PJT Partners IB Interview Questions

EV = 600. Using EV = 10×EBITDA and Debt = 5×EBITDA, substitute into EV = Market Cap + Debt − Cash: 10×EBITDA = 400 + 5×EBITDA − 100, giving EBITDA = 60 and EV = 600.

I follow U.S. Healthcare Services, where key trends include the site-of-care shift to ASCs, GLP-1 drug utilization reshaping payor costs, AI-driven revenue cycle automation, Medicaid redetermination mix pressure, and PE-led provider consolidation driving multiple arbitrage.

The enterprise value is $100mm, calculated by summing the market values of all capital structure layers: senior secured loans ($70mm) + bonds ($15mm) + equity ($15mm), since market prices reflect the true asset value in distress.

You could pursue sale-leasebacks of owned assets for immediate cash proceeds, defer discretionary capex, elect accelerated depreciation to maximize tax shields, and optimize working capital by tightening receivables, extending payables, and reducing inventory.

Investors are indifferent: the $3.00 per-share dividend exactly offsets the $3.00 drop in share price, preserving total value at $7.50 per share, though in practice a tax shield could make them slightly happy.

Junior creditors can threaten to delay plan confirmation through litigation and valuation challenges, leveraging their holdup value to extract a 'tip' from senior creditors who prefer the certainty and speed of a consensual restructuring plan.

A sponsor is the private equity firm that buys the company in a leveraged buyout (LBO), a purchase funded largely with debt. Its return comes from three drivers: EBITDA growth, multiple expansion, and debt paydown from free cash flow. Growing EBITDA (earnings before interest, taxes, depreciation and amortization, a rough measure of operating cash profit) raises what the company is worth. Multiple expansion means selling at a higher price per dollar of EBITDA than you paid. Debt paydown means the company's free cash flow (the cash left after interest, taxes, capital spending and cash tied up in day-to-day operations) repays the loans, so more of the sale price goes to the sponsor. In the model, those drivers come from the purchase price, the amount of debt (leverage), the sales growth and margin projections, and the exit multiple and hold period (the years owned before selling).

The deal is EPS-neutral because the buyer's P/E (10x) equals the acquisition P/E (10x), so the pro forma EPS is identical to the buyer's standalone EPS—neither accretive nor dilutive.

The Income Statement measures profitability over a period ending at Net Income, the Balance Sheet is a point-in-time snapshot where Assets equal Liabilities plus Equity, and the Cash Flow Statement reconciles Net Income to actual cash generated.

The deal is accretive: pro forma EPS of $12.00 exceeds the acquirer's standalone EPS of $10.00, representing $2.00 per share or 20% accretion, driven primarily by the use of relatively cheap debt financing and synergies. On a premium-adjusted basis, B is acquired at 5.0x P/E, which is equal to A's 5.0x P/E, so the stock portion is roughly EPS-neutral.

Apple generated roughly $391B of revenue in FY2024, with very strong profitability and free cash flow generation: about $124B of EBIT, about $94B of net income, and about $108B of FCF, or a ~27.6% FCF margin. The key financial story is that while Apple is still primarily a hardware company by revenue, its high-margin Services segment and installed-base ecosystem support margin durability, strong capital returns, and a premium valuation.

Because the goal is to maximize firm value, not mechanically minimize WACC. A company may issue debt even past the theoretical WACC minimum if the use of proceeds still creates positive NPV and debt is the best practical funding source after considering taxes, dilution, signaling, control, issuance costs, market conditions, and strategic objectives.