of the landmark initial public offering (IPO) by Blackstone Group Inc. ( BX ) in 2007. In addition to Blackstone, KKR & Co. Inc. ( KKR ), Carlyle Group Inc. ( CG ), and Apollo Global Management Inc. ( APO ) all have shares traded on U.S. exchanges. A number of smaller private equity firms have also gone public via IPOs, primarily in Europe.

Mira Norian / Investopedia

Some private equity firms and funds specialize in a particular category of private-equity deals. While venture capital is often listed as a subset of private equity, its distinct function and skillset set it apart, and have given rise to dedicated venture capital firms that dominate their sector. Other private equity specialties include:

Distressed investing , specializing in struggling companies with critical financing needs
Growth equity, funding expanding companies beyond their startup phase
Sector specialists, with some private equity firms focusing solely on technology or energy deals, for example
Secondary buyouts , involving the sale of a company owned by one private-equity firm to another such firm
Carve-outs involving the purchase of corporate subsidiaries or units.

The deals private equity firms make to buy and sell their portfolio companies can be divided into categories according to their circumstances.

The buyout remains a staple of private equity deals, involving the acquisition of an entire company, whether public, closely held or privately owned. Private equity investors acquiring an underperforming public company will often seek to cut costs, and may restructure its operations.

Another type of private equity acquisition is the carve-out, in which private equity investors buy a division of a larger company, typically a non-core business put up for sale by its parent corporation. Examples include Carlyle's acquisition of Tyco Fire & Security Services Korea Co. Ltd. from Tyco International Ltd. in 2014, and Francisco Partners' deal to acquire corporate training platform Litmos from German software giant SAP SE ( SAP ), announced in August 2022. Carve-outs tend to fetch lower valuation multiples than other private equity acquisitions, but can be more complex and riskier.

In a secondary buyout, a private equity firm buys a company from another private equity group rather than a listed company. Such deals were assumed to constitute a distress sale but have become more common amid increased specialization by private equity firms. For instance, one firm might buy a company to cut costs before selling it to another PE partnership seeking a platform for acquiring complementary businesses.

Other exit strategies for a private-equity investment include the sale of a portfolio company to one of its competitors as well as its IPO.

By the time a private equity firm acquires a company, it will already have a plan in place to increase the investment's worth. That could include dramatic cost cuts or a restructuring, steps the company's incumbent management may have been reluctant to take. Private equity owners with a limited time to add value before exiting an investment have more of an incentive to make major changes.

The private equity firm may also have special expertise the company's prior management lacked. It may help the company develop an e-commerce strategy, adopt new technology, or enter additional markets. A private-equity firm acquiring a company may bring in its own management team to pursue such initiatives or retain prior managers to execute an agreed-upon plan.

The acquired company can make operational and financial changes without the pressure of having to meet analysts' earnings estimates or to please its public shareholders every quarter. Ownership by private equity may allow management to take a longer-term view, unless that conflicts with the new owners' goal of making the biggest possible return on investment .

Making Money the Old-Fashioned Way With Debt

Industry surveys suggest operational improvements have become private equity managers' main focus and source of added value.

But debt remains an important contributor to private equity returns, even as the increase in fundraising has made leverage less essential. Debt used to finance an acquisition reduces the size of the equity commitment and increases the potential return on that investment accordingly, albeit with increased risk .

Private equity managers can also cause the acquired company to take on more debt to accelerate their returns through a dividend recapitalization , which funds a dividend distribution to the private equity owners with borrowed money.

Dividend recaps are controversial because they allow a private equity firm to extract value quickly while saddling the portfolio company with extra debt . On the other hand, the increased debt presumably lowers the company's valuation when it is sold again, while lenders must agree with the owners that the company will be able to manage the resulting debt load .

Private equity firms have pushed back against the stereotype depicting them as strip miners of corporate assets, stressing their management expertise and examples of successful transformations of portfolio companies.

Many are touting their commitment to environmental, social, and governance (ESG) standards directing companies to mind the interests of stakeholders other than their owners.

Still, rapid changes that often follow a private equity buyout can often be difficult for a company's employees and the communities where it has operations.

Another frequent focus of controversy is the carried interest provision allowing private equity managers to be taxed at the lower capital gains tax rate on the bulk of their compensation. Legislative attempts to tax that compensation as income have met with repeated defeat, notably when this change was dropped from the Inflation Reduction Act of 2022 .

How Are Private Equity Funds Managed?

A private equity fund is managed by a general partner (GP) , typically the private equity firm that established the fund. The GP makes all of the fund's management decisions. It also contributes 1% to 3% of the fund's capital to ensure it has skin in the game . In return, the GP earns a management fee often set at 2% of fund assets, and may be entitled to 20% of fund profits above a preset minimum as incentive compensation, known in private equity jargon as carried interest. Limited partners are clients of the private equity firm that invest in its fund; they have limited liability .

What Is the History of Private Equity Investments?

In 1901, J.P. Morgan bought Carnegie Steel Corp. for $480 million and merged it with Federal Steel Company and National Tube to create U.S. Steel in one of the earliest corporate buyouts and one of the largest relative to the size of the market and the economy.

In 1919, Henry Ford used mostly borrowed money to buy out his partners, who had sued when he slashed dividends to build a new auto plant. In 1989, KKR engineered what is still the largest leveraged buyout in history after adjusting for inflation , buying RJR Nabisco for $25 billion.

Are Private Equity Firms Regulated?

While private equity funds are exempt from regulation by the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 or the Securities Act of 1933 , their managers remain subject to the Investment Advisers Act of 1940 as well as the anti-fraud provisions of federal securities laws. In February 2022, the SEC proposed extensive new reporting and client disclosure requirements for private fund advisers including private equity fund managers. The new rules would require private fund advisers registered with the SEC to provide clients with quarterly statements detailing fund performance, fees, and expenses, and to obtain annual fund audits. All fund advisors would be barred from providing preferential terms for one client in an investment vehicle without disclosing this to the other investors in the same fund.

For a large enough company, no form of ownership is free of the conflicts of interests arising from the agency problem . Like managers of public companies, private equity firms can at times pursue self-interest at odds with those of other stakeholders, including limited partners. Still, most private equity deals create value for the funds' investors, and many of them improve the acquired company. In a market economy , the owners of the company are entitled to choose the capital structure that works best for them, subject to sensible regulation.

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Carlyle. " The Carlyle Group Agrees to Acquire ADT Korea from Tyco for $1.93 Billion ."

Francisco Partners. " Francisco Partners to Acquire Litmos From SAP ."

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10X. " Private Equity Buyout Strategies That Generate Superior Returns ."

McKinsey & Company. " Private Equity Exit Excellence: Getting the Story Right ."

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KPMG. " Delivering on the Promise of Value Creation ."

The New York Times. " Private Equity Firms Are Piling On Debt to Pay Dividends ."

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Davis, Steven J. and et al. " The Economic Effects of Private Equity Buyouts. " National Bureau of Economic Research , Working Paper 26371, July 2021, pp. 1-89.

The New York Times. " The Carried Interest Loophole Survives Another Political Battle ."

Fogelström, Erik and Gustafsso, Jonatan. " GP Stakes in Private Equity: An Empirical Analysis of Minority Stakes in Private Equity Firms ." MSc Thesis in Finance , Stockholm School of Economics, pp. 1.

Harvard Business School, Baker Library, Bloomberg Center. " The Founding of U.S. Steel and the Power of Public Opinion ."

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U.S. Securities and Exchange Commission. " Proposed Rule: Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews ."

Kirkland & Ellis. " SEC Proposes Sweeping Rule Changes for Private Fund Advisers (Part 1 of 2) ."

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How Private Equity Firms Can Leverage Case Studies to Grow Their Portfolios

Adding case studies to your marketing toolbox can not only help you earn the trust of founders and business owners, but it can prove your track record with intermediaries and investors, demonstrate your expertise, boost your seo ranking, and more..

Few activities are more critical to the success of a private equity firm than deal sourcing. In the past, private equity firms have relied on their own networks to generate deal flow and nurture relationships, but as competition has increased, it’s become even more important for firms to broaden their tactics and strategies.

Investing in the development of case studies—which work to highlight the growth of companies currently within your portfolio and those that have successfully exited—can not only demonstrate your ability to deliver on your promises, but it can reassure founders and business owners seeking a partnership that your firm is the right fit. It can also solidify your track record, helping your firm to stand out to investment bankers, who help bring prospective companies into your fold, and to investors, who invest capital into private equity funds.

In this post, we’ll walk through what a case study is, why you should invest in this form of content, and provide baseline steps on how to create your own. We’ll also highlight a few examples of private equity firms already taking advantage of this tactic to inspire your own ideas.

What is A Case Study and Why Does It Matter?

For a private equity firm, a marketing case study serves as a detailed summary that examines an initial challenge a portfolio company has faced, and the tactics and strategies that were deployed to solve the challenge, and ultimately grow the company. Case studies can vary greatly in length and can take the form of a web page, blog post, downloadable, or video—or even a combination of both written and video components.

When done well, these case studies can effectively showcase real-world examples of your strategies at play, as well as your authority and expertise as a potential partner for similar companies. Founders and business owners want to see businesses like themselves in your portfolio and be reassured that you understand the ins and outs of their industry and have relevant experience.

The Benefits of Leveraging Case Studies

Although case studies require more effort, time, and resources to put together compared to a client testimonial or other marketing materials, the payoff is very high. When used as part of your overall marketing toolkit, case studies can help generate new potential leads, nurture prospect relationships, and even close deals, winning new business. Below are more benefits: 1. Provides social proof Case studies are prospect-focused—not firm-focused—and as a result, they are extremely adept at building trust and providing social proof. A case study should aim to effectively outline the founder’s or business owner’s journey from their own point of view, explaining initial challenges, strategies used, and solutions, as well as the overall experience. Within the story, relevance and impact can be brought to life, and can help put business owners or executives reading the case study at ease, and motivate them to take the next step in partnering with your firm. 2. Builds credibility By including data and analysis in your case study, it can help demonstrate the value that your firm brings to the table, while also providing proof points that back up your track record to intermediaries and investors. Highlighting portfolio companies throughout different industry niches can also build credibility across your vertical focus, and show your portfolio’s diversity. 3. Boosts SEO rankings Case studies, when digitally published to a webpage or as a blog post, provide an ample opportunity to strategically seed relevant keywords into your content. Over time, as new case study content is added to your site, this will not only help boost your SEO ranking by reinforcing your relevance to those keywords, but increase quality traffic to your website. 4. Reusable marketing materials Case studies are not only an effective marketing tool, but a very powerful sales tool. Repackaging a case study into different types of media assets—from a standalone video, downloadable one-pager or whitepaper, social posts, to a series of blog posts—can allow your firm to syndicate the content to your audiences through a variety of channels or share directly to prospects through your business development team. Diversifying the format and reusing the content in new ways can also help boost SEO efforts.

How to Get Started Creating A Case Study

Sharing your portfolio company’s story is a delicate balance between highlighting their point of view and growth over time, while naturally incorporating how your firm helped contribute to the success. To ensure that your case study lands correctly, check out the preliminary tips below for getting started. 1. Find the right investment to highlight Crafting an effective case study requires more than simply selecting a company within your portfolio and writing a story. When considering which investment to highlight, start by narrowing your focus to a grouping of companies who are your ideal fit and that has seen good results that you know can be repeated by other companies that partner with you (aka, leave extreme outliers aside). This company must also be willing to participate in the case study in order to strengthen its narrative.

The investment you choose from your portfolio should resemble the following:

Experienced tremendous growth with your partnership.
Have a recognizable brand that is familiar to, or will resonate with, founders and business owners who will read the case study.
Be willing to participate in the case study, enabling you to not only get a clear understanding of their perspectives, but also allow you to gather accompanying testimonial quotes, video footage, or photography.

2. Determine your objective While all business case studies are designed to showcase the value your firm provides to its investments, the value itself and the strategies used can take on many shapes. You’ll want to ensure the story you choose highlights your firm’s biggest strengths and pertains to your most specialized industry focus. 3. Choose your case study medium and other deliverables. As mentioned earlier, a case study doesn’t have to exist only as a web page or PDF download, but can instead take on other formats. It can also greatly vary in length and can include mixed media such as written content alongside photography and video, in order to deliver a compelling and multi-faceted story.

When determining the primary format and length, keep in mind the sensibilities of your target audience—will they want to dig into the details or want a high-level overview? Would a video component make a difference by providing a deeper testimony into the firm’s approach or is it unnecessary?

Below are several formats worth considering:

Web Page: This format can be the most interactive. It can house written content alongside video clips or photography to tell a complete story.
Report or One-Pager Download: Keep your message short and sweet in a format that can be readily emailed to prospective leads.
Video : Showcase the culture and approach visually, appealing to the emotional journey, while still providing the hard-hitting facts.
Social Posts: Syndicate the case study to professional networks like LinkedIn.

4. Pull together data and insights from the investment team and portfolio company. Private equity firms have a unique vantage point of having access to, and an intimate understanding of, their portfolio company’s data points and insights. The investment team can work with the portfolio company to begin collecting this data, and begin formulating interview questions to discuss with the executive team. This interview will allow you to begin to develop a narrative that speaks to their point of view, as well as provide an opportunity to capture testimonial quotes and even video footage. 5. Begin writing your case study or find a partner to work with. When it comes time to take all of the information you’ve collected and turn it into the case study itself, it’s easy to feel overwhelmed. Starting from a brief outline, like outlined below, can help you get started on the right track.

Title and executive summary: The executive summary allows for speed readers to scan through longer formats of the case study, while still digesting the highlights.
Introduction to the portfolio company: Sets the stage for the case study, while providing background on the executive team of the company.
Challenges and objectives: Explain the problem that you helped the portfolio company overcome, while keying into the larger impact of the issues.
Deployed strategies and tactics: This section allows you to provide a real-world example of your services to prospective founders and business owners who want to better understand how your firm would work with them.
Results: Provide an overview of the hard-hitting stats, and highlight the company’s emotional journey and excitement in response to the growth.
Supporting visuals, video, or testimonial quotes: These supporting elements are most effective when used throughout the entire case study.

Alternatively, instead of writing your own case study, you may also choose to work with an agency partner specialized in content marketing to develop it. Not only will an agency partner be able to offload the work from your internal team, but they have the expertise to lead the SEO keyword research, interviews, copywriting, video, and syndication, while also providing guidance on the overall strategy. Drop us a message and connect with us if you’re seeking a professional partner to develop a case study or other content.

Case Study Inspiration to Get You Started

If you’re new to developing case studies, or any form of content for your firm, having inspiration to draw from can help you establish a baseline to ideate further. We’ve rounded up four private equity case study examples below to help you get started.

Carlyle : Carlyle leads with compelling storytelling and a first-hand audio testimonial that immediately engages users. The case study provides a strategic overview on how ZoomInfo and Carlyle worked together without over disclosing sensitive, private details.
CVC : CVC kicks off its case study by providing an executive summary of the company’s background. CVC also provides in-depth details on revenue growth on key focus areas, ending with a succinct profile card of the company.
American Industrial Partners : This case study is ideal for readers who quickly scan content for the most important insights. Very quickly, readers can gather information on what the portfolio company does, how they partnered with American Industrial Partners, as well as company highlights.
Brockway Moran & Partners : While Brockway Moran & Partner’s isn’t the strongest example in this subset, its case studies are thorough and provide detail. We recommend strengthening the storytelling narrative to focus on the portfolio team’s perspective.

Need Help Making Case Studies Part of Your Toolkit?

Earning trust in the private equity space can—at times—be a challenging feat. But, by leveraging case studies to showcase real-life examples of growth, you can not only build credibility with intermediaries and investors, but also alleviate the concerns of founders and business owners when they approach a potential partnership with your firm.

Whether you need help executing a full content marketing strategy or want to begin to explore more deeply whether case studies can help your firm, we’re here to help. Connect with us and subscribe to our newsletter to get relevant industry perspectives sent straight to your inbox.

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Mastering Email Marketing for Your Private Equity Firm

Email marketing is a key communication channel that is often underutilized by private equity firms. here we’ll cover the basics of email marketing, and most importantly, share how this tactic can bring prospects closer into your fold., start a project, or just start a conversation….

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AI and Machine Learning in Private Equity: A Case Study

Feat. Blueprint Prep, a New Harbor Capital portfolio company

In today's ever-evolving technological landscape, private equity firms must remain agile and adaptable to stay on top of advancing technology such as artificial intelligence (AI) and machine learning. AI has the power to revolutionize how private equity firms operate, streamlining processes and unlocking the power of data for firms.

In this Partnership Perspectives blog post, we will highlight some ways in which private equity firms like New Harbor Capital and our portfolio companies are beginning to think about and deploy AI.

Identifying Relevant Investment Opportunities

The deal origination process is the heart of any private equity firm’s operations. Firms are constantly looking for new investment opportunities, but it can be challenging to identify relevant deals in a competitive market. AI can help private equity firms identify relevant investment opportunities by analyzing large datasets and identifying patterns and trends that would be difficult or impractical to spot manually. AI can also conduct industry research and competitor analyses to supplement a private equity deal team’s sourcing efforts.

Enhancing the Due Diligence Process

Due diligence is a critical step in the private equity investment process, where firms meticulously assess the risks and opportunities associated with a potential investment. AI can support and streamline the due diligence process by automating repetitive tasks like data aggregation and analysis. AI can quickly and efficiently analyze financial statements, contracts, and other legal documents to identify potential red flags or risks associated with a target company. This not only saves teams time, but also enhances accuracy, ensuring firms gain a comprehensive understanding of a potential investment.

Streamlining Operational Efficiency

AI can modernize operational efficiency for private equity firms by automating repetitive tasks and streamlining internal processes, such as meeting scheduling, compliance and regulatory reporting, and project management, freeing up human capital as a result. This allows private equity professionals to redirect their efforts toward more value-added activities, like deal origination and relationship management.

Blueprint Prep: A Case Study in AI-Powered Personalized Learning

New Harbor is not only leveraging AI at a firm level to gain a competitive advantage - we are also encouraging our portfolio companies to do the same. One example is Blueprint Prep , a leading platform for high-stakes test preparation and continuing education. Blueprint has been using AI to drive personalized learning at scale for several years.

Founded in 2005, Blueprint Prep is a leading platform for test prep related to high stakes exams, certification and licensure in the U.S., offering live and self-paced online courses, private tutoring, self-study materials, and question banks for pre-law, pre-med, and medical school students, as well as residents, practicing physicians, PAs, and NPs.

Blueprint began its journey with AI by focusing on personalized and adaptive practice question banks. The Blueprint team has developed machine learning models that feed each learner the highest-value practice content at every step of their journey. They also use AI tools to build personalized study plans for students.

Most recently, Blueprint released a first-gen AI feature : a conversational AI chatbot that acts as a tutor for MCAT students, helping them understand the strategy behind certain exam questions. The AI chatbot, named Blue, is the first of its kind in the MCAT test preparation market. It can provide students with personalized guidance on how to tackle Critical Analysis and Reasoning Skills (CARS) questions through genuine one-on-one conversations while adapting in real time to their individual learning needs.

The launch of Blue comes at a time when interest in the use of AI in medical school and healthcare education is on the rise. AI offers medical schools the ability to provide a more personalized curriculum that can adjust to each student's needs. As the demand for medical education increases, AI technology is fast becoming necessary to meet the evolving needs and preferences of students.

Blueprint’s Founder and CEO, Matt Riley, believes that AI will continue to be a disruptive force in the education and online learning industry: “In our space, AI will be incredibly beneficial to learners. No longer will they need to labor through piles of content without knowing how to drive results. With AI, we can now make the entire learning journey more efficient and enjoyable, which will unlock tons of untapped human potential.”

As private equity firms strive to maintain competitiveness amidst a constantly evolving technological landscape, the adoption of AI and machine learning will be increasingly important. By embracing AI’s capabilities, private equity firms can gain a distinct advantage — identifying more relevant investment opportunities, enhancing the due diligence process, streamlining internal operations, and adeptly managing risks. As AI continues to advance, private equity firms that embrace and integrate it into their operations and workflows will be at a significant competitive advantage.

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PE Case Study - LBO with CIM

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Hey guys, I looked for a clear answer to the following case study in the old discussions, but I couldn't find any: what's the best way to approach a LBO exercise with a full (50+ pages) CIM and no assumptions given in terms of sources (including type and cost of debt ) and entry/exit multiples? The task is simply to get to an IRR and discuss the returns in a short investement memo.

Thank you!!

I dont understand the question. Read the CIM and come up with operating assumptions. Use basic transaction assumptions and make an LBO .

I'm sure the firm gave you instructions...

What do you mean by "basic transaction assumptions"? If you have no idea about the sector (i.e. you don't know at which ev / ebitda company are trading), what are your entry and exit multiples going to be? What about cost and maturity of debt? Just putting a random 5 years bank debt at 7%? Thank you!!

Do a quick comps to find out current trading multiples and assume entry equals exit (unless you can very reasonably argue otherwise). Similarly you could also look at debt / ebitda ratios of public peers and (depending on the size of the target) discount that to account for risks associated with smaller firms. Although I'm not entirely sure you should be fine staying away from mezz and using a senior A (yearly 5 year amortization) and senior B (bullet in year 6) at 4%-5%.

The main issue is that you aren't given any comps set and you haven't got any internet connection (i.e. you have ONLY the CIM), hence there are no benchmarks or peers. And I don't think that the fact that they specify they want a LBO for valuation purposes will change anything as you would need exit and entry as well as debt assumptions. Am I missing anything? Thanks!

In that case I would argue that they are trying to test your reasoning. Try to get a grasp of multiples of major industries and what drives valuation in those industries, then apply that to the CIM you are presented with. As far as debt is concerned, try to think like a bank; a company that has a clean balance sheet or a company that has successfully grown and consistently paid down debt over the years is more likely to be able to attract higher multiples (north of 3x ebitda) than a company with a relatively unproven business model in a highly complex industry. Hope this makes sense, just my two cents!

ctrlaltelite: In that case I would argue that they are trying to test your reasoning. Try to get a grasp of multiples of major industries and what drives valuation in those industries, then apply that to the CIM you are presented with.

I tend to agree, if you come out with like 5x Rev you should provide a reasonable explanation for that, but without data and little/no knowledge of industry/sub-sector (or even more if you don't have info about it - though not the case) if you say 1x or 1.5x or 2x Rev that is clearly not the point of the whole valuation. The reason why they ask you to model an LBO is to test your reasoning as well as your modeling skills. At the end of the day, if you build a working, effective lbo model and it turns out the proper multiple is 5x Rev for whatever reason, it's a matter of a second to change it.

I definitely agree that without a valid reason you have to use the same multiple both entering and exiting.

As for the debt - the point is to check if you have any rough ideas about how the banking world works - in this case, you can't end up with a D/E of 5 or 10 as banks will not lend that much to a firm. You can use some kind of metric to determine how much (e.g. D/E or multiple of EBITDA , they are both a starting point... Remember: valuation is both a science and an art, so there's not 100% right response).

PE Case Study - Model & Presentation with CIM ( Originally Posted: 04/02/2018 )

I have an upcoming case study round where I will be given a CIM to build a model and prepare a few slides that I will have to present incl. Q&A. This will be my first full case study, so my question is how do you approach this most efficiently? I will have 2-3 hours for the whole exercise. How would you divide up the time and what are the most important areas to cover in the slide deck? I would have thought to include 1 page exec summary upfront, 1 slide about the market developments, 1 page business overview incl. historic performance, 1 page forecasts of key financials / business plan, 1 page transactions overview / assumptions + IRR sensitivities, 1 page potential risks / further ares for DD.

Does this sound reasonable for the time / is there anything major missing that you would include?

In terms of the operating assumptions for the model - is this usually just replicating the business plan assumptions from the CIM and making necessary downwards / upwards assumptions based on the industry outlook? Also, how often is it required to build a full three statement model? I would assume time is pretty limited and the full 3 statements might be a bit too much?

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If we're lucky, the following pros may have something to say: EuroGorilla bule Radu-Georgescu

I hope those threads give you a bit more insight.

Think your intuition is right - I wouldn't build in a balance sheet just do I/S, working capital and debt schedule. And DO NOT worry about formatting, just make sure the valuation you arrive at makes sense and focus all additional time on the qualitative part

30mn reading + business understanding (what is the USP, product etc) 1h preparing commercial slides 1h LBO (i guess it depends on the background whether you need 1h for your LBO /commercial work) 30mn check + formating (primarily slides)

from experience, focus on 3-4 key value creation/DD items with a more detailed answer; in the end: it doesnt matter whether you got an IRR of 14% or 22% , more importantly you need to demonstrate critical thinking, business acumen as people want to see whether you can have a smart discussion over the company

All great comments so far.

Personally, I think it's a tough one. I did this SaaS LBO case study, a full 3-statement with LBO features --- multiple debt tranches, cash sweep , rollover equity, option pool, dividend recap, etc. --- and with the b/s balanced and all formulas correct, somehow I ended up with a 9x MOIC over a 5-year horizon. It's obviously too high for pretty much any company, but it'd be really helpful if I have some SaaS specific knowledge (I don't have that much) to know if that number is not THAT weird.

The hypothetical Co. is a SaaS company who just started to generate revenue in transaction close year.

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New Report Reveals Which States Have High Private Equity Influence On Healthcare, Housing and Jobs

Are you for big business or affordable solutions?

A new report highlights the states where private-equity firms have taken over key economic areas, including healthcare, pensions, jobs, and housing.

Research conducted by the nonprofit Private Equity Stakeholder Project shows that Arizona and Georgia top the list in housing, with more private equity firms purchasing rental homes. Massachusetts and Alabama are on the high end in terms of impact on jobs and employee relations, while healthcare systems operated by financiers have dominated New Mexico and West Virginia.

Lastly, Washington, Louisiana, and Michigan are at a high end in pension risk due to investments in private equity.

In the last few years, private equity firms have been responsible for shifts in the United States economy in a vast group of industries outside of the top four. Other spaces seen under the influence include supermarkets, child care, fast food operations, pet care providers, and senior living centers.

Even the departments of first responders are impacted, as 40% of emergency departments are operated by staffing companies owned by private equity firms.

According to MetLife, by 2030, companies supported by private equity could potentially own 40% of the nation’s single-family homes, adding a risk for areas already facing increased housing costs. In Fulton County, Georgia, the selection of single-family homes owned by corporate landlords has doubled to 6,429 in 2023 from only 3,169 in 2018. With a staggering number of rent increases in Atlanta, nonprofit Housing Justice League’s Alison Johnson said the private equity firms are putting residents in a tough spot. “They have us in a chokehold,” she said.

“They have purchased so many homes here, they get to manage the market. They get to tell us what rents are set in areas where they have absorbed all the housing.”

Patrons of these businesses are unaware of the private-equity ownership since the firms don’t put their names outside the buildings or paperwork. The report’s positive side is that Private Equity Stakeholder Project policy director, Chris Noble, says state leaders have “the tools to protect the people they serve” from these firms.

Since private-equity firm ownership risks a decline in healthcare, lawmakers are pushing to “take for-profit, equity-based companies out of the healthcare system.”

Senate Ways and Means Chairman Michael Rodrigues (D-Mass.) said Gov. Maura Healey must change the damage done to the state healthcare network, Steward Health Care network, and other surrounding hospitals. “I’m worried about health care in general because all of our providers, all of our hospitals, are facing immense pressures — labor and workforce pressure, they can’t get enough nurses; inflationary costs, health care costs generally have increased more over the last year than it has in probably the prior decade,” Rodrigues said, according to Mass Live.

He added that Cerberus Capital Management, who purchased Steward, made $800 million. The Democratic legislator believes that money would have been better off being pushed “back into the healthcare system” instead of into corporate pockets.

While an independent study found that private equity ownership of nursing homes, hospitals and physician practices hurts patients, pro-private equity advocates like the American Investment Council argue that corporate acquisitions only improve their investments. “Private equity investments consistently support quality, affordable health care for patients across America,” the council wrote.

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Complete Private Equity Case Study Example
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Private Equity Case Study: Full Tutorial & Detailed Example
The Private Equity Case Study: The Ultimate Guide
Private Equity Case Study: Full Tutorial & Detailed Example

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Private Equity Case Study: Full Tutorial & Detailed Example
The private equity case study is an especially intimidating part of the private equity recruitment process.. You'll get a "case study" in virtually any private equity interview process, whether you're interviewing at the mega-funds (Blackstone, KKR, Apollo, etc.), middle-market funds, or smaller, startup funds.. The difference is that each one gives you a different type of case study ...
Private Equity Case Study: Example, Prompts, & Presentation
How To Do A Private Equity Case Study. Let's look at the step-by-step process of completing a case study for the private equity recruitment process: Step 1: Read and digest the material you've been given. Read through the materials extensively and get an understanding of the company. Step 2: Build a basic LBO model.
Private Equity Interviews
Here, the Purchase Enterprise Value is $1.5 billion, and the PE firm contributes 40% * $1.5 billion = $600 million of Investor Equity. The "average" amount of proceeds is $225 * 10 = $2,250, and the "average" Exit Year is Year 4 (no need to do the full math - think about the numbers - and all the Debt is gone).
Mastering Your Private Equity Case Study: Essential ...
The case study is the pivotal phase of a private equity interview, demonstrating your ability to perform the job effectively. It involves assessing a Confidential Investment Memorandum (CIM ...
Best Private Equity Case Study Guide + Excel Model + Example
3 Steps to Finish a Private Equity Case Study. 3.1 1. Download and organize all documents in one folder. 3.2 2. Research the industry to understand trends and key metrics. 3.3 3. Read the filings and take notes. 3.4 4. Input financials in Excel and build the LBO model.
The Private Equity Case Study: The Ultimate Guide
Learn more: https://breakingintowallstreet.com/core-financial-modeling/?utm_medium=yt&utm_source=yt&utm_campaign=yt14In this tutorial, you'll learn how to ap...
How to prepare for the case study in a private equity interview
One private equity professional says that understanding why an investment might suit a particular firm could prove to be a plus. Prior to the case study, check whether the fund favours a particular industry sector, so that when it comes to the case study, you can add that to the investment thesis.
Private Equity Case Study: Example, Prompts, & Presentation
Learn info different types of private equity crate studies and how to expand in them. This guide covers prompts, presentations, and getting tips
Private Equity Case Study: Example, Prompts, & Presentation
Private equity case student are an important separate of the private equity recruiting process because they allow firm to evaluate a candidate's analytical, investing, and presentation abilities. In this article, we'll look the the various types is private equity case studies and offer advice on how to prepare used them.
Private Equity Case Study: Example, Prompts, & Presentation
Learn about different types of social equity matter studies and how go exceptional in them. This guide covers calls, performances, and prep tips
How to prepare for your upcoming private equity case study.
For most case studies, you'll be given a Confidential Investment Memorandum (CIM) relating to a company the private equity fund could invest in. You'll be expected to value the company and put ...
Private Equity: Articles, Research, & Case Studies on Private Equity
Private Equity and COVID-19. by Paul A. Gompers, Steven N. Kaplan, and Vladimir Mukharlyamov. Private equity investors are seeking new investments despite the pandemic. This study shows they are prioritizing revenue growth for value creation, giving larger equity stakes to management teams, and targeting somewhat lower returns.
Private Equity Case Studies
Examples and tutorials for private equity case studies, including walk-throughs of models, case study presentations, and more.
Tips for a Private Equity Case Study Interview
In this video, Gail McManus, founder of PER, a recruitment consultancy for private equity and venture capital, and guest expert on the Oxford Private Markets...
Private Equity in Action: Case Studies from Developed and Emerging
Private Equity in Action takes you on a tour of the private equity investment world through a series of case studies written by INSEAD faculty and taught at the world's leading business schools. The book is an ideal complement to Mastering Private Equity and allows readers to apply core concepts to investment targets and portfolio companies in real-life settings.
Private Equity: A Casebook
Abstract. This book is a collection of cases and notes that have been used in Private Equity Finance, an advanced corporate finance course offered in the second year of the Harvard Business School's MBA curriculum, over several years. Our goal is to provide detailed insight into the sources of value creation as well as outline the process of ...
2 Hour 3-Statement LBO Case Study
Watch me build a 3-statement LBO model from scratch. Great practice and review for private equity case study interviews!About me: My name is Josh Jia and I h...
Private Equity Case Study Example
In this Bain and Company private equity case interview example, Management Consulted coach and former McKinsey Associate Partner Divya Agarwal leads a 4th-year PhD candidate (Biomedical Engineering at Georgia Tech and Emory University) through a case interview.. The case features a private equity company looking for insight into purchasing a pizza chain (Gumby's Pizza).
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Private equity is capital that is not noted on a public exchange. Private equity is composed of funds and investors that directly invest in private companies , or that engage in buyouts of public ...
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Private equity Digital Article. Paul Michelman. With private equity buyouts and acquisitions on the rise, we turned to Harvard Business School professor Josh Lerner, a longtime observer and ...
How Private Equity Firms Can Leverage A Case Study
Social Posts: Syndicate the case study to professional networks like LinkedIn. 4. Pull together data and insights from the investment team and portfolio company. Private equity firms have a unique vantage point of having access to, and an intimate understanding of, their portfolio company's data points and insights.
AI and Machine Learning in Private Equity: A Case Study
Nov 9, 2023 9:06:55 AM. Feat. Blueprint Prep, a New Harbor Capital portfolio company. In today's ever-evolving technological landscape, private equity firms must remain agile and adaptable to stay on top of advancing technology such as artificial intelligence (AI) and machine learning. AI has the power to revolutionize how private equity firms ...
Case Studies in PE
In formal case study interviews, many PE firms will actually give you a (usually old) CIM. In shorter discussions, they will give you a short prompt about the company (think the CIM's exec summary) or a public company/major private company in the sector that you may know about already. If it accompanies a model, you have to incorporate the CIM ...
PE Interview Case Studies
General the case study portion of the interview involves reading an offering memorandum and answering questions on the spot. Opportunities / Risks, would I invest, what questions to ask management, etc. Usually PE firms choose either a recent deal or an existing portfolio company to administer these case studies.
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Take-private deals witnessed a downturn in deal value in Q1 as PE buyers favored smaller transactions. Monday, Vista Equity Partners, a leading buyout shop in the software, data and technology-enabled sectors, agreed to acquire Model N for $1.25 billion in a take-private deal. Model N is a software company that provides revenue management and compliance services, with clients including Johnson ...
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Cinven and Phadia: a case for product diversification. The buyout of Phadia, which is a leading provider of in-vitro allergy and autoimmunity diagnostics, is a telling example of how fund managers can increase value by supporting the portfolio company diversify its product offering.⁵ ⁶. In 2017, Phadia was acquired by private equity firm ...
PE Case Study
Private Equity Case- Leveraged Buyout Model (LBO) Part 1: Wall Street ... modeling tests, 4 private equity resume samples along with 1 year access to the WSO Company Database with ... presentation. Case study examples will also be cover. REFM Private Equity Fund Modeling Self-Study Course them).
Report Shows Private Equity Firms Influence In Economic Growth
While an independent study found that private equity ownership of nursing homes, hospitals and physician practices hurts patients, pro-private equity advocates like the American Investment Council ...

Private Equity Case Study: Example, Prompts, & Presentation

Types Of Private Equity Case Studies

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Private Equity Case Study Presentation

How To Do A Private Equity Case Study

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Private Equity Interviews 101: How to Win Offers

How to Network and Win Private Equity Interviews

The Overall Private Equity Interview Process

Private Equity Interview Topics

Fit/Background Questions: “Why Private Equity?”

Technical Questions For PE

Talking About Deal/Client Experience

Firm Knowledge

Market/Industry

Case Studies and Modeling Tests

Type #1: “Mental” Paper LBO

Type #2: Written Paper LBO

Type #3: 1-3-Hour On-Site or Emailed LBO Model

IB Interview Guide

Type #4: Take-Home LBO Model and Presentation

Type #5: 3-Statement/Growth Equity Model

Type #6: Consulting-Style Case Study

A Final Word On Case Studies

What NOT to Worry About In PE Interviews

PE Interview X-Factor(s)

PE Interview Preparation

The Ugly Truth About PE Interviews

So You Get An Offer: What Next?

If You Get No Offer: What Next?

To PE Or Not to PE?

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Best Private Equity Case Study Guide + Excel Model + Example

Private Equity Case Study Example + Model

How is a Private Equity Case Study Structured

1. LBO Modeling Test

2. Paper LBO

3. Private Equity Take-Home Case Study + Written Memo

Steps to Finish a Private Equity Case Study

1. Download and organize all documents in one folder

2. Research the industry to understand trends and key metrics

3. Read the filings and take notes

4. Input financials in Excel and build the LBO model

5. Work on a presentation or write a memo

Private Equity Case Study Presentation / Memo

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Recommendation to Investment Committee

Financials/Return Summary

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Model Output/Exhibits

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How to prepare for the case study in a private equity interview

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