Recently completed an LBO modeling test for an EB. 2 hr for a simple LBO and a slide on the analysis. I believe everything was correct except interest in one year was positive and unused commitment fee on the revolver wasn’t tied in. How are these things typically graded? I’m freaking out pretty bad because I’d hate to lose it over a stupid error.
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Based on the most helpful WSO content, LBO modeling tests in investment banking interviews, especially at elite boutiques (EBs), are graded on both accuracy and your ability to handle the model under time constraints. Here are a few insights on how your test might be evaluated:
Accuracy and Completeness: The primary focus is on how accurately you can project the financials and handle the LBO structure. Missing out on linking the unused commitment fee on the revolver or having an error in the interest calculation could be significant, depending on the overall impact these have on the model's outcomes like IRR or debt repayment capacity.
Attention to Detail: Small errors like the ones you mentioned can sometimes be overlooked if they don't materially affect the final analysis. However, in highly competitive environments like EBs, even minor mistakes can be critical, especially if there are many candidates with similar qualifications and error-free models.
Presentation and Clarity: The slide on your analysis is also crucial. It should clearly communicate the rationale behind your model, key assumptions, and conclusions. This part of the test assesses your ability to convey complex information in an accessible and professional manner.
Overall Impression: Sometimes, the decision might not solely hinge on a single error but on the overall quality of your work and other factors during your interview process, such as cultural fit and other interactions with the team.
It's understandable to be concerned about errors, but it's also important to consider the broader context of your performance across the entire recruitment process. If you feel it's appropriate, a thoughtful follow-up email acknowledging the oversight and reiterating your interest and fit for the role could also help mitigate any negative impact.
Sources: Ask me anything - MM PE Associate, 1 year in, NEW Financial Modeling Training Courses, Q&A: 1st year VC analyst (~750M AUM), NEW Financial Modeling Training Courses, Guide to Lateraling in 2021
If it was the last thing then you should be fine
Impossible for anyone to say. There is no international grading standard for how modeling tests are reviewed.
That said I'd probably assume there were other significant issues based on the ones you noticed.
I have the test, looked through, nothing else
Relax, I graded model tests before. It’s only a couple of points deducted if that’s all.
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