Private Equity - Advanced

Level 3

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This test evaluates a candidate's level of understanding of Private Equity transactions. The test covers deal structuring, valuation methodologies and investment execution.  

This test is great way to understand how developed a candidate is in structuring Private Equity transactions.

Designed to assess

  • Very strong understanding of Private Equity transactions

  • Deal structuring

  • Valuation methodology

Use this test to hire for

  • Private Equity Analysts
  • Private Equity Associates
  • Corporate Finance
  • Investment Banking
  • Fund Placement
  • Duration 10 minutes
  • Languages English
  • Level Advanced / Level 3

Question

Stone River Capital buys Company A on Dec 31st 2024 for 8.0x LTM EBITDA and negotiates a 4.0x LTM EBITDA debt package with High Street Bank for an interest cost of 5.0% p.a. The debt is bullet (no amortization). In 2025, Company A achieves an EBITDA of £120m (£20m more than in 2024), has net capex of £20m (equal to D&A) and net working capital increases by £15m. Company A has a tax rate of 30%. What is the total cashflow of the business in 2025?

Select ONE answer

Question

Stone River Capital acquires Company A on Dec 31st 2024 writing a £400m equity cheque. Stone River Capital agrees to sell Company A to a larger PE fund for 8.0x LTM EBITDA of £120m. Stone River Capital will have to pay £1m in advisory fees at exit. There is £400m of debt and cashflow generated in the year of £50m. Assuming the deal closes on Dec 31st 2025, what is the IRR and Cash on Cash multiple for the investment? 

Select ONE answer

Question

You have made an investment for €100m and receive €20m in dividends every year for 5 years and then in the 6th year you sell the investment and receive €120m. What is your IRR?

Select ONE answer

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