Skill 02 · Make the call, and stand behind it
The partner has two minutes. Should the fund buy Corvus Software?
The end of a case. You have most of the facts but not all of them. The interviewer is testing whether you can make a call, back it with numbers and say what would change your mind.
The question
Halden Capital, a private equity fund, has been offered Corvus Software, a CRM platform. You have worked through the case. Here is what you found.
- Price
- 8x ARR: $800M for $100M of ARR, growing about 20% a year
- Plan
- cut lost ARR from 15% to 10% a year within three years; Halden wants 2.5x its money in five years
- Cohorts
- newer customer cohorts churn faster: quarter-1 retention fell from 95% to 88%
- Churn
- of the $15M of ARR lost last year, $7M went to Competitor X over its forecasting feature, and buyers confirm the gap; about $1M was failed card payments that can be recovered
- Math
- getting to $10M means winning back about $4M of the $7M lost to Competitor X, about 57%
“What do you recommend?”
2 min Think first. Jot down your answer, or say it out loud, before you open the steps. The steps make far more sense once you’ve tried it yourself.
A strong answer, step by step
Open each step in turn. This is our worked answer, not the only good one.
Step 1: Lead with the answer
“Don’t buy at 8x on this plan.”
Why it works: The partner hears the decision in the first five seconds. Everything after it is support. Building up to the answer makes it sound like you’re still deciding.
Step 2: Give two or three reasons, each with a number
“First, churn is rising, not falling: quarter-1 retention for new cohorts slipped from 95% to 88%. Second, the plan needs Corvus to win back nearly 60% of the ARR it loses to a rival with a better product, and buyers confirm the gap.”
Why it works: Each reason is a fact from the case, with its number. Two strong reasons beat five vague ones.
Step 3: Say what you would do instead
“I’d bid lower, or tie part of the price to next year’s retention, and make a product roadmap review the first diligence step.”
Why it works: “No” on its own isn’t a recommendation. Offering a structure that would make the deal work shows you’re thinking like the client.
Step 4: Name the risk, and what would change your mind
“The risk is that Corvus ships its own forecasting module within a year. If the roadmap shows that, the gap could close faster than we expect, and 8x would look more reasonable.”
Why it works: It shows you’ve weighed the other side, and it gives the partner a clear test. That’s the kind of judgment Skill 02 is about.
Common traps
- Summarising every exhibit in order instead of answering.
- Hedging: “it depends” without saying on what.
- A recommendation with no next step or no risk.