Oct 08, 2026 by Offer

Houlihan Lokey Interview Questions 2027: DCF Walk-Through & How to Answer

Answer Houlihan Lokey interview questions on the DCF in five ordered steps: (1) forecast unlevered free cash flow; (2) determine WACC; (3) calculate terminal value; (4) discount all cash flows to present value for enterprise value; (5) bridge to equity value. This core technical question is commonly reported by candidates — HL expects precision.

What These Houlihan Lokey Interview Questions Assess

This question is commonly reported by candidates interviewing at Houlihan Lokey for 2027 roles. It assesses valuation fluency at a firm famous for it: interviewers expect the steps in order, correct definitions, and — beyond the basics — awareness of which assumptions drive the answer.

How to Answer Houlihan Lokey Interview Questions Like This

Interviewers score technical questions on your process, not just the final answer. State your assumptions first, work through the steps out loud in order, and sanity-check your conclusion at the end.

Step 1: Project UFCF — EBIT×(1–tax) + D&A – capex – change in net working capital, typically 5 years.
Step 2: Compute WACC from CAPM-based cost of equity and after-tax cost of debt, using market-value weights.
Step 3: Terminal value via Gordon growth or exit multiple — mention both and when each fits.
Step 4: Discount forecast cash flows and terminal value at WACC to get enterprise value.
Step 5: Bridge to equity value: subtract net debt, adjust for non-operating items; then note key sensitivities.

Example line: "I'd forecast five years of unlevered free cash flow, discount at WACC built from CAPM, and compute terminal value with both a perpetuity growth rate and an EBITDA exit multiple to triangulate. After discounting, I'd bridge from enterprise to equity value — and flag that terminal assumptions and WACC drive most of the output."

Common Mistakes in Houlihan Lokey Interview Questions Answers

Skipping the enterprise-to-equity bridge.
Confusing levered vs. unlevered cash flows.
Reciting steps with no sense of which assumptions matter.

At HL, the DCF is table stakes asked at a higher bar — hesitation here colors the whole technical round. Drill it until every step and sensitivity is fluent.

Keep Reading

FAQ

How is HL's DCF bar different?

Expect deeper follow-ups: mid-year conventions, stub periods, and sensitivity mechanics — know beyond the basics.

Which terminal method should I lead with?

Present both; Gordon growth for stable companies, exit multiples as a market cross-check.

What discount rate for a distressed company?

Higher risk means higher WACC — and be ready to discuss scenario-weighted or adjusted approaches.

Should I mention football-field summaries?

Yes — showing you triangulate DCF with comps signals the valuation judgment HL values.

Preparing for Houlihan Lokey's interview? Our 2027 Houlihan Lokey Online Assessment Exact Questions & Answers has practice questions and answers — $79 one-time, instant download.