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Practice Tests / 3-Hour LBO Model From Scratch

  • 3 hours
  • Excel model
  • Blank workbook
  • Private equity

3-Hour LBO Model From Scratch

Read a 48-page memorandum and build a full LBO from a blank workbook: purchase price allocation, three statements, a debt schedule and an exit waterfall.

You get the test, a worked answer key, the files I sent on the day and a two-page debrief.

Bramblewick Seafood, a fictional company · Recreated from a test I took in August 2023

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What you are given

A 48-page memorandum and a one-tab workbook of assumptions and financials.

This is a page from the test. Select it to read it at full size.

The assignment page of 3-Hour LBO Model From Scratch
The assignment. Page 1 of the test, as you receive it. Open the PDF

What the test asks

  • Read a 48-page memorandum on a maker of surimi seafood whose two founders are selling.
  • Build the model from scratch. No template and no pre-set format.
  • Recommend a purchase price and a structure, with a purchase price allocation and sources and uses.
  • Link three statements, starting from an opening balance sheet, on your own projections.
  • Build a debt schedule with a working revolver and a PIK security, and fund the growth capex with a term loan.
  • Finish with an exit waterfall and IRR and MOIC sensitivity tables.
  • All of it in three hours.

What the answer looks like

The answer key is a complete model you can check yours against line by line, with a note wherever it differs from what I sent. This example is from the free test, so nothing here gives this case away.

From the answer key of the free testEnlarge
The income statement of the free test's answer key, December 2025 to December 2030, from revenue to net income

The note on the Taxes row

<- Got this wrong on the day: in the 60-minute file (row 27) this was EBT x (1 - tax rate), which is after-tax income, and cash taxes read it. Tax is EBT x the tax rate.

Take the free 60-minute test to see a full answer key and debrief

What you get

Start here.pdf1 page

1 - The test

1 - The assignment.pdf1 page

2 - Confidential information memorandum.pdf48 pages

3 - Financial information.xlsx

2 - My answer

1 - Answer key (corrected model).xlsxcheck yours against this

2 - The model I sent.xlsx

3 - Debrief

Debrief.pdf2 pages

Who it is for

  • Candidates who will be handed a memorandum and a clock and asked to build the model from nothing.
  • You should be able to build a three-statement LBO. This is the hardest format to practice because there is no template to lean on.
  • Three hours for the attempt and about one more to compare and read the debrief.

The story

In June 2023 a recruiter contacted me about an associate role at a private equity firm, starting the following summer.

After two rounds of interviews in July, the firm set a modeling test for a Sunday afternoon in August. A vice president emailed two files: a confidential information memorandum on a food company, and a one-tab workbook with nine assumptions and the company's financial statements.

I had three hours to build a full LBO model from a blank workbook, with no template. No memo was asked for. The workbook went back at the end of the three hours.

Before you start

Is this the real test?

It is recreated from the test I took. The format, the task and the time limit are the same. The company is fictional and its figures are changed.

How do I know the answer is right?

The answer key is my own model, corrected, with a grey note on every row that changed. It was recalculated and checked before release. Check yours against it line by line.

Why include the model you sent?

It shows what three hours produces. The notes in the key show what changed and what each fix was worth: the model I sent returned 18.0% and the answer key returns 19.8%.

More tests like this one

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