SkillsSkill 5 of 5
Make the recommendation and say what would change it
Lead with the decision and the price, show the downside, and say what would change your mind.
Worked example
You have five minutes at IC. What do you recommend?
The committee wants your view, the two numbers behind it and what would change it. Not the model’s case read aloud.
The question
Your team is taking fictional Quillfield to the investment committee. An AI tool drafted the memo’s opening. The fund underwrites to 2.5x and a 20% gross IRR over five years. The seller wants $400m, 10.0x FY25 EBITDA of $40m, with $200m of debt. The scenarios underwrite the business as it is, without the value creation plan.
Recommendation: approve at $400m. Base case 2.50x MOIC and 20.1% IRR. Net revenue retention of 108% and 9.1% revenue growth show a durable, expanding franchise.
| Year-5 EBITDA | Exit multiple (x) | Exit net debt | Exit equity | MOIC (x) | IRR (%) | |
|---|---|---|---|---|---|---|
| Model case | 50 | 12 | 100 | 500 | 2.50 | 20.1 |
| Flat multiple | 50 | 10 | 100 | 400 | 2.00 | 14.9 |
| Review run-off | 42 | 8 | 120 | 216 | 1.08 | 1.6 |
Invented data. Equity in is $200m. Exit equity = EBITDA × multiple − net debt; MOIC = exit equity ÷ 200; IRR = MOIC^(1/5) − 1, rounded to 0.1%. Run-off is an assumed case with review falling about 12% a year: year-5 EBITDA $42m, $80m of debt repaid, exit at 8.0x.
“The AI-drafted memo recommends approving Quillfield at $400m on a 2.50x base case. You have five minutes with the committee. What do you recommend?”
Your turn
Say your answer out loud, or jot notes below. Both work. Or skip to the worked answer.
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Lead with the answer
What would you do here? Open the move you’d make.
Start with the business: walk through Quillfield’s products and customers, then reach the recommendation.
Tempting, but it misses something. In five minutes the committee wants the decision first. The background is already in the memo.
Open with the decision: don’t approve at $400m; continue at up to $320m, 8.0x, subject to two diligence items.
The strong move. The decision and the price are in the first sentence, and everything after supports them.
Open with the memo’s line: approve at $400m on a 2.50x base case.
Tempting, but it misses something. It reads the model aloud. The 2.50x needs a 12.0x exit; at a flat 10.0x it’s 2.00x.
See how a strong candidate says it
“I recommend we don’t approve at $400m. I’d continue at up to $320m, 8.0x, subject to two diligence items.”
Why it works: A committee hears the decision first, then the reasons.
Step 2: Give the two numbers that matter
What would you do here? Open the move you’d make.
Present the three scenarios equally and let the committee weigh them.
Tempting, but it misses something. Without your read the committee does your job. Only the model case clears 2.5x, and it depends on a 12.0x exit.
Average the three scenarios: about 1.86x, so roughly a 2x deal.
Tempting, but it misses something. Averaging treats a re-rating to 12.0x and a run-off as equally likely and hides both. The point is that 2.50x needs expansion and 1.08x barely returns capital.
Show the dependence: 2.50x needs 12.0x; flat it’s 2.00x and run-off 1.08x. At $320m, flat is 2.50x and run-off 1.80x.
The strong move. Two numbers explain the price: at $400m the downside barely returns capital; at $320m, $120m of equity, it still returns 1.80x.
See how a strong candidate says it
“The 2.50x needs the multiple to rise to 12.0x. At a flat 10.0x it’s 2.00x and 14.9%, and if review keeps shrinking it’s 1.08x. At $320m, $120m of equity: 2.50x flat, 1.80x in the run-off.”
Why it works: It shows the downside and why the lower price fixes it.
Step 3: Correct the memo’s evidence
What would you do here? Open the move you’d make.
Correct the facts: with leavers, retention is 98.2%, not 108%; without the one-off project, growth was 2.7%, not 9.1%.
The strong move. A committee will check the evidence. Fixing both before they do keeps the recommendation credible.
Keep the memo’s 108% and 9.1%: they come from the CIM, so they’re the seller’s numbers to defend.
Tempting, but it misses something. Once they’re in your memo they’re yours. 108% leaves out $20m of lost revenue, and 9.1% includes a $14m one-off project.
Skip the memo’s figures and talk only about returns.
Tempting, but it misses something. The committee will read the memo. Leaving 108% and 9.1% uncorrected lets the wrong evidence stand behind the deal.
See how a strong candidate says it
“The 108% retention leaves out customers who left; with them it’s 98.2%. The 9.1% growth includes a one-off project; underlying growth was 2.7%.”
Why it works: A recommendation is only as strong as the facts the committee will check.
Step 4: Say what would change your mind
What would you do here? Open the move you’d make.
Say you’d revisit if anything material changes in diligence.
Tempting, but it misses something. Too vague to act on. Name the signals: expansions signed by the top 2, review-volume commitments, or review falling faster than 12% a year.
Offer up to $400m if the growth plan is counted, since Plan B clears the hurdle.
Tempting, but it misses something. That pays the seller for value the buyer has to create. The plan is upside earned after close, not before the extraction pilots convert.
Name the triggers: top-2 expansions and review-volume commitments move you toward the seller’s price; review falling faster than 12% a year ends it.
The strong move. It tells the committee what to watch and when the decision gets revisited.
See how a strong candidate says it
“I’d move toward the seller’s price if the top 2 sign multi-year expansions and carriers commit to review volumes. I’d walk away if review falls faster than 12% a year. The growth plan is upside we earn after close; I wouldn’t pay the seller for it before the extraction pilots convert.”
Why it works: It tells the committee what to watch and when the decision gets revisited.
The answer, in short
- Decision
- Don’t approve at $400m. Continue at up to $320m, subject to customer-level retention data and review-volume commitments.
- Because
- At $400m the hurdle depends on multiple expansion; at a flat multiple it returns 2.00x, and the run-off case barely returns capital.
- What would change it
- Signed expansions from the top 2 and minimum review volumes would justify a higher price; a faster decline in review would end the deal.
Common traps
- Reading the model case aloud as the recommendation.
- Burying the decision under the analysis.
- Repeating the memo’s figures without checking them.
- Recommending ‘approve, subject to diligence’ with no price.
Check your answer
- Did I state the decision in my first sentence?
- Did I give the downside, not just the base case?
- Did I correct the facts the memo got wrong?
- Did I say what would change my recommendation?
Want feedback on how you’d answer? Practice “Make the recommendation and say what would change it” with an AI interviewer on Socratify.
Last reviewed Nov 9, 2026