Goldman Sachs NYC and Morgan Stanley San Francisco/Menlo Park | GFC Technical Interview Series

June 8, 2017

San Francisco Goldman Sachs

1.     Walk me through an LBO.

·         See M&I guide

2.     What characteristics make an ideal LBO candidate? See M&I guide – know all six characteristics

3.     If a company has $1B market cap, 200M cash, and 100 EBITDA, what does its capital structure look like? (follow up questions: give a number range, what happens with the cash)

·         I said take comparable companies, find their Debt/EBITDA multiples, take a median, and then apply it to your company’s multiple. Cash can be used to lower the amount of equity the PE firm has to contribute

4.     Why would you use a DCF over the other methodologies?

·         Another valuation method strength question

5.     What are some problems with a DCF?

·         Based on biased assumptions

6.     Tell me about a time you tried to do too much and failed, or didn’t follow through on a commitment?

·         Remember to show what your learned through this experience and how you improved

7.     How are you prepared to work for the hours at I-banking, where you have to always give up your plans and social life for your job as an analyst?

8.     If Google was acquiring Playboy in an LBO, what debt/equity ratio would you re-lever the Beta to in the DCF model?

·         Know the typical LBO leverage ratio

9.     Pitch a stock (follow up questions: what are its multiples, debt on balance sheet and etc.)



Singapore Goldman Sachs

1.     PE of debt and cash?

·         Debt: 1/ (1-T)*interest rate; Cash: 1/ (1-T)*foregone interest on cash



Los Angeles/San Francisco Morgan Stanley

1.     What is the beta of a lottery ticket? Near 0 because there’s no relevance to benchmark index

2.     You are buying $100ml of PPE using cash 10 yr asset straight line depreciation, walk through all 3 statements? Now book depreciation is 10ml, tax depreciation is 15ml, walk through all 3 statements?

3.     What is the average R-squared co-effcient for a beta?

·         It measures the relevance of the company to the market

4.     What does beta truly represent?

5.     Why do you get enterprise value and not equity value from a DCF?

6.     Walk me through a levered DCF?

·         Know the difference between levered and unlevered cash flow

7.     Walk me through WACC?

8.     Now an LBO has an asset write up of 100ml and the same portfolio company has 25MM of debt written down, walk me through all 3 statements?

9.     Lever and unlever a beta? What does that process represent?

10.  How do I value an analyst?

11.  If a company can increase return by using leverage in an LBO, why not leverage a deal 99 to 1?

12.  I have three companies, a newspaper with a strong Internet presence, a furniture business, and a software company. They are family owned. You are my banker and I want to sell one for liquidity, what do you tell me?


Menlo Park Morgan Stanley

1.     How would you value a start-up pharmaceutical company with no earnings? What trading multiples would you utilize in your analysis?

2.     In an acquisition scenario, if the shareholders of the target company wanted to monetize their equity position, what share price would they use as a benchmark?

3.     Why are you interested in healthcare?




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