1
Mechanics
Can you calculate entry equity, debt paydown, exit equity, MOIC, and IRR without losing the economic logic?
Private equity interview prep
Prepare for the case you were actually assigned
A paper LBO, a timed model, a take-home memo, and a live investment discussion test different failure points. Start by identifying the deliverable, then train the weakest link between mechanics, judgment, downside work, and communication.
WORK THROUGH THE DECISION
Turn the model into a conditional recommendation
A complete case recommendation states what you would do, the assumptions supporting it and the evidence that could change your view. A model with a high base-case IRR is not a finished investment argument.
Use a decision memo with four lines
| Line | What to write |
|---|---|
| Recommendation | Invest, decline, or proceed only under stated conditions |
| Driver | The operating or valuation assumption doing the most work |
| Failure point | The condition under which the case misses its objective |
| Next diligence | The evidence needed to resolve the decision |
Fictional case: entry equity is 100, exit net debt is 40, exit EBITDA is 35 and exit multiple is 8×. Exit equity is 240, producing 2.4× MOIC before fees and distributions. At EBITDA of 30 and 7×, exit equity is 170, or 1.7×. If the case specifies a 2.0× hurdle, the combined downside misses it.
Make the recommendation conditional
“I would proceed only if diligence supports the earnings floor required in the lower-multiple case. The base case clears the stated hurdle, but the combined downside does not.” Then identify what you would examine: renewal evidence, pricing, cost persistence or another driver supported by the case.
Use the full sensitivity exercise to calculate the failure point. In a complete model, lower earnings may also slow debt paydown; holding debt fixed is only a teaching simplification. Use the paydown-cap example to check that excess cash is not counted twice.
Buy preparation for the actual format
If the task is a paper LBO and you cannot reconcile debt or returns, the paper-LBO guide is a relevant self-study option. If the task is a full Excel test, investment memo or presentation, do not assume a paper exercise alone covers it. Practice the required deliverable and time constraint.
Damodaran’s terminal-value discussion supports checking exit assumptions against economics. Return to the paper LBO framework for mechanics or the valuation-methods guide for method selection. The case and hurdle above are fictional, not a fund’s disclosed underwriting policy.
Choose support only for the gap you found
Useful for: Candidates whose case-study bottleneck is LBO mechanics, debt paydown or explaining returns.
Limit: A paper-LBO resource does not replace a full Excel modeling test, deal diligence or a presentation rehearsal.
83-page paper LBO guide with ten full cases and solutions, debt schedules, return bridges and mental-math practice.
Current price: $49. Review the contents and sample before purchase. This is the existing edition described on the product page, not a new 2028 edition.
Inspect the The Paper LBO Playbook sample →Match preparation to the deliverable
Ask the recruiter what files, tools, time limit, and presentation format are permitted. If details are withheld, practice the closest format and state your assumptions. Do not treat these examples as universal firm rules.
| Format | Likely deliverable | First practice | Warning sign |
|---|---|---|---|
| Paper LBO | Handwritten returns analysis plus an explanation | Solve cleanly without Excel, then explain each return driver aloud. | You know the formulas but cannot finish or defend the assumptions. |
| Timed Excel model | A functioning model and concise investment conclusion | Run a timed build with an error check and a hard stop for the recommendation. | Formatting consumes the time reserved for checks and judgment. |
| Take-home case | Model, memo or slides, and supporting analysis | Set the decision question first; build only analysis that changes the answer. | The output is comprehensive but the recommendation is hard to find. |
| Live case discussion | A structured verbal investment view under follow-up questions | Practice stating a view, evidence, key risk, and next diligence step in two minutes. | You describe the company but never commit to invest, pass, or investigate. |
The four-part readiness check
Score the bottleneck, not your confidence
Give yourself one point only if you can demonstrate the skill under the expected time limit. A score of 4 means repeat full simulations. A score of 2–3 means isolate the missing layer. A score of 0–1 means rebuild fundamentals before paying for feedback.
2
Judgment
Can you name the two assumptions that drive the decision and explain why they are reasonable?
3
Downside
Can you show what breaks the deal without hiding behind a large sensitivity table?
4
Communication
Can you give the recommendation, evidence, risk, and next step before walking through detail?
Worked example: a 90-minute model
Suppose the prompt asks for a simple LBO and an investment view. A useful allocation is 10 minutes to read and frame the decision, 55 minutes to build, 10 minutes to check, and 15 minutes to write the recommendation. Adjust the split to the actual prompt; the point is to protect time for checking and judgment.
Minutes 0–10
Frame
Clarify the deliverable; mark the decision-driving assumptions.
Minutes 10–65
Build
Prioritize sources and uses, operating case, debt, and returns.
Minutes 65–75
Check
Trace signs, cash flow, debt balances, and exit math.
Minutes 75–90
Decide
State invest/pass, evidence, downside, and next diligence step.
Example conclusion structure
“I would continue diligence, not approve the investment yet. Base-case returns depend on margin improvement and debt paydown, while the key downside is weaker cash conversion. I would next validate customer retention and the sustainability of working-capital assumptions.”
Who this guide is for
- Candidates who have received a case-study or modeling-test round.
- Bankers and consultants who need to convert execution skills into an investment recommendation.
- Undergraduate candidates who need to distinguish a live discussion from an associate-level modeling test.
Who should use something else
- If the screen is only mental LBO math, use the free Paper LBO template.
- If you need Excel construction practice, start with the modeling-test guide.
- If you need the entire recruiting process, use the PE interview-prep hub.
Need one system for the wider PE process?
The 42-page PE Recruiting Playbook covers process timing, paper LBOs, modeling tests, technicals, fit, and firm selection. It is broader than a standalone case drill and is not a substitute for repeated timed practice.
Preview the PE Playbook, $49Sources and limitations
Case formats vary by firm, role, seniority, and process. The format map is grounded in a Wharton-hosted PE interview guide containing a three-hour model-and-thesis case, while the judgment framework aligns with CFA Institute material on due diligence, valuation, deal structuring, value creation, and exit analysis. Always follow the recruiter’s actual instructions.