Private Equity Case Studies: Study Guide for Buy-Side Interviews

Summary

Private equity case studies are a key part of buy-side interviews. This guide explains what to expect and how to prepare for them.

What is a case study

A case study is a test of whether a company is worth investing in. It can take different forms, such as a presentation or an interview task.

How to answer the case study

A clear decision of yes or no is needed. The decision should be supported by major points and key investment risks.

What to include in the case study

A valuation overview and detail are needed. LBO models should be simple and include assumptions, sources and uses, income statement, cash flow statement, debt schedule, and returns and sensitivities.

What matters in the case study

The thought process and communication skills are more important than finance knowledge. The investment thesis and major reasons for recommendation should be clear.

Key terms

buy-side

The side that buys investments, such as private equity firms.

LBO model

A financial model used to assess the potential returns of a leveraged buyout.

IRR

Internal rate of return, a measure of the profitability of an investment.

CIM

Confidential information memorandum, a document providing details about a company for sale.

DCF

Discounted cash flow, a valuation method that estimates the value of an investment based on its expected future cash flows.

EBITDA

Earnings before interest, taxes, depreciation, and amortization, a measure of a company's operating performance.

Questions this document helps with

• What is a case study in private equity interviews?
• How do you decide whether to invest in a company?
• What should be included in a case study presentation?

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