WestPeak History
Who are the founders of WestPeak?
Walton Lim & Tudor Barcan
There are 8 marbles, all identical. One is heavier than the rest but you can’t tell from looking. You only have a scale – how do you figure out which is the heavier ball in the most efficient way?
(+50 points if done in two measurements)
Weigh 3 on one side and 3 on the other.
1) If both sides balance, then weigh the other 2. Find the heavier one.
2) If one side is heavier, take 2 of the 3 balls and weigh them. If they balance, the one not being weighed is the heaviest. Otherwise, determine the heaviest one by which one weighs the scale down most of the two.
Would you expect a manufacturing company or a technology company to have a higher Beta?
(+100 bonus if answered by 2nd year, +200 bonus if answered by 1st year)
A technology company, because technology is viewed as a “riskier” industry than manufacturing.
When did the WestPeak Instagram account first post? (+50 for exact date)
May 6, 2024
A red house is made from red bricks. A blue house is made from blue bricks. A yellow house is made from yellow bricks. What is a greenhouse made from?
Glass
What variables impact an LBO model the most?
(+100 bonus if answered by 2nd year, +200 bonus if answered by 1st year)
Purchase and exit multiples have the biggest impact on the returns of a model. After that, the amount of leverage (debt) used also has a significant impact, followed by operational characteristics such as revenue growth and EBITDA margins.
What was the precursor to WestPeak called? (bonus +100 points if someone mentions why it was shut down).
OG Capital.
Fraud trades committed by the founder.
What is harder to catch the faster you run?
Your breath
What are some important metrics in evaluating a SaaS business model?
(+100 bonus if answered by 2nd year, +200 bonus if answered by 1st year)
retention rate (for recurring revenue streams), the churn rate (the percentage of customers lost), the cost to acquire a customer (CAC), and the lifetime value from a customer (LTV) as well as the Monthly LTV / CAC is a common ratio used in valuation.
What are 4 companies that the current management team has written equity research/M&A reports on?
(M&A report companies count as 1)
Hasbro, BRP, Canadian Tire, NetApp & Nutanix, Mariott, Copa Holdings, Glencore & Hudbay Minerals, Wingstop
In a room of X people there’s a 50% chance of at least two people having the same birthday.
What is X?
23
A person's birthday is one out of 365 possibilities. The probability that a person does not have the same birthday as another person is 364 divided by 365. This means that any two people have a 364/365 chance of not matching birthdays.
In a group of 23 people, there are 253 comparisons, or combinations, that can be made. So, we're not looking at just one comparison, but at 253 comparisons. Every one of the 253 combinations has the same odds, 99.726027 percent, of not being a match. If you calculate (364/365)^253, you'll find there's a 49.952 percent chance that all 253 comparisons contain no matches. Consequently, the odds that there is a birthday match in those 253 comparisons is 1 – 49.952 percent = 50.048 percent, or just over half! The more trials you run, the closer the actual probability should approach 50 percent.
50M EBITDA, Trading at 6 times, 200M in Bank Debt, 200M in High Yield Debt, what will the debt be trading at?
(+100 bonus if answered by 2nd year, +200 bonus if answered by 1st year)
The Enterprise Value of this company is 300M. Therefore, Bank Debt will be trading at par (higher seniority than HY Debt) and their High Yield Debt will be trading at 50 cents on the dollar.
How many pictures are on the WestPeak website (not including backgrounds and placements)? (+/- 5 is acceptable)
58 (53-63 accepted)
How many numbers from 1 to 1000 (inclusive) can be written as the sum of some number of 4’s and/or 5’s? (For example, 4 + 4 + 5 + 5 + 5 = 23.)
994
15 = 5+5+5
16 = 4+4+4+4
After this, every number can be written by replacing one of the 4s with a 5 until you reach 20.
21 can be written by adding 5 to 4+4+4+4. After that the same process follows.
If we just inspect the numbers from 1 to 14, we see that 6 of them cannot be written as the sum of 4’s and 5’s: 1, 2, 3, 6, 7, and 11. Hence 994 of the numbers from 1 to 1000 can be written as the sum of 4’s and 5’s.
A private equity firm buys a business with $100 in EBITDA at 4x EV/EBITDA. The company will continue to generate $100 in EBITDA for all future years and will be sold in 5 years for $400 plus all the FCF that has been generated by the business during the 5-year hold period. No debt is paid off during the hold period. D&A is $40, interest rate is 10%, there is no tax, no change in NWC, and CapEx is $40. If the private equity firm generated MOIC of 2.5x, what was the original equity cheque at entry?
(+100 bonus if answered by 2nd year, +200 bonus if answered by 1st year, +50 points if answered by mgmt)
Answer - $100M
Entry = Equity + Debt = 400.
Exit = 2.5*Equity + Debt = 400 + 5*FCF
FCF = EBITDA – Interest Expense – Change in NWC – CapEx
FCF = 100 – 0.1*Debt – 40
FCF = 60 – 0.1*Debt
2.5*Equity + Debt = 400 + 5*(60 – 0.1*Debt)
2.5*Equity + Debt = 400 + 300 – 0.5*Debt
2.5*Equity + 1.5*Debt = 700 (Equation 1)
Debt = 400 – Equity (Equation 2)
2.5*Equity + 1.5*(400 – Equity) = 700
Equity + 600 = 700
Equity = 100, Debt = 300.
Therefore, the original equity cheque was $100mm.