Interviewer view · keep this screen to yourself

A buyout of a testing laboratories company in Spain

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Fictional and illustrative. A private equity fund can buy a Spanish testing laboratories company at 10 times EBITDA. EBITDA (profit before interest, tax, depreciation and amortisation) is EUR 20 million. The fund would pay with EUR 100 million of debt and the rest from the fund. The plan grows EBITDA to EUR 30 million in five years, with cash from the business paying debt down to EUR 60 million. Assume it sells at the same 10 times multiple. The fund wants at least 2 times its money and about 20 percent a year. Should it invest?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Multiple of money = equity value at exit / equity invested at entry
- Entry: price = EBITDA x multiple; equity = price minus debt
- Exit: value = future EBITDA x multiple; equity = value minus remaining debt
- Where the gain comes from: profit growth, multiple change, debt paid down

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Entry price
What a strong candidate does: EBITDA of EUR 20 million at 10 times.
Entry enterprise value (EUR millions): 20 × 10 = 200
Step 2: Equity invested
What a strong candidate does: Equity is the fund's own money: the price minus the EUR 100 million of debt.
Equity invested (EUR millions): 200 - 100 = 100
Step 3: Exit value
What a strong candidate does: EBITDA of EUR 30 million at the same 10 times.
Exit enterprise value (EUR millions): 30 × 10 = 300
Step 4: Equity at exit
What a strong candidate does: The exit value minus the EUR 60 million of debt still owed.
Equity value at exit (EUR millions): 300 - 60 = 240
Step 5: Multiple of money
What a strong candidate does: Equity at exit divided by equity invested.
Multiple of money (times): 240 ÷ 100 = 2.4
Step 6: Yearly return, checked by hand
What a strong candidate does: Try 19 percent a year: grow 1 by 1.19 five times and see if it lands near 2.4.
1.19 multiplied by itself five times: 1.19 × 1.19 × 1.19 × 1.19 × 1.19 = 2.39
Step 7: Where the gain comes from
What a strong candidate does: Profit growth at the 10 times multiple, plus debt paid down. The multiple did not change.
Equity gain explained (EUR millions): (30 - 20) × 10 + (100 - 60) = 140

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Invest, but only if the profit growth is believable. The deal returns 2.4 times the money, about 19 percent a year, which is just under the 20 percent target. Of the EUR 140 million gain, EUR 100 million depends on EBITDA rising from 20 to 30 million. The other EUR 40 million comes from paying down debt. This means diligence must test the growth. Check contract renewals, price rises that customers have accepted before, and whether new labs fill as fast as the plan says. I would not pay more than 10 times today, because if the exit multiple fell from 10 to 9 times, exit equity would drop by EUR 30 million.

Risks a strong answer names: A lower exit multiple cuts the return quickly; Testing demand may fall with industrial activity.

Next steps: Test the EBITDA plan lab by lab; Ask how much of EBITDA turns into cash, which sets how fast the debt falls.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.

Next: another case in Partner mode

Swap roles and run the next case, so you both practise answering and scoring.

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