Private Equity Job: A Definitive Guide to Ace Your Interviews

Private equity interviews

With the global economy resurrecting, private equity analyst jobs again seem to be the flavour of the season!

A lot of students have come to me recently and asked me how they can get jobs with leading global private equity firms.

Well, the obvious answer to this is to get a good qualification, have a good professional resume, have good networking skills, and prepare well for your interview.

I have already written about how and which qualifications you should have to get a good private equity associate job and how to make a good resume. This time I am going to write and tell you how to ace your private equity interviews and hiring.

If you ask me, private equity interviews are quite similar to investment banking interviews.

You would typically have an initial telephonic screening call, then a face to face personal interview followed by multiple other face to face interviews with key personnel at the private equity firm.

But most times private equity marketing selection process is a tad longer than a typical investment banking interviews and hiring process.

Don’t be concerned if the interview selection process goes on for months. Also, you will be tested on various private equity marketing case studies, financial techniques, various leveraging models and all the deals and projects that you have worked on so far in your career.

Typically Growth equity are smaller than banks and hence can afford to spend more time in the selection of their candidates.

So what are the various questions that you can expect in your private equity analyst interview?

If you ask me, private equity firms are very particular about the below 3 points:

  • Will you be able to make big money for them?
  • Will you be able to save money for them?
  • Will you be able to improve their processes and make them better?

Remember you are not going to an NGO for an interview. It’s the big bad world of finance. It is always going to be all about money!

Then your interview is going to be divided into three key segments.

The first segment will test you on your technical expertise, the second will test you on your experience and in the third segment the interviewer will try to see if you really fit their organization and their scheme of things.

Now let me give you some tips on how to handle yourself in these three segments of the interview.

During the First Technical Questions Segment

If you ask me the key differences in the technical questions from an investment banking interview will be:

  1. In a private equity associate interview, the questions will be a bit more unconventional and may need more than just memorisation.
  2. Many times the technical questions are tied to your work experience or deals that you may have worked on, so you need to know those in-depth.

During the Second Work Experience Segment

This segment is going to be the most important for you, as it’s your chance to show that you can earn money for the firm.

So you have to be cautious about which deals you talk about.

Try to talk about any unusual deals that you might have worked on like divestitures or a distressed M&A transaction.

You can also talk about a transaction where you may have contributed significantly.

You need not choose to talk about only closed deals. But do remember to make them nameless (“a cement company”) if the deal is not yet public.

An important thing to remember is that you must talk about your deals in the same way that you have described them in your resume.

You should provide a brief description which provides the key deal parameters, and then an explanation of the 2-3 key pieces of analysis that you had established.

For example:

“One deal I worked on was the USD 50bn acquisition of a cement company by a consortium of private equity firms. The company had revenues of around USD 5bn and an EBITDA of USD 2bn and was a leader in the American market.”

See how we have mentioned the deal size, revenue and EBITDAof the company as well as the core of the deal.

So what do you do if you don’t have any deal experience?

What you need to do is to find close alternatives– for candidates who are from the consulting background; it could be a due diligence assignment or any kind of operating improvement within an organization.

If you come from a corporate or business development background, discuss about partnership contracts or any type of long-term deal that needed noteworthy analysis.

Private Equity Case Studies

One of the most important elements of a private equity interview will be case studies.

Typically you could get an offering memorandum and financial statements of a company. You could be then asked to create an ‘invest or not to invest’scenario and augment it with a small PowerPoint presentation and an Excel model.

If you have a scenario like this, remember the following key points:

  • Make sure that you get to a conclusion one way or the other
  • Create an executive summary slide at the start of your PPT deck along with your investment analyst decision and augment it up with 2-3 main points. Specify the various risks, justifying factors and probable earnings
  • Restrict your PPT to a maximum of 7-8 slides
  • Make sure the PPT is formatted well and reads well

Some private equity firms could ask you to do this on the spot and give you very limited time while others could give you more time (a few days to a week) to solve this case study.

The other things that you need to remember are:

  • Be ready with your deal List: Create a list of all the deals that you have worked on and choose the best one or two best deals to showcase in your interviews
  • Review Your Deals: Revise the deal, financial details, debt and equity, and most prominently how your contribution resulted in a higher or lower price
  • Rehearse making simple Leveraged Buy Out (LBO) models as there is a big chance that you might be asked questions on this

How to approach LBO modeling questions

Some private equity firms could give you financial modeling exercises and could ask you to create an LBO model during your interview.

The important thing to remember here is to keep your models as simple as possible. Remember the KISS principle that I have explained many times in my previous articles. Don’t try to be a superhero.

You will be under a lot of time pressure, so do not think of a lot of scenarios. Remember to keep it simple.

Further to comprehending the setup of the interview, questions in the interview, various case studies that you will be asked to solve, and financial modeling, remember to make sure that you do both “selling” and “buying.”

While you surely need to sell your skills as much as possible, you also need to conduct research on the private equity firm that you are giving the interview with. If you think that there’s any kind of misfit, bail out at the beginning itself.

During the Last“Does He Fit into Our Organization” Segment

In this segment you will be tested on aspects such as attitude, ability to work in a team, attention to detail, strengths, as well as weaknesses, hobbies and the other typical “does he fit into our organization” questions.

For getting a job with a private equity firm, you need to stress on the fact as to why you want to be an investor or a buyer rather than a consultant.

So you will be required to talk about how you can add more value, how you are capable of improving processes of companies, showcase your responsible nature and show how hardworking you are.

How Much Time Will It Take for You to Get That Private Equity Job?

As I have stated earlier in this article, a private equity interview time-frame is typically much lengthier as compared to candidate selection time frames with investment analysts or hedge funds as the f is very niche.

Medium-sized and small equity firms typically take a lot of time and could put you through numerous rounds of interviews (both telephonic as well as face to face), lunches, dinners and coffees before they actually hire you.

There are definitely some exceptions like large private equity firms such as Blackstone and KKR who typically take quick decisions and their selection usually involves weeks instead of months.

So do not give up so soon if the selection process is taking time. All’s not lost. Probably the private equity firm is in the last stage of selection.

Typically if you ask me, private equity firms start hiring in the period of March to April every year and usually finish up before the summer.

I have tried my best to explain above what you should do in your private equity interview to get that most coveted job.

I hope you find this article helpful. Do let me know in case you have any suggestions or queries.

The Private Equity Interview Process

The Private Equity Interview Process

Private Equity Job: A Definitive Guide to Ace Your Interviews 1
Private Equity Job: A Definitive Guide to Ace Your Interviews 2
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