Private Equity Case Competition
The 2018 Financial Modeling Competition was a private equity case study where participants play the role of an Associate at a private equity firm. All contestants received a case which contained a Confidential Information Memorandum (CIM) about a private business that is for sale and being marketed by an investment bank. With participants from all around the world, this was one of the most intensive finance competitions, where financial modeling skills are put to the test with a real-world case study.
Participants were required to build a financial model in Excel, value the business, and make a recommendation about whether the private equity firm should invest in the business or not, and if so, how they should structure the deal.
Focused on real-life scenarios, this online competition will challenge participants to showcase and celebrate their financial modeling and valuation skills, knowledge and excellence in the industry. Participants will take part in a single round of elimination designed to test their technical knowledge of financial modeling.
The files that the participants can be found on the links below:
Confidential Information Memorandum (CIM) Case
The 2018 case is based on a Confidential Information Memorandum (CIM) for the sale of a private business presented to a private equity firm. As an analyst at the firm, your task is to take all of the financial information provided in the CIM and build a financial model to value the business. Once your valuation is complete you will determine what you think the business is worth and make recommendations to the Investment Committee at the PE firm about whether or not they should invest, at what price, and how the deal should be structured.
2018 Financial Modeling Competition – Executive Summary
You are an Analyst at the private equity firm Silver Lane Management, which invests in high growth companies with an expected internal rate of return of 25% or more. This CIM was prepared by an investment bank, Mid-Market Advisors, to help their client SHOX raise a round of growth equity.
Your task is to create a financial model for the company and price the intrinsic value of the business, then present a pitch on whether your firm should invest in the company or not.
INSTRUCTIONS FOR THE CASE
- Download all files for the competition (CIM, Excel Data File, PowerPoint Template)
- Read the CIM to determine your forecast assumptions and drivers based on industry growth and Management’s Discussion and Analysis
- Build a financial model and determine the intrinsic value of the Company, and an illustrative internal rate of return (IRR) at different prices and under different scenarios
- Build a short presentation on the Investment opportunity – summarize your financial model (assumptions, financial forecast, valuation, etc) and provide a recommendation
- Record a quick 5-minute video presentation (screen recording) of your analysis
- Upload all files to My Account on the competition website before the deadline
1 REQUIREMENTS FOR YOUR FINANCIAL MODEL (Estimate: 75% of your time)
- Clearly laid out assumptions and drivers
- Fully linked three financial statements and supporting schedules
- Free cash flow and Discounted Cash Flow (DCF) analysis
- Expected IRR for the investment opportunity at different prices/scenarios
- Formatting must follow the financial modeling best practices guide
2 REQUIREMENTS FOR YOUR POWERPOINT PRESENTATION (Estimate: 15% of your time)
- Key takeaways of the model summarized visually
- Clear presentation of Intrinsic Value and IRR under different investment prices/scenarios
- Discussion of risk and different scenarios
- Clear recommendation stated:
- Should the firm invest or not?
- What is the maximum price the firm can pay and still earn their targeted IRR?
- Maximum 10 slides
3 REQUIREMENTS FOR YOUR VIDEO RECORDING (Estimate: 10% of your time)
- Screen recording – use screencast-o-matic or a software of your choice
- Introduce yourself (name, country, employer/university)
- Discuss key slides from your PowerPoint presentation
- Discuss and demonstrate inner workings of your Excel model
- Maximum 5 min long
How it Works (5-Step Guide)
Here are the five steps to competing in our annual finance competitions:
Step #1 – Download the Case Package
As soon as the financial modeling competition commences you will be notified by email and can download all case materials from your user account on financialmodeling.org. You will have access to documents that contain instructions, financial information about a company, industry information, and case situation for a private equity firm.
Step #2 – Build Your Financial Model
Once you have the case package and have carefully read through it, start building your financial model in Excel. You’ll have to use assumptions and data from the case to build your forecast, link the three financial statements, and perform a discounted cash flow analysis.
Step #3 – Build Your Presentation
With the model complete you can now start to make your recommendations about the investment opportunity and build a short PowerPoint slide presentation. You’ll have to include what you think the company is worth, how a deal could be structured, and highlight the risks and benefits of the opportunity.
Step #4 – Record a 5-Minute Video
Use a free screen recorder (such as screen-o-matic) to record a 5 minute delivery of your presentation and recommendations to the partners in the private equity firm. Be sure to introduce yourself or your team, the findings and insights from your model, and your official recommendation.
Step #5 – Upload Your Submission
Upload all requirements for the CFI Financial Modeling Competition before the 1 week time period is over.
2018 Financial Modeling Competition – Investment Thesis
SHOX: We are looking for $40 million in growth equity, by issuing new common shares. We will use the net proceeds from this offering to expand our production of suspensions for powered vehicles, and for general corporate purposes.
We believe the high-end segments in which we participate are well positioned for growth due to several factors including:
- Our premium products allow us to charge an increasing retail sales price that is justified by our feature-rich product with advanced technologies
- The continuous innovation of our product has motivated consumers to upgrade and purchase new products for enhanced performance
- Branded auto Original Equipment Manufacturers (OEMs) introducing vehicles with off-road capabilities
- Increased sales opportunities for high-end mountain bikes in international markets.
- New powered vehicles category
- Aftermarket growth potential
- International markets remain underpenetrated
- Solid top line and EBITDA growth
OUR COMPETITIVE STRENGTHS
- Broad offering of high-performance products across multiple consumer markets
- Premium brand with strong consumer loyalty
- Strategic brand for OEMs, dealers, and distributors
- Experienced management team
Showcase Your Finance Skills
The “Financial Modeling Competition – World Case Championships” is a life-changing experience that fosters education and commitment to continuous education. Participants will have the chance to showcase their expertise and gain international credibility through an accumulation of practice, hard work, work experience, and continuous education.
Register today to embark on an exciting adventure! Embrace the opportunity to demonstrate your subject mastery, accumulation of hard work, and expertise across a broad range of topics by entering our annual finance competitions!