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Private Equity Prep (LBO modeling)

Private equity interview prep: LBO mechanics and paper-LBO math, returns analysis (IRR, MOIC), sources & uses, debt schedules, value-creation levers, and deal judgment — the technical core of PE associate interviews.

Start free Private Equity prep: 3,136 questions with full explanations →

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How do I prepare for a private equity interview?

Three pillars: LBO mechanics you can run on paper, your deal experience told with judgment, and investment instinct on businesses. KomFi drills the first pillar hardest — 3,136 PE practice questions from sources & uses through returns bridges, with every calculation shown.

How do I learn LBO modeling?

Start with the paper LBO: entry price, debt/equity split, EBITDA growth, debt paydown, exit multiple, IRR. When you can do that in five minutes, full models are just bookkeeping. The bank rehearses each component until automatic.

What is a good IRR for a private equity deal?

The classic underwriting bar is roughly 20–25% gross IRR or 2.0–2.5x MOIC over a five-year hold, varying with strategy and rates. Knowing how leverage, growth, and multiple expansion each contribute is the interview-grade understanding.

Free Private Equity practice questions

  1. An acquisition of a company with $50M EBITDA is priced at a 10.0× multiple. The transaction uses $200M in…
  2. If all other items are constant, what is the Free Cash Flow to Equity (FCFE)?
  3. When modeling the three financial statements in an LBO, how does a $10M increase in Depreciation in Year 2…
  4. A target company has $200M of Assets, $120M of Debt, and $80M of Book Equity. If a sponsor pays $300M for…
  5. A PE firm acquires a target for $500M, which has $100M in identifiable net assets at book value. If an…
  6. With a 25% tax rate and a 10% discount rate, what is the approximate Net Present Value (NPV) of the tax…
  7. Under US GAAP, how does an increase in depreciation of $10M affect the three financial statements (assuming a…
  8. In a 3-statement model, how does a $10 million increase in depreciation affect the financial statements…
  9. Under standard GAAP accounting, how is OID treated on the income statement over the life of the debt?
  10. If all other transaction parameters are identical, how much higher will the Goodwill be in the stock deal?
  11. What is the Cash Flow from Operations (CFO)?
  12. If the Goodwill is impaired by 50M, what is the impact on the DTL?
  13. How does PIK interest appear in the Cash Flow from Financing (CFF) section of the Cash Flow Statement in the…
  14. If we ignore taxes, what is the Goodwill?
  15. What is the 'leverage effect' after a dividend recap is completed?
  16. In Year 2, what is the interest expense recorded on the Income Statement?
  17. In a Sources and Uses table for a dividend recapitalization, which of the following is categorized as a 'Use'?
  18. A sponsor wants to maintain a 15% IRR. If they expect a lower exit valuation than originally planned, how…
  19. How does the 'Fair Value' adjustment of a target's existing debt affect Goodwill if the debt is assumed (not…
  20. If a sponsor's entry equity was $200M and they receive a $200M dividend, what is their 'Net Investment'…
  21. What is the primary structural objective of a dividend recapitalization in a leveraged buyout context?
  22. A sponsor acquires a business with a $40M net pension… How should this be treated in the enterprise-to-equity…
  23. In an LBO model, if PIK interest is capitalized, how does it affect the 'Equity Plug' s & Uses table at entry?
  24. What is the pro-forma Net Debt / EBITDA ratio?
  25. If SOFR is 5%, what is the impact of the Mezzanine interest on the Year 1 Cash Flow Statement?

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