Cascade Consumer Brands: A Full 3-Statement LBO Case Study
Cascade Consumer Brands is a full three-statement LBO case study of the kind large-cap and upper middle-market funds hand out during associate recruiting. You get a complete business overview, historical financials, and every transaction and operating assumption you need — then three hours and a blank Excel file. It is the most technically demanding case in the set, and the one that most closely mirrors a real 3-hour on-site modeling test.
This page walks through what the case contains, what it is actually testing, how to allocate your time, and the mistakes that most often sink candidates on it. For the broader context on how these exercises work, start with our guide to what a private equity case study looks like.
The Business
Cascade is a specialty snacks and beverages platform selling through grocery, club, and convenience channels. The business has grown steadily through a mix of volume, price, and distribution gains, with a portfolio of brands at different stages of maturity.
The financial profile is what makes it a good LBO candidate and a good teaching case: predictable revenue, real but improvable margins, moderate capex, and working capital that swings with the channel mix. The prompt gives you a full set of historical financials and a management projection you are expected to interrogate rather than accept.
What This Case Tests
A revolver, a term loan with a tiered excess-cash-flow sweep, and senior subordinated notes carrying PIK interest. Each behaves differently, and the debt schedule has to handle all three simultaneously without circularity errors.
The sweep percentage steps down as leverage falls. This is the single most common place candidates break the model — the sweep has to reference a leverage ratio that itself depends on the sweep.
The sub notes accrue rather than pay cash. The balance grows, and it has to flow correctly through the cash flow statement and the exit equity bridge.
The seller retains equity. Your returns are calculated on the sponsor's share only — a step candidates routinely forget, which inflates IRR.
Options dilute sponsor proceeds at exit above a strike. Handling the waterfall correctly is what separates a strong model from an adequate one.
Full three-statement means the balance sheet has to balance in every projected year. If it doesn't, you have an error somewhere upstream and you need to find it under time pressure.
How to Approach It
Read the whole prompt before touching Excel. Build your assumptions tab and sources & uses first. Getting the purchase price, fees, and funding right takes ten minutes and everything downstream depends on it.
Build the income statement down to EBITDA, then D&A, then EBIT. Build working capital and capex. Do not start the debt schedule until the operating model produces a clean cash flow before financing.
Layer the tranches in order: revolver, term loan, sub notes. Get the term loan's mandatory amortization in before the sweep. Add the tiered sweep last, and turn on iterative calculation before you do.
Exit at the stated multiple. Build the equity bridge: exit EV, less net debt, less the option waterfall, times the sponsor's share after rollover. This is where the seller rollover and options actually bite.
Build the entry/exit multiple sensitivity table. Then stop and ask whether the IRR is plausible. A 90% IRR means you have a mistake, not a great deal.
Common Mistakes on This Case
The debt schedule depends on cash flow. Build the operating model first or you will be rebuilding both.
A 15% seller rollover means you own 85% of the exit equity. Calculating returns on 100% is the most common single error on this case.
Enable iterative calculation (File → Options → Formulas) before you build the sweep, not after it breaks.
The prompt hands you a management case. You are expected to build your own base case and be able to say why it differs.
A model with no IRR is a zero. Build a rough, working, balancing shell end to end, then go back and add sophistication.
Get the Case Packet
Download the Cascade Consumer Brands case packet — free
The full packet includes the business overview, end markets and customers, historical financials, and every transaction, operating, and working-capital assumption you need to build the model from scratch in Excel. There is no answer key, on purpose — real cases do not come with one.
Related Guides
The candidates who clear cases like this one are rarely the smartest people in the room. They are the ones who have built enough models that the mechanics are automatic, which frees their attention for the judgment the interviewer is actually testing.
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