Houlihan Lokey interview questions

The core liquidity tool for any distressed-company engagement.

What makes a 13-week cash flow forecast useful in a restructuring?

A first-round question on recognising when a company needs restructuring advice.

What are the early warning signs that a company may need restructuring advice?

A core concept tested across restructuring and distressed-investing interviews.

What is the fulcrum security in a restructuring?

The basic first workstream on any new restructuring mandate.

What belongs in a distressed company's capital-structure summary, and why is it important?

A common terminology question in early-stage distressed situations.

What is a forbearance agreement, and why would a lender agree to one?

A first-round restructuring question testing the practical purpose of a Chapter 11 filing.

What is the automatic stay in Chapter 11, and why can it preserve value for a distressed company?

Tests capital-structure mechanics in a consensual restructuring case.

Why would creditors agree to exchange debt for equity, and what determines the ownership split?

The first analysis a restructuring banker runs on a new situation.

A company calls you in distress. What is the first analysis you run, and what determines whether they have a liquidity problem or a solvency problem?

A practical liquidity-reconciliation question for a restructuring analyst reviewing an asset-based revolver.

A retailer has $80m of eligible receivables at an 85% advance rate and $50m of eligible inventory at a 60% advance rate. Its revolver commitment is $90m, outstanding borrowings are $78m and letters of…

A Chapter 11 governance question for restructuring candidates.

What is an official creditors' committee in Chapter 11, and what does it do?

A technical question on setting recoveries in a restructuring.

How does valuation of a distressed company differ from valuation of a healthy company?

A core Chapter 11 transaction concept for restructuring analysts.

What is a Section 363 sale, and why might it be preferable to a plan of reorganisation?

A senior restructuring case testing whether a proposed Chapter 11 plan can bind a rejecting creditor class.

A company proposes a Chapter 11 plan with $300m of reorganised enterprise value. It has $120m of first-lien debt, $150m of second-lien debt and $110m of unsecured notes. The first lien is paid in…

A restructuring analyst case involving liquidity triage, DIP financing, and creditor negotiation under a Chapter 11 timetable.

You advise the first-lien lender group of a specialty retailer that will file Chapter 11 in ten days. The company needs DIP financing, but its sponsor wants to provide it on terms that may dilute…

A synthesis case in restructuring interviews.

How would you decide whether to pursue an out-of-court restructuring or file Chapter 11?

A restructuring analyst prioritization lab testing liquidity control, stakeholder sequencing, and executable contingency planning.

You advise a retailer whose revolver agent has sent a reservation-of-rights notice. Payroll is due in five days and suppliers are shortening terms. Rank the actions as the stakeholder situation…

A restructuring analyst live case balancing liquidity, stakeholder leverage and recoveries.

You advise a sponsor-owned distributor with one week before payroll and a blocked revolver draw. Decide what to do as facts arrive, then send the senior team a restructuring recommendation.

Material in restructuring and in acquisitions of loss-making companies.

A target has $500m of NOL carryforwards. How much is that worth to an acquirer, and where does it go in the valuation?

Core technical for restructuring groups and distressed funds.

Walk me through a Chapter 11 process, and explain what a debtor actually gains by filing.

A senior technical question on competing creditor rights in a distressed capital structure.

Why does the intercreditor agreement matter in a restructuring?

Common in restructuring, credit and corporate banking interviews.

Define the cash conversion cycle and its components. A company's CCC moves from 45 days to 70 days year over year, what would you investigate?

The standard follow-up to the three-statement walkthrough. Assume a 25% tax rate.

Depreciation increases by $10. Walk me through what happens on all three statements. Use a 25% tax rate and assume nothing else changes.

Tests whether you can handle a non-cash charge that isn't depreciation.

A company writes down $100 of obsolete inventory. Walk me through the three statements at a 25% tax rate.

One of the four analyses in every fairness opinion.

Walk me through a premiums paid analysis. What are its weaknesses compared to precedent transactions?

Tests whether you can reason about debt-like items rather than recite a formula.

Beyond debt and cash, what other items belong in the enterprise value bridge? Explain the principle you'd use to decide whether something is a debt-like item.

Tests whether you understand the advisory product, not just the analysis behind it.

A board asks its banker for a fairness opinion. What does it actually say, what does it not say, and why is it worth paying for?

Tests judgement about tool selection rather than mechanics.

Name situations where a DCF is the wrong tool, and explain what you would use instead in each case.

Common in middle-market M&A and private equity interviews.

Explain the difference between an asset purchase and a stock purchase. Which does a buyer prefer, which does a seller prefer, and how does the tension get resolved?

Shows up in M&A and restructuring where NOLs are a material part of deal value.

What creates a deferred tax asset? Explain how net operating losses are valued in an acquisition and what limits their usefulness to a buyer.

The purchase price adjustment that gets negotiated after the headline number is agreed.

A deal is signed on a cash-free, debt-free basis with a normalised working capital target. What does that mean, and why is the target contested?

A technical differentiator. Most candidates cannot explain the DTL.

Walk me through purchase price allocation in an acquisition. Why does a deferred tax liability get created, and what effect does it have on goodwill?

Common in middle-market M&A and valuation advisory.

How does valuing a private company differ from a public one? What discounts apply and how do you estimate a discount rate without a share price?

Common in energy, industrials and shipping where asset write-downs are routine.

When must a company impair a long-lived asset, and how does it differ from a goodwill impairment?

Asked because industrials can burn cash while reported earnings improve.

Why can a manufacturing company burn cash during a revenue recovery?

Critical in industrials, airlines and any legacy manufacturer.

A company has a $2bn defined benefit obligation and $1.4bn of plan assets. How does this appear in the financials, and how do you treat it in valuation?

This is a foundational recovery question in credit sales, trading and research interviews.

A company has a first-lien loan, unsecured bonds, and common equity. Rank them in a restructuring and explain why the ranking matters even when the company is current on interest.

A common follow-up to leverage sizing.

A company has $100m EBITDA and $500m debt priced at 10% cash interest. What is interest coverage, and is it comfortable?