Project Iceford — 30-Minute Quick LBO
A 30-minute Quick LBO Modeling Test case study with a complete model answer
Modeled After
TPG
A quick EBITDA-down LBO practice model held in our corpus under the firm's name: no revenue line and no balance sheet, a transaction-assumptions table stating amount, drawn, pricing, multiple, term, amortization and prepayability for each of three tranches, a one-off restructuring charge in the first projected year that drives free cash flow negative and forces a real two-way revolver, a tax line floored at zero, and an exit multiple set equal to entry with the return expressed as a power of the multiple of money
The model's scope, its term-sheet exhibit and the restructuring-charge trap are modeled after TPG. The thirty-minute limit is a market convention for this tier rather than the firm's, interest on beginning-of-period balances is our own convention, and the company, the plan and every figure in this case are entirely our own.
The Situation
Iceford Cold Chain Holdings runs eleven automated cold-storage facilities and a dedicated refrigerated fleet across the Great Lakes and the Upper Midwest, serving food manufacturers and grocery distributors. It has been owned since it was founded by the family that built it, and the family has now agreed to sell to a sponsor.
Iceford Cold Chain Holdings
- Sector
- Transportation & logistics — temperature-controlled warehousing and refrigerated distribution
- Size
- Geography
- United States; Great Lakes and Upper Midwest
- Ownership
- Situation
The Prompt
You are an associate candidate in a second-round private equity interview. A laptop is placed in front of you with a blank workbook open, and the proctor says:
"Here is the management plan, here is the term sheet the arranger has given us, and here is a template.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
Modeling test instructions (material-1.pdf)
Management plan and financing term sheet (material-2.pdf)
Diligence model extract (data-1.xlsx)
Blank template (template.xlsx)
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 30 minutes.
PART 1
Sources and uses, with sponsor equity as the plug
PART 2
The operating model, Adjusted EBITDA down
PART 3
Free cash flow and the cash rollforward
PART 4
The debt schedule, with a working cash sweep
PART 5
Check the revolver against its commitment
PART 6
Exit, multiple of money, IRR and the exit-multiple cases
PART 7
Returns attribution — where the return came from
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished Excel model is in the solution set below.
- 0 – 3 min
read, do not type
- 3 – 7 min
sources and uses
- 7 – 12 min
the operating model
- 12 – 16 min
cash flow
- 16 – 25 min
the debt schedule
- 25 – 28 min
exit and returns
- 28 – 30 min
attribution, and say it out loud
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
EBITDA-down, and why the scope stops where it does
A quick LBO starts at EBITDA because that is where a sponsor's first pass at a deal starts. There is no revenue build, no margin bridge and no balance sheet — and therefore no purchase price allocation, no goodwill, no capitalized financing fee and no fee amortization. Knowing what is absent by design is as much a part of the archetype as knowing what is present, and a candidate who starts building a balance sheet has misread the exercise rather than exceeded it.
Interest on beginning-of-period balances
Compute interest on the balance at the start of the year and the model has no circularity: interest in a year depends only on balances set at the end of the year before, so nothing refers to itself. Average-balance interest is common in practice and is more precise, but it makes the model circular and needs iterative calculation switched on. At this tier the beginning-balance convention is the right trade, and if you find yourself enabling iteration you have wired something wrong rather than merely difficult.
A two-way revolver
A revolving credit facility repays when there is spare cash and draws when there is not. Most candidates write a sweep that can only repay, because in most practice models free cash flow is positive in every year and the difference never shows up. A model with a one-way sweep runs perfectly well, produces no error value, and is wrong. The tell is the cash line, and specifically whether cash ever falls below the stated minimum.
A cascading sweep that respects the term sheet
Optional repayment goes to tranches in priority order, and it can only reach tranches the documentation allows it to reach. Write the formula once with a prepayable flag as a multiplier and the term sheet decides where the money goes. Write three bespoke formulas and you have hard-coded a reading of the term sheet into the model, where nobody can see it and nobody can change it.
The tax line in a loss year
A tax formula written as pre-tax income times the rate books a benefit in a loss year. Whether that is right depends entirely on whether the structure can use the loss — against other income, or carried forward against later income. A model with no loss schedule cannot, and a model that books the benefit anyway has given the deal a cash refund it will never receive. This is three characters of formula and it can move a return across a hurdle.
Cash restructuring charges are not provisions
A restructuring charge below the EBITDA line is easy to read as an accounting provision and add back as non-cash. Sometimes it is. Often it is severance paid, leases exited and equipment moved, and it leaves the bank account like any other payment. Read the note before you decide, because getting this wrong changes what the year looks like completely and can remove the only interesting thing in the model.
Earnings quality behind the multiple
Any valuation running off an earnings multiple should say what is in the earnings. Ask which figure the multiple is struck on, what the reconciliation contains, and whether each add-back is something that happened or something that is forecast to happen. Run-rate savings are a forecast wearing a historical costume, and striking them out changes the multiple you are actually paying. Where the whole basket sits inside a customary twenty-five percent cap it is a disclosure point rather than a covenant point — but it is still a point, and it costs four seconds to make.
Returns attribution
Total gain decomposes into growth in earnings, expansion in the exit multiple, and deleveraging. Growth is the change in EBITDA capitalized at the ENTRY multiple; multiple expansion is the change in multiple applied to EXIT-year earnings; the remainder is the change in net debt. A return that leans on multiple expansion is a weaker return, because the multiple is the one variable in a buyout the sponsor does not control.
Price discipline
'What is the IRR?' and 'what would you pay?' are different questions with different answers. The second holds the return fixed at the hurdle and solves for the entry multiple, which converts a readout into a negotiating position. Expect it as the follow-up to any returns number that lands near a hurdle, and know roughly how many turns sit between the price on offer and the price the hurdle supports.
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: Excel model, built the way a banker would actually build it. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —EBITDA-down model with no revenue line
- —Three-tranche term sheet
- —Two-way revolver from a one-off charge
- —Zero-floored tax
- —Exit at entry multiple
- —MoM and IRR
Memo
The written recommendation and how it was reached
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the Excel model and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and Memo (PDF) — yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Project Iceford — 30-Minute Quick LBO
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
Is thirty minutes really enough to build a three-tranche debt schedule?
It is, if the structure is already familiar — which is what the format is testing. The template hands over every label, column header, number format and print setting, plus the whole term sheet and the whole management plan, so nothing is spent on layout. The measured workload is 300 cells and 96 distinct formulas, because almost every row is written once in the first projected column and filled right. That is about 19 seconds a formula. It is fast, and it is meant to be.
Why is there no revenue line?
Because a sponsor's first pass at a deal does not have one either. EBITDA-down is the defining scope of this tier: the plan is handed over at the EBITDA level, and the work is in what happens below it. Adding a revenue build or a balance sheet would turn a thirty-minute exercise into a two-hour one and would test something the format is not asking about.
Should interest be on average or beginning balances?
Beginning, in this exercise, and the instruction sheet says so. Average-balance interest is more precise and is common in practice, but it makes the model circular and requires iterative calculation. Beginning balances remove the circularity, which is why every check row in the file can be trusted. If you are used to building it the other way, say so out loud — knowing why the convention exists is worth more than the convention itself.
How much does formatting actually matter?
It is explicitly graded here, as it is on real modeling tests. Blue for a hardcoded input, black for a formula on the same tab, green for a pure link to another tab. A hardcoded number buried inside a formula is marked down even when the number is right, because the next person to open the file cannot see it. One related habit is worth building: pin your references to single-cell assumptions with dollar signs, or the row you meant to fill right walks onto empty cells in every column but the first.
What if I run out of time?
Cut the exit-multiple cases first and the credit statistics second. Do not cut the check rows and do not cut the returns attribution. A model that ties, with two sentences about which source of value dominates, is a better answer than a complete model whose owner cannot explain the number. The attribution bridge is seven cells and carries more weight than any twenty-five cells elsewhere in the file.
Why does the exit multiple equal the entry multiple?
It is the base-case convention, and it is a choice rather than a default. Holding exit equal to entry means none of the return depends on the market re-rating the asset, which is the honest way to underwrite and makes the return attributable. If a case assumes expansion, that has to be an explicit, labeled assumption you can defend — a reversion to the mean is an assumption, not an explanation.
What is the interviewer's most likely follow-up?
Some form of 'what would you pay?' or 'what worries you?'. The first is answered by holding the return at the hurdle and solving back for the entry multiple, which turns a returns readout into a negotiating position. The second is answered from the attribution bridge: name the source of value that dominates, say what has to be true for it to arrive, and say what happens if it does not.
Does this format still come up?
Constantly, and it is usually the second quantitative screen after a paper LBO. It is cheap to administer, it fits inside an on-site session, and it is very hard to fake: a debt schedule with a working sweep either behaves under a negative year or it does not, and thirty seconds of scrolling tells an interviewer which.
About This Quick LBO Modeling Test Case Study
Quick LBO Modeling Test case study for private equity interviews. 30-minute format covering ebitda-down model with no revenue line, three-tranche term sheet, two-way revolver from a one-off charge. Includes the full prompt, a tied-out Excel model and an audio walkthrough.
This case study sits in Private Equity, under LBO Modeling Tests. Every case ships with the full prompt, the supporting materials, a complete model answer and an audio walkthrough of the judgment behind the recommendation.
30-Minute Format
The time limit a real assessment would give you
Excel Model
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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