Private Equity And LBO Analyst Interview Questions #4

  1. Which has a greater impact on a company's DCF valuation if a 10 percent change in revenue or a 2 percent change in the discount rate?

  2. Walk me through a Dividend Discount Model (DDM) for financial institutions that you would use rather than a traditional DCF.

  3. Why would a company decide to acquire another company?

  4. In a merger model, what types of sensitivities would you consider? What factors would you consider?

  5. Please walk me through a simple LBO model.

  6. What factors have the greatest influence on an LBO model?

  7. How would you figure out how much debt can be raised and how many tranches there will be in an LBO?

  8. Why would a private equity firm allocate portion of a company's new equity to a management option pool in an LBO, and how would this affect the model?

  9. Why would you choose PIK (Payment In Kind) debt over other types of debt, and how does it affect your debt schedules and other financial statements?

  10. What are three factors that impact the performance of a leveraged buyout?

  11. What is the method of calculating Enterprise Value?

  12. Why is cash excluded from the calculation of enterprise value?

  13. What are the tax implications of buying an asset?

  14. What are the tax implications of buying the stock?

  15. Which is preferable to the buyer: asset acquisition or stock acquisition?

  16. Why Does the Seller Prefer Asset Acquisition or Stock Acquisition?

  17. What makes a good management team, and why?

  18. What are the three questions you'd ask a CEO of a firm you're considering investing in?

  19. You have two companies in separate industries with differing EV/EBITDA multiples. What are some possible reasons for the disparity in their EBITDA multiples?

  20. What is the difference between senior and ( Subordinated) junior notes?

  21. What are the most important factors to consider when planning a carve-out transaction?

  22. How would you decide how much leverage to use in the capital structure of a company?

  23. Give an example of a period when you displayed your commitment and drive.

  24. What motivates you in your life?

  25. What makes you so special that we should hire you?

  26. What is the biggest risk you've ever taken?

  27. What criteria do you use to evaluate credit risk?

  28. What are the three questions you'd ask a CEO of a firm you're considering investing in technology firm?

  29. Why can't you use Equity Value / EBITDA instead of Enterprise Value / EBITDA as a multiple?

  30. Why would a firm with comparable growth and profitability be valued higher than its Comparable Companies?

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