LBO Case Study & Financial Modeling Test

The LBO case study and financial modeling test are now live as part of the LBO Video Series. Please see the link that follows for the updated files: LBO Case Study: BabyBurgers LLC. The introductory video is also available below.
I wrote this case study after over a decade in private equity with the objective of designing a LBO test that would help me identify talented junior team members. I have also personally used this test in a live hiring process. The case study was sent to a group of second-round interview candidates to help us evaluate each candidate’s skill set before making an offer to a senior associate.


There are two things that I believe make this case study unique:
  1. The first is the level of detail provided in the operating model, which allows the candidate to decide how much detail to include in their analysis. As an analyst or associate this is a common challenge. You will be bombarded with data (far more that what has been provided here), and you will need to identify what is important. It is your job to synthesize the information available into a cohesive narrative that will help the investment team make the appropriate decision.
  2. I also wanted to use this case study as an opportunity to introduce the legal documents that guide a transaction towards a close. The attached document describes all of the documentation required to secure a transaction under letter of intent. To complete this exercise you will have to pull information from two term sheets (one for a subordinated lender and one for a senior lender) and from a letter of intent. We have also included a massively condensed Confidential Information Memorandum to give you a better feel for how this process moves forward. If there is one thing I wish I had been exposed to earlier in my career, it is the significance of this documentation. Hopefully it will give you a leg up in interviews or on the job.

These two variables make it possible to use this case study across a broad skill set. If you are a novice you can build a simple projection using the summarized financials available in the workbook. If you have a more advanced skill set you can use the information in the operating model to build a far more detailed model.

We hope you find it useful!

Please see the link that follows to download the associated notes and Excel workbook: LINK