Medium Private Equity Practice Questions

409 free medium-difficulty Private Equity questions, drawn live from KomFi's calibrated bank. The exam backbone: the difficulty band where most scoring happens.

1. An acquisition of a company with $50M EBITDA is priced at a 10.0× multiple. The transaction uses $200M in debt
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 imp
4. A target company has $200M of Assets, $120M of Debt, and $80M of Book Equity. If a sponsor pays $300M for 100%
5. A PE firm acquires a target for $500M, which has $100M in identifiable net assets at book value. If an apprais
6. Under US GAAP, how does an increase in depreciation of $10M affect the three financial statements (assuming a
7. In a 3-statement model, how does a $10 million increase in depreciation affect the financial statements (assum
8. Under standard GAAP accounting, how is OID treated on the income statement over the life of the debt?
9. What is the Cash Flow from Operations (CFO)?
10. If the Goodwill is impaired by 50M, what is the impact on the DTL?
11. If SOFR is 5%, what is the impact of the Mezzanine interest on the Year 1 Cash Flow Statement?
12. If we ignore taxes, what is the Goodwill?
13. A sponsor wants to maintain a 15% IRR. If they expect a lower exit valuation than originally planned, how does
14. How does PIK interest appear in the Cash Flow from Financing (CFF) section of the Cash Flow Statement in the y
15. How does PIK interest impact the levered Free Cash Flow (LFCF) of a business?
16. In a Sources and Uses table for a dividend recapitalization, which of the following is categorized as a 'Use'?
17. In LBO returns analysis, 'deleveraging' is a return driver. How does a dividend recap interact with this drive
18. What is the impact of a dividend recap on the 'Cash Conversion Cycle' of a business?
19. What is the 'leverage effect' after a dividend recap is completed?
20. Which debt tranche is most likely to feature PIK interest in a standard LBO capital structure?
21. If the corporate tax rate is 20%, what is the annual cash tax shield generated by this step-up?
22. What is the pro-forma Net Debt / EBITDA ratio?
23. What is the Adjusted Net Debt?
24. In Year 2, what is the interest expense recorded on the Income Statement?
25. A sponsor acquires a business with a $40M net pension defici… — How should this be treated in the enterprise-t
26. A target company has a Net Working Capital (NWC) peg of $50M. At closing, the actual NWC is found to be $42M.
27. Calculate the pro-forma leverage of a company with $200 million in LTM EBITDA that raises a new $1.2 billion U
28. If a borrower is subject to interest deductibility limitations under Section 163(j), how does this specificall
29. If a lender is granted 'Penny Warrants' alongside a PIK loan, how is the potential dilution handled in an LBO
30. In a dividend recapitalization, why does the IRR often increase even if the total MOIC slightly decreases?

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