Introduction

If you're interviewing for a private equity role, chances are you’ll face an LBO case—either in a take-home test or a live build. Technical ability matters, but so does clarity, structure, and commercial thinking. Here’s how to stand out.

1. Keep your assumptions realistic
Many candidates overestimate leverage or target unrealistic IRRs. Use current market data—realistic interest rates, exit multiples, and EBITDA growth. Smart assumptions show you understand the real world, not just Excel.

2. Simplicity wins
You don’t need a 20-tab monster model. In most interviews, a clean 3-statement model with a debt schedule, return analysis, and sensitivity outputs is more than enough. Make sure your logic is traceable and easy to follow.

3. Prioritise debt structuring
Private equity is all about leverage. Demonstrate knowledge of senior vs mezzanine, revolvers, covenants, and cash sweeps. Clearly show the impact of debt tranches on IRR and equity value.

4. Show the commercial story
LBOs aren’t just number games. Show how the company gets from entry to exit—through margin expansion, revenue growth, or cost optimisation. Articulate why the deal makes sense beyond the spreadsheet.

5. Know your returns inside out
You’ll likely be asked: “What drives the IRR?” or “What assumptions did you flex in your sensitivity?” Don’t let your model do the thinking—show you understand the levers behind the numbers.

Conclusion
LBO models are about control, clarity, and credibility. At Circle Square, we coach candidates through real-case simulations used by top PE funds—whether you’re preparing for a megafund or growth equity role.