Behavior Questions Flashcards
Tell me about a time that you worked in a cross-functional or global team?
*No filtering for actionable opportunities (don’t mention IC)
Problem: I joined Caesars in 2017 following a 2-year bankruptcy period in which they emerged with $9 bn to invest over a 5-year period; however, no filtering process existed in executing actionable opportunities
Action: I built a platform model, taking both a top-down and bottoms-up approach to identify markets in which the CZR rewards network was weak.
Result: Hiring decisions were made as a result of the analysis; we wound up partnering with a soverign fund called Meraas to invest in Caesars Dubai. The deal opened a door for an asset-lite strategy, which we prescribed as adding $4/share to our share price (markets credited us with $1/share
Tell me about a time you demonstrated leadership
Problem: The Commonwealth of Virigina legalized Vegas-style casino gaming last year, and one of the permitted cities reached out to CZR , requesting proposals. Given we were cash contrained, the analysis and approval process was going to be atypical.
Action: I leveraged my teams resources. For tasks I’d typically take the lead, I’d delegate responsibilities. We brought the deal to our IC in two weeks for approval by two different CEO and the Board, including Icahn Group. With some back-and-forth, we got BOD approvals in three days.
After that, we needed to negotiate with the City of Danville on subsidies to provide. This required going back to the CEO and asking for approvals to increase our bid.
Result: We turned around the RFP within 5 weeks, a process that typically takes 9-12 months. Fast-forward to April, we are awarded the deal by the City of Danville.
Tell me about a time you took initiatives
Problem: AC revenues had declined by 6% per year for about 5 years started and Icahn urged us to sell, but we had to come with an unbias recommendation to recommend to the Board.
Action: We measured which properties we could retain revenue to pencil in clauses on marketing restrictions.
Needed to decide on an off-market deal or run a process. We decided to off-market the deal to two buyers. I built a teaser
Result: I worked with Legal and the M&A Head to carve out Bally’s Atlantic City into two pieces: 1) the hotel and casinos, excluding the slot business, and 2) the slot business, which we knew we could combine with the Caesars AC casino license.
Ultimately, we proved to Icahn we could reduce exposure and to regulators who wanted use to reduce our monopoly size
Tell me about a time you had to persuade a group
Problem: Buddha Bar deal not financially accretive but allows for scale
Action: Rallied allies on marketing team to gain support as a pre-IC meeting. Then, no one was surprised at IC.
Result: IC approves the deal, we fly out to Berlin to meet
How do you use an LBO model to value a company?
Depends on client - is this sell-side or buy-side? Are they a financial sponsor or strategic investor?
You can use an LBO model to sensitize the key drivers in a capital structure and derive equity consideration to buy or restructure a company
- Input historical financials, synergies, pro forma ratios
- Debt comps
- Project Free Cash Flow
- Set exit/monetization
Solve for purchase price “floor” required to acheive a maximum NPV.
Calculate WACC based on leverage levels
Depends on whom client is but typically funds / financial sponsors like to look at IRR and ERM while strategic investors also care about NPV
- Target IRR can vary depending on market conditions, the perceived risk of an investment, and other factors specific to the situation
Textbook way would be to solve for an IRR but need to take into account risk-adjusted returns
Compare to peer debt structure
How do you use an LBO model in an M&A context?
Find a price floor
