Josh, Author at Finance Interview Coach

Published On - March 9, 2022

Josh Corporate Banking / Commercial Banking / Private Debt, Corporate Development, Financial Modeling, FP&A, Investment Banking, Private Equity

What are the advantages and disadvantages of leading a deal by yourself vs. doing the deal with other PE firms as partners?

The advantage of being the only PE firm involved in the LBO is that you have complete control. You can dictate the type of debt financing to be raised and take full control when negotiating the financing terms with banks / institutions. You can choose whether or not to hire an investment bank as an ...

Published On - March 3, 2022

Josh Corporate Banking / Commercial Banking / Private Debt, Corporate Development, Financial Modeling, FP&A, Investment Banking, Private Equity

How does a capital call affect IRR?

A capital call is when a portfolio company needs to go back to its investor(s) to ask for more equity investment. This could be to finance an add-on acquisition or a new growth strategy. A capital call may also occur if the company is simply low on cash and needs more capital to stay afloat [&hellip...

Published On - March 1, 2022

Josh Corporate Banking / Commercial Banking / Private Debt, Corporate Development, Financial Modeling, FP&A, Investment Banking, Private Equity

Why would a PE firm choose to do a sale-leaseback after acquiring a company?

A sale-leaseback involves selling property ownership to a third party and then renting that property back from that third party at a rate that was previously agreed upon. This is also a common way to generate cash to fund other projects. Companies may also wish to do this to reduce their real estate...

Published On - February 27, 2022

Josh Corporate Development, Investment Banking, Private Equity

How do rising interest rates affect the PE landscape, and how would you adjust your financial models and investment strategy in light of rising rates? (1 min)

As of 2022, the Federal Reserve has committed to raising interest rates to combat 7% inflation in the US, possibly by as much as 50 basis points which would drive up borrowing costs materially. This means that interest payments on existing senior debt will rise since they are typically floating rate...

Published On - February 25, 2022

Josh Behaviorals and Fit, Investment Banking

What makes a good investment banking analyst or associate?

The purpose of this question is to see if you understand what it takes to excel in IB. Here are some examples of important traits: Strong work ethic Necessary to survive the hours and stress of the business; IB hours can be anywhere from 80 to 100 hours a week Attention to detail Bankers need [&hell...

Published On - February 23, 2022

Josh Investment Banking, Private Equity

When should we use management assumptions / projections in an LBO model? When shouldn’t we? (1 min)

We should use management assumptions and projections in an LBO model only if management has given us significant back-up data and rationale supporting their assumptions. For example, if management is projecting a certain range of revenue growth for each of their segments, we should find out what is ...

Published On - February 21, 2022

Josh Corporate Development, Investment Banking, Private Equity

If you were an investor, what would you look for in the balance sheet?

As an investor, you would be focused on both the book value of the company’s shares as displayed on the balance sheet, which can be calculated as total assets less liabilities. This shows how much the company is worth based only on its accounting books. Another way of thinking of the book value of...

Published On - February 18, 2022

Josh Investment Banking, Private Equity

Why do changes in inventory affect the income statement?

Ending Inventory = Beginning Inventory + Purchases – Cost of Goods Sold (COGS) Purchases do not affect the income statement, since they represent purchases of unsold inventory which have not been delivered to the customer. However, COGS does show up on the income statement, since it represents...

Published On - February 14, 2022

Josh Investment Banking, Private Equity

What are the advantages and disadvantages of sourcing a deal through proprietary means vs. participating in a competitive auction? (1 min)

Sourcing a deal through proprietary means can potentially give you a competitive advantage, especially if other private equity firms have not discovered or participated in this niche / sector. For example, a private equity firm could identify a subsector of an industry that is attractive, which has ...

Published On - February 11, 2022

Josh Investment Banking, Private Equity

What are the 10 most common ways to increase IRR in an LBO?

10 ways to increase IRR include: 1. Growing revenue by expanding into new markets and ultimately increasing EBITDA2. Growing revenue through add-on acquisitions and ultimately increasing EBITDA3. Growing revenue by cross-selling to existing customers or achieving deeper customer penetration, therefo...