The Investment Banking Case Study: Frameworks for Live Modeling Tests and Take-Home Assignments

You receive an email Friday evening: "Please complete the attached case study and return by Monday 9am."

The attachment contains a company overview, three years of financials, and instructions to value the business, recommend an offer price, and prepare a brief presentation.

Your weekend just disappeared.

Case studies are the highest-fidelity test in investment banking recruiting. They reveal whether you can actually do the work—not just answer questions about it. Technical interviews test knowledge; case studies test application.

This guide covers how to approach both timed live tests and take-home assignments, what evaluators prioritize, and the frameworks that produce strong work under pressure.

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Types of Case Studies

Take-Home Case Studies

Format: Materials sent via email, typically 2-7 days to complete.

Typical deliverables:

• Excel model (DCF, LBO, or comps)
• PowerPoint presentation (5-15 slides)
• Written memo or recommendations

What it tests:

• Technical accuracy and modeling skill
• Presentation and communication
• Judgment and recommendations
• Work quality without time pressure

Evaluation: Thoroughness, accuracy, and polish matter. You have time—use it.

Live/Timed Case Studies

Format: In-office or virtual, typically 1-3 hours.

Typical structure:

• Materials provided at start
• Work in Excel, sometimes Word or PowerPoint
• May include presentation to evaluators

What it tests:

• Speed and efficiency
• Ability to prioritize under pressure
• Core technical skills without references
• How you handle stress

Evaluation: Completeness and judgment matter more than perfection. Evaluators understand time constraints.

Paper LBOs

Format: 15-30 minutes, pen and paper or whiteboard.

What you're given:

• Purchase price and financial metrics
• Debt structure and terms
• Exit assumptions

What you produce:

• IRR and multiple of money calculation
• Sensitivity to key assumptions

What it tests:

• Mental math and estimation
• Understanding of LBO mechanics
• Ability to think under pressure

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The General Framework

Step 1: Read Everything First

Before touching Excel, read all materials completely.

What to look for:

• Exactly what deliverables are required
• What information is provided vs. what you need to assume
• Any specific instructions or constraints
• Hints about what the evaluator cares about

Common mistake: Jumping into modeling before understanding what's being asked.

Step 2: Plan Your Approach

Allocate your time before starting work.

For a 3-hour live case:

• 15 minutes: Read and plan
• 90 minutes: Build model
• 30 minutes: Develop recommendations
• 30 minutes: Prepare presentation (if required)
• 15 minutes: Review and quality check

For a weekend take-home:

• Day 1: Read materials, research company/industry, plan approach
• Day 2: Build model, iterate on assumptions
• Day 3: Develop presentation, refine recommendations, quality check

Step 3: Execute Methodically

Work through the case systematically.

Model building order:

1. Historical financials (if needed)
2. Revenue and operating projections
3. Working capital and capex
4. Debt schedule (if applicable)
5. Valuation output
6. Sensitivity analysis

Step 4: Develop a Point of View

The case isn't just about the math—it's about your judgment.

Questions to answer:

• What is this company worth?
• Would you recommend this investment/acquisition?
• What are the key risks?
• What additional information would you want?

Step 5: Present Clearly

Your output should be professional and easy to follow.

Model standards:

• Clear labels and organization
• Assumptions documented
• No hardcoded numbers in formulas
• Error checks where possible

Presentation standards:

• Executive summary upfront
• Key findings and recommendations clear
• Supporting analysis available
• Professional formatting

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DCF Case Study Approach

What You're Typically Given

• 2-3 years of historical financials
• Industry information or context
• Sometimes management projections
• Sometimes comparable company data

Building the Model

Revenue projections:

• Understand revenue drivers
• Project 5-10 years forward
• Support growth assumptions with reasoning

Operating projections:

• Gross margin (may be given or assumed)
• Operating expenses as % of revenue or specific line items
• EBITDA margin trajectory

Working capital:

• Days sales outstanding (receivables)
• Days inventory outstanding
• Days payables outstanding
• Calculate annual working capital change

Capital expenditures:

• As % of revenue, or specific projections
• Maintenance vs. growth capex if relevant

Free cash flow:

FCF = EBIT × (1 - Tax Rate) + D&A - Capex - Change in NWC

Terminal value:

• Perpetuity growth method (more common)
• Exit multiple method

TV (perpetuity) = FCF × (1 + g) / (WACC - g)

WACC:

• Cost of equity: CAPM (Risk-free + Beta × Market Risk Premium)
• Cost of debt: Interest rate × (1 - Tax Rate)
• Weight by target capital structure

Enterprise value:

EV = PV of projected FCFs + PV of Terminal Value

Common DCF Mistakes

Unrealistic assumptions:

• Terminal growth above GDP growth
• Margins expanding forever
• No normalization of capex

Mechanical errors:

• Wrong discounting periods (mid-year vs. end-of-year)
• Inconsistent assumptions
• Circular references without iteration

Missing components:

• No sensitivity analysis
• No sanity check against comparables
• Assumptions not documented

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LBO Case Study Approach

What You're Typically Given

• Target company financials
• Purchase price or valuation guidance
• Debt structure parameters
• Exit assumptions

Building the Model

Sources and uses:

Sources = Uses
Debt + Equity = Purchase Price + Fees + Cash to Balance Sheet

Operating model:

• Revenue and EBITDA projections
• Working capital and capex
• Free cash flow generation

Debt schedule:

• Interest expense by tranche
• Mandatory amortization
• Cash flow sweep (if applicable)
• Revolver draws/repayments

Returns calculation:

Exit Equity Value = Exit EV - Net Debt at Exit
MOIC = Exit Equity / Entry Equity
IRR = Internal rate of return on equity cash flows

Key LBO Outputs

Entry metrics:

• Purchase price / EBITDA
• Debt / EBITDA
• Equity contribution

Exit metrics:

• Exit price / EBITDA
• Net debt at exit
• Exit equity value

Returns:

• IRR (20%+ typically attractive)
• Multiple of invested capital (2.0x+ typically attractive)

Sensitivity Analysis

Key sensitivities for LBO:

• Entry multiple vs. exit multiple
• Revenue growth vs. EBITDA margin
• Exit timing (3 years vs. 5 years vs. 7 years)
• Debt paydown assumptions

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Comparable Company Analysis

Building Comps

Select comparable companies:

• Similar business model
• Similar size
• Similar growth profile
• Same industry/sector

Calculate trading multiples:

• EV / Revenue
• EV / EBITDA
• P / E
• Relevant sector multiples

Apply to target:

• Identify appropriate multiple
• Apply to target's metrics
• Calculate implied valuation range

Comps Mistakes to Avoid

Poor company selection:

• Companies aren't actually comparable
• Too few companies (need 5+ typically)
• No acknowledgment of differences

Stale data:

• Using outdated share prices
• Not adjusting for recent events

No adjustments:

• Applying mean/median without thinking about where target fits
• Ignoring why target might deserve premium/discount

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The Paper LBO

The Standard Format

You're given key metrics and 15-30 minutes.

Typical information:

• Purchase price: 10x EBITDA ($500M EV on $50M EBITDA)
• Debt: 6x EBITDA ($300M)
• EBITDA growth: 5% annually
• Exit: 5 years at same multiple

What to calculate:

• Entry equity
• Exit EBITDA and enterprise value
• Debt paydown (simplified)
• Exit equity
• MOIC and IRR

Mental Math Approach

Entry:

• EV = $500M
• Debt = $300M
• Equity = $200M

Exit (Year 5):

• EBITDA = $50M × (1.05)^5 ≈ $64M
• Exit EV = $64M × 10 = $640M
• Assume debt paid to $200M (simplified)
• Exit Equity = $640M - $200M = $440M

Returns:

• MOIC = $440M / $200M = 2.2x
• IRR ≈ 17% (use rule of 72: doubling in ~4.5 years ≈ 16%)

Paper LBO Shortcuts

Rule of 72: To double your money at X% return, takes 72/X years.

• 20% IRR → 3.6 years to double
• 25% IRR → 2.9 years to double

Quick IRR estimation:

• 2.0x in 3 years ≈ 26% IRR
• 2.0x in 5 years ≈ 15% IRR
• 2.5x in 5 years ≈ 20% IRR
• 3.0x in 5 years ≈ 25% IRR

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Making Recommendations

What Evaluators Want

Beyond technical correctness, evaluators assess your judgment.

Strong recommendations include:

• Clear answer (buy/don't buy, acceptable price range)
• Key factors driving the recommendation
• Risks and mitigants
• What additional information you'd want

Structuring Your Recommendation

Format:

1. Bottom line recommendation (first)
2. Valuation summary (DCF, comps, LBO implied values)
3. Key investment considerations (bull case)
4. Key risks (bear case)
5. Process considerations (if applicable)

Example: "Based on my analysis, the target is worth $450-550 million. At the proposed price of $500 million, I would proceed with the acquisition because [reasons]. Key risks include [risks], which I would mitigate by [approaches]."

Common Judgment Mistakes

No clear recommendation: "It depends on several factors..." is not helpful. Make a call.

Ignoring obvious risks: Every investment has risks. Acknowledge them.

Overconfidence: Acknowledge uncertainty and sensitivity of conclusions to assumptions.

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Time Management

For Timed Cases

Hour 1 (if 3-hour case):

• Read everything (15 min)
• Set up model structure (15 min)
• Input historical data (15 min)
• Build revenue and operating projections (15 min)

Hour 2:

• Complete operating model (20 min)
• Build valuation (DCF, comps, or LBO) (40 min)

Hour 3:

• Sensitivity analysis (15 min)
• Develop recommendations (15 min)
• Prepare output/presentation (20 min)
• Review and check (10 min)

For Take-Home Cases

Don't wait until the deadline. Start immediately. You'll find questions you need to think about, and you want buffer time for unexpected issues.

Iterate: First pass won't be perfect. Build, review, refine.

Get fresh eyes: After sleeping on it, review again. You'll catch errors.

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Presentation Tips

If Presenting Your Work

Know your model cold: Evaluators will ask detailed questions. Know where every number comes from.

Lead with conclusions: Don't walk through model build sequentially. Start with recommendation, then support it.

Handle questions professionally: If you don't know something, say so. Offer to show how you'd figure it out.

Slide Deck Best Practices

Executive summary slide: Key recommendation, valuation range, critical factors.

Valuation slides: Methodology, key assumptions, output, sensitivity.

Appendix: Supporting details, additional analysis, data sources.

Formatting: Clean, professional, consistent. No typos. Labeled axes on charts.

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Quality Control Checklist

Before Submitting

Model checks:

• Formulas work (no errors)
• Assumptions are reasonable and documented
• Balance sheet balances (if included)
• Sensitivity analysis included
• No hardcoded numbers in formulas

Output checks:

• Valuation makes sense (sanity check against comps or intuition)
• Recommendation is clear
• Risks acknowledged
• Professional formatting

Mechanical checks:

• Correct file names
• All requested deliverables included
• Submitted before deadline

Common Errors to Catch

Math errors:

• Signs wrong (adding when should subtract)
• Units inconsistent (millions vs. thousands)
• Dates/periods misaligned

Logic errors:

• Terminal growth > WACC (model breaks)
• Negative free cash flow treated incorrectly
• Circular references causing errors

Presentation errors:

• Typos in client or company names
• Charts with unclear labels
• Missing sources or assumptions

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What Evaluators Actually Assess

Technical Execution (40%)

• Model structure and organization
• Accuracy of calculations
• Appropriate methodology selection
• Reasonable assumptions

Judgment and Recommendations (30%)

• Quality of investment recommendation
• Identification of key drivers
• Recognition of risks
• Business sense and intuition

Communication (20%)

• Clarity of presentation
• Professional quality of output
• Ability to explain and defend work
• Written/verbal communication

Process and Efficiency (10%)

• Time management
• Ability to prioritize
• Handling of pressure
• Response to questions or feedback

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Practice Approach

Before the Case Study

Technical preparation:

• Practice building models from scratch
• Time yourself on DCF, LBO, comps
• Know shortcuts and formulas cold

Mental preparation:

• Accept that you won't do everything perfectly
• Prioritize completeness over perfection
• Stay calm under pressure

Practice Cases

Where to find cases:

• Wall Street Prep, Breaking Into Wall Street (paid)
• Company 10-Ks for DIY practice
• Your school's finance club resources
• Online banking prep communities

How to practice:

• Set timer, simulate real conditions
• Review your work critically
• Focus on weak areas

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Key Takeaways

Case studies reveal whether you can actually do investment banking work—not just talk about it.

The general approach:

1. Read everything before starting
2. Plan your time allocation
3. Execute methodically
4. Develop a clear recommendation
5. Present professionally
6. Quality check before submitting

What matters most:

• Technical competence (model works and makes sense)
• Business judgment (sensible recommendations)
• Communication (clear and professional output)

Time management:

• In timed cases, completeness beats perfection
• In take-home cases, you're expected to be thorough and polished

The ultimate test: Could this work be shown to a client? If your case study output looks like real banking work product, you've succeeded.

Walk in prepared. Stay calm. Show you can do the work. That's what case studies are for.