Almost every private equity process past the headhunter screen includes a modelling test: a timed LBO built from a short case packet, sometimes followed by a discussion of your output. It is the most preparable part of the process — the formats are standard, the grading criteria are known, and speed comes purely from reps. Here is what to expect and how to get ready.
The three standard formats
- The 1-hour paper-plus: a simplified LBO from given assumptions — sources & uses, a short debt schedule, returns. Tests speed and mechanics. Common in on-cycle first rounds.
- The 2-3 hour standard test: full three-statement or cash-flow-driven LBO from a 2-5 page case: revenue build, margin assumptions, debt tranches with a cash sweep, management rollover sometimes, returns and sensitivities. The workhorse format at most funds.
- The take-home case: 24-72 hours, model plus a 3-5 page investment memo or deck answering "should we buy this business at this price?". Tests judgment as much as modelling — the memo is graded harder than the model.
What graders open first
Graders have limited time and a consistent routine. They check, in roughly this order:
- Does the balance sheet balance / does cash tie? A broken model fails regardless of polish.
- Returns outputs: is MOIC/IRR in a sensible range for the assumptions, and did you sanity-check it?
- The debt schedule: correct cash sweep, interest on average or opening balance stated, no circularity errors.
- Formatting discipline: inputs in one colour, formulas in another, no hardcodes buried in formulas — the same hygiene the Model Audit workflow in L3VLUP Skills checks for.
- In discussions: can you defend every assumption and decompose the returns into paydown, growth and multiple?
Standard assumptions to have loaded
Case packets leave gaps deliberately to see what you assume. Defaults that read as sensible in 2026-era processes: leverage of 4.5-6.0x EBITDA depending on business quality, senior/sub split with the senior tranche amortising, 40-60% of free cash flow swept to debt paydown if not specified, exit at entry multiple unless the case argues otherwise, and a 5-year hold. State every assumption in a visible assumptions block — graders reward explicitness.
A two-week preparation plan (banking-hours compatible)
- Days 1-3: rebuild a simple LBO from a blank sheet until it takes under 45 minutes. Structure first, speed second.
- Days 4-7: add complexity one layer at a time — multi-tranche debt, cash sweep, PIK toggle, management rollover. One layer per session.
- Days 8-11: timed runs of the 2-hour format, cold, from case packets you have not seen. Review errors against the grader checklist above after each run.
- Days 12-14: paper LBO speed reps (the mental version keeps the mechanics sharp — use the free Labs trainer daily) and one take-home style memo: force yourself to write the "would I buy this?" page.
Frequently asked questions
Can I use my own model template in the test?
Usually no — most tests are from a blank workbook on their machine or a locked template. Practise from blank sheets, not from your bank's models.
What if I do not finish in time?
Prioritise a working returns calculation over completeness: a simplified but tied-out model with returns beats a sophisticated broken one. If time runs out, write your remaining steps as comments — graders credit a candidate who knows what is missing.
How different are growth equity tests?
Less debt mechanics, more revenue build and cohort/unit economics, and often a returns framework based on ownership at exit rather than a full LBO. The discussion focuses on growth durability rather than leverage.
Want this applied to your recruiting?
Reading is the easy part. For practitioner feedback tailored to your situation, work 1:1 with Suro.