Interview Modelling Test
Hi,
I was looking for some advice / some pointers from experienced monkeys that have been through 2-3 hour interview modeling tests when lateraling to a larger M&A IBD firm (applying for analyst role).
I recently practiced the M&I free 3-statement model test case study and found it had quite tricky items to project (which was noted at the end that it was quite a difficult level of test).
I often find the DCF and building the forecasts relatively easy however sometimes balancing the sheets can prove quite difficult with complex line items.
How complex are these tests typically? Do they expect perfection? Would it be all over if one had issues balancing the sheets?
Any pointers on how what to expect in these tests and best tips for doing well would be greatly appreciated.
Thanks.
You should see if older analysts have any old LBO modeling tests from PE recruiting. If you can build an LBO from scratch then a DCF or acc/dil model should be cake. When I did lateral tests they were mostly LBOs with or without a DCF. I’d say arguably the most important part of any model is making sure the BS balances. It’s easiest way to tell if someone knew what they were doing
Thanks for the response. How complex were these models you had to make? Were there any sort of “interesting” model requirements (such as minimum cash balance etc) that were a surprise?
Happy to answer this if you also want to DM, but basically it depends on the bank. Typically, most BB will have some form of 3 statement analysis mixed with a DCF. They’re not too complex on average as you are timed and they need to account for that.
Most of the time, you’re building out a forecast for 2-3 years, where you are either given certain drivers, or expect to make them up entirely (a part of your exam will be you defending why you gave certain assumptions, like 7% revenue growth, or margin improvements). You’ll be expected to tie everything together without any major errors, sometimes also needing to build a debt schedule.
Remember, if it’s a 2-3 hour exam, they likey assume you need 40-30% of the time for either understanding what each step is asking or for review to make sure it all works. If you can comfortably do everything I mentioned, it won’t matter what company you get the model for you should be fine.
Thanks for the detailed response. Your insight is a great help. Do you have any pointers on the best way to practice/study for these tests? Would he grateful to continue the conversation on DM if that works better for you. Thanks
Best way will be to either do practice exams online or if you have a buddy who has old exams.
hey, was wondering if you have any good resources for beginners? Also reading through the Rosenbaum book at the minute.
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