Sign inThe LBO modeling test
What funds actually hand you, how long you get, what the reviewer checks first, and where candidates run out of clock. Then practice the same build on a free timed desk.
Run a timed practice testHow to sequence the build
01
Read the prompt and lock assumptions first
Spend the first few minutes listing entry multiple, leverage, growth, margin, exit multiple, and hold period in a single assumptions block. Never bury an assumption inside a formula.
02
Build sources and uses
Enterprise value, debt tranches, sponsor equity, fees. Get the equity check right before anything else, because every downstream number depends on it.
03
Project the operating case
Revenue, EBITDA, depreciation, capital expenditure, and working capital to reach free cash flow. Keep the case simple unless the prompt asks for detail.
04
Build the debt schedule
Mandatory amortisation, cash sweep, interest on average balances, and a revolver if the prompt provides one. This is the section reviewers check most closely.
05
Exit, returns, and sensitivity
Exit enterprise value, less net debt, to sponsor equity. Compute MOIC and IRR, then add an entry against exit multiple sensitivity table if time allows.
Guide
What the test looks like
Formats vary by fund size. Mega funds and many upper mid-market funds run a two to three hour Excel test from a short prompt or a real information memorandum. Smaller funds often use a sixty minute simplified build, and some replace it entirely with a paper LBO at the desk.
In every version the deliverable is the same: a working model that produces sponsor returns from stated assumptions, and a view on whether the deal is worth doing.
How it is scored
Reviewers open the returns page first, then trace backwards. If MOIC and IRR are plausible, they check the debt schedule, then sources and uses, then the operating case.
- Does the balance sheet or the cash flow tie, and does debt actually pay down.
- Is interest computed on a sensible balance rather than a hardcoded figure.
- Are assumptions visible in one place and clearly labelled.
- Is there a short written recommendation, even one paragraph, rather than numbers alone.
Where the clock is lost
Almost every failed test is a time management failure rather than a knowledge failure.
- Over-engineering the operating case before the debt schedule exists.
- Formatting and colour coding during the build instead of at the end.
- Circular reference errors from interest on average balances with no iterative calculation enabled.
- Leaving no time for the returns summary, which is the first thing the reviewer reads.
Practising under real time pressure
The only way to fix a timing problem is to practice against a clock. The free Paper LBO Challenge runs ten and fifteen minute modes over the same structural checkpoints, and grades each one so you can see exactly where the minutes went.
Once the mechanics are automatic, the full Super Simulator extends the exercise into a connected deal across sourcing, diligence, valuation, value creation, and exit.
Frequently asked
Run a timed practice test
Ten and fifteen minute modes over the same checkpoints a real modelling test scores. Free, no signup.
Run a timed practice testRelated
Educational practice only. Not investment advice. Assumptions are simplified for interview preparation.