This is where the PDFs are most helpful.
The #1 Question: Walk me through the three financial statements.
Must-Know Change Scenarios (Memorize these):
| Transaction | Net Income | Cash Flow | Debt | | --- | --- | --- | --- | | +$10 Depreciation | ↓ (tax shield effect) | ↑ (non-cash add-back) | No direct change | | Customer pays A/R | No change | ↑ | No change | | Issue $100 debt | No change | ↑ (financing inflow) | ↑ | Thank-you note:
Key formula:
You don’t need a full 3-statement LBO for most internships, but know the simple logic:
Key ratio: Debt / EBITDA – above 6x is risky. This is where the PDFs are most helpful
Simple LBO math question:
“Buy at 8x EBITDA ($100), use 5x debt. Sell at 8x EBITDA ($140) after 5 years. IRR?”
→ Roughly ~20-25% if debt paydown ~$30-40.
Rule: A deal is accretive if the acquirer’s P/E > target’s P/E (assuming all-cash) or if the cost of debt < target’s earnings yield.
Standard walkthrough:
Example question:
“Company A (P/E 20x) buys Company B (P/E 10x) with 100% cash. Accretive or dilutive?”
→ Accretive. Cash has a cost (~5% pre-tax), but B’s earnings yield = 10%, so cash yield < B’s yield → accretive.
The candidates who break into elite boutiques never use a vanilla PDF. They create a personalized version. Here is how:
After two weeks of this, your annotated copy will be worth ten times the original PDF. Must-Know Change Scenarios (Memorize these): | Transaction |
Common format:
Checklist for speed: