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Adi

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3

Private Equity: Value Creation Interview - what to expect and how to structure answers

Hi, some really helpful content on this platform. I have an upcoming 2nd round interview with a mid-market PE firm, within their value strategy group (primarily focussed on the holding period and exit strategies), having had my fit interview. There is a combination of strategy consultants (I fit into this bucket) and those with a financial services background in this team.

My preparation has been focussed around the three drivers of value creation

(1) Operational improvements

(2) Multiple Expansion

(3) Changes in net debt.

I have also looked over financial accounting terms to help around these areas, and the areas of investment in the current portfolio.

I am unsure whether to expect a LBO modelling in this round. I have a few weeks to prepare and wanted to know if there was any advice on what I can expect in this 2nd round interview and the best way to prepare. Should I treat it as similar to typical strategy case interviews? I am struggling to come up with a structure to answer questions, as I'm unsure what to expect.

Hi, some really helpful content on this platform. I have an upcoming 2nd round interview with a mid-market PE firm, within their value strategy group (primarily focussed on the holding period and exit strategies), having had my fit interview. There is a combination of strategy consultants (I fit into this bucket) and those with a financial services background in this team.

My preparation has been focussed around the three drivers of value creation

(1) Operational improvements

(2) Multiple Expansion

(3) Changes in net debt.

I have also looked over financial accounting terms to help around these areas, and the areas of investment in the current portfolio.

I am unsure whether to expect a LBO modelling in this round. I have a few weeks to prepare and wanted to know if there was any advice on what I can expect in this 2nd round interview and the best way to prepare. Should I treat it as similar to typical strategy case interviews? I am struggling to come up with a structure to answer questions, as I'm unsure what to expect.

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Book a coaching with Adi

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Hey,

Just wanted to make sure that you are covering all aspects. I pick up 3 distinct subjects from your question:

  1. Valuation
  2. Value creation
  3. LBO

As you know, these are different topics (obvs all under the same umbrella) and will require different approaches. Hope that makes sense.

#1 is your typical valuation of a firm and am assuming you know this subject (NPV, shares outstanding etc) and how to approach such cases. #2 can be intrepreted as creating shareholder value or customer value. You can create more value by growing revenue and/or reducing operating cost and/or improving asset efficiency and/or improving customer experience. There are many other ways but I have summarised and simplified here. #3 is about valuing a company to acquire..am assuming you know this subject.

Feel free to shoot me a message if you wish to discuss further.

Hey,

Just wanted to make sure that you are covering all aspects. I pick up 3 distinct subjects from your question:

  1. Valuation
  2. Value creation
  3. LBO

As you know, these are different topics (obvs all under the same umbrella) and will require different approaches. Hope that makes sense.

#1 is your typical valuation of a firm and am assuming you know this subject (NPV, shares outstanding etc) and how to approach such cases. #2 can be intrepreted as creating shareholder value or customer value. You can create more value by growing revenue and/or reducing operating cost and/or improving asset efficiency and/or improving customer experience. There are many other ways but I have summarised and simplified here. #3 is about valuing a company to acquire..am assuming you know this subject.

Feel free to shoot me a message if you wish to discuss further.

Book a coaching with Ian

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Hi there,

This feels a bit limited.

In addition to this, you need to think about pre-deal, deal, and post-deal. You need to look at both acquisitions and divestments (spin-offs/carve-outs) and how to think about when they apply, when they're good/bad, and how to value them. You need to understand methods of valuation (NPV for example) as well as additional non-financial ways of measuring this. You also need to be able to determine, when merging/acquiring, the methods for ensuring success (i.e. high vs low-control). You need to be well read on the most well-known (and recent) mergers, acquisitions, and failed acquisitions.

Shoot me a message...I've been preparing a number of candidates for PE-based consulting roles...more than happy to help further!

Hi there,

This feels a bit limited.

In addition to this, you need to think about pre-deal, deal, and post-deal. You need to look at both acquisitions and divestments (spin-offs/carve-outs) and how to think about when they apply, when they're good/bad, and how to value them. You need to understand methods of valuation (NPV for example) as well as additional non-financial ways of measuring this. You also need to be able to determine, when merging/acquiring, the methods for ensuring success (i.e. high vs low-control). You need to be well read on the most well-known (and recent) mergers, acquisitions, and failed acquisitions.

Shoot me a message...I've been preparing a number of candidates for PE-based consulting roles...more than happy to help further!

Book a coaching with Vlad

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Hi,

In private equity interviews, the cases will be much more detailed in financial part. Depending on the company you'll need to do some valuation on paper:

  • Find the relevant information in P&L and Balance sheet
  • Do the simplified valuation using NPV: calculate cash flows and make assumptions about growth rate and discount rate
  • Do the valuation using comps - you'll have to explain which comps you will use and why

Good luck!

Hi,

In private equity interviews, the cases will be much more detailed in financial part. Depending on the company you'll need to do some valuation on paper:

  • Find the relevant information in P&L and Balance sheet
  • Do the simplified valuation using NPV: calculate cash flows and make assumptions about growth rate and discount rate
  • Do the valuation using comps - you'll have to explain which comps you will use and why

Good luck!

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