Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Adi

100% Recommendation Rate

97 Meetings

9,203 Q&A Upvotes

USD 169 / Coaching

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.

3 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Adi

100% Recommendation Rate

97 Meetings

9,203 Q&A Upvotes

USD 169 / Coaching

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

100% Recommendation Rate

328 Meetings

29,186 Q&A Upvotes

USD 289 / Coaching

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

98% Recommendation Rate

414 Meetings

11,469 Q&A Upvotes

USD 239 / Coaching

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!

Related case(s)

Bain case: Asian lubricants producer

Solved 168.9k times
Bain case: Asian lubricants producer LubricantsCo, a very successful Asian premium producer of lubricants in their native region, would like to further increase their revenue and profit. The product range ranges from lubricants in the automotive sector (e.g. motor and gear oil) to industrial applications (e.g. fats, heavy-duty oils). According to preliminary examinations, further growth potentials in the Asian core market are rather limited. Thus, LubricantsCo would like to investigate options to internationalize in the passenger car business – also outside the premium segment which is given priority. Therefore, your consulting firm was instructed to elaborate a market entry strategy for the European market.  
4.6 5 29725
| Rating: (4.6 / 5.0)

LubricantsCo, a very successful Asian premium producer of lubricants in their native region, would like to further increase their revenue and profit. The product range ranges from lubricants in the automotive sector (e.g. motor and gear oil) to industrial applications (e.g. fats, heavy-duty oils). ... Open whole case

Oliver Wyman case: Full Electrons Ahead

Solved 105.1k times
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
4.6 5 6569
| Rating: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

EY-Parthenon Case: Virtual Marketplace

Solved 44.3k times
EY-Parthenon Case: Virtual Marketplace A leading online real estate marketplace in Germany – your-new-home.com – is struggling with stagnating sales after many years of high growth rates. In a preliminary project with EY-Parthenon, the market environment has already been examined in detail – competitors, new entrants, customer needs, etc. As a result, you are asked to identify growth areas and quantify the potential sales uplift for the management.
4.4 5 1351
| Rating: (4.4 / 5.0)

A leading online real estate marketplace in Germany – your-new-home.com – is struggling with stagnating sales after many years of high growth rates. In a preliminary project with EY-Parthenon, the market environment has already been examined in detail – competitors, new entrants, customer needs, etc ... Open whole case

BearingPoint Case: Digital Business Model of a Parking App

Solved 16.7k times
BearingPoint Case: Digital Business Model of a Parking App A car park and parking lot operator pursues the strategic goal of exploiting new sources of income via digital business models. As part of this initiative, a MVP (Minimal Viable Product) was developed for a parking app that enables users to search and pay for paid parking spaces. The managing director approaches you with the request to carry out a comprehensive analysis of the parking app. First, the digital business model of the parking app will be analyzed. After the strategic consideration, a financial evaluation of the parking app will be carried out. On this basis, a clear recommendation will be made as to whether the app should be rolled out throughout Germany or not. Finally, an analytics-driven expansion strategy should be considered.
3.2 5 221
| Rating: (3.2 / 5.0)

A car park and parking lot operator pursues the strategic goal of exploiting new sources of income via digital business models. As part of this initiative, a MVP (Minimal Viable Product) was developed for a parking app that enables users to search and pay for paid parking spaces. The managing direc ... Open whole case

Simon-Kucher Case: GST Cruise Company

Solved 8.4k times
Simon-Kucher Case: GST Cruise Company Cruise company German Sea Tours (GST) is a successful operator of international cruises. GST currently offers several cruise trips, lasting between 5 and 24 days. Additional services can be booked on board (e.g. excursions at each destination, onboard leisure activities). Customers tend to book their tickets several months in advance. GST has had a long history of revenue growth, but in the past five years, it showed lower growth rates. Board members are not sure whether the market, in general, saw lower growth or whether the problem is specific to GST. GST recognizes that winning new customers and stimulating existing customers to book their vacations with GST is crucial for future growth and therefore has always focused on keeping a close relationship with its (potential) cruise-trip bookers. GST’s chief commercial officer (CCO) Ms. Brown has hired Simon-Kucher & Partners to assess the market environment and competitive positioning for cruise ships and to conduct a subsequent evaluation of potential growth options.
4.5 5 107
| Rating: (4.5 / 5.0)

Cruise company German Sea Tours (GST) is a successful operator of international cruises. GST currently offers several cruise trips, lasting between 5 and 24 days. Additional services can be booked on board (e.g. excursions at each destination, onboard leisure activities). Customers tend to book thei ... Open whole case