Private Equity Interview Questions, Preparation and Tips Guide

Private Equity InterviewAcing Private Equity (PE) interviews is similar to how you would approach investment banking interviews.

The whole process is challenging from the beginning, both for the interviewee and the recruiter.

Usually, recruiters conduct 3 to 4 interview rounds but depending on the firm and requirements, there may be about 9 to 10 interview rounds. All kinds of tests are conducted which helps recruiters to assess whether you’ve the necessary skills and knowledge to join their PE firm.

In this article, FinanceWalk will guide you through tips for cracking PE interviews.

Breaking into PE Interviews – Preparation

The PE interview will generally consist of CV overviews, LBO modeling and case study analysis.

LBO modeling skills are tested in mid-cap to large-cap markets whereas small-cap markets generally suffice themselves with case study analysis or presentation of private investment.

Overall, what these firms are looking for is your business logic and commerciality of your business approach. If you can convince them of these two factors, you’ve the desired PE job.

The task is particularly troublesome for entry-level candidates due to a lack of experience and skills; however, at least they should try to prove themselves to possess the mind of an investor.

Before preparing yourself for the PE interview, you should be well versed about the firm in question. Cracking PE is tough and therefore, you don’t want to appear as a greenhorn in front of the interviewer. You should:

  • research about the firm
  • know its fund size
  • know some of its professionals
  • research their market presence and value
  • know their investment stages and procedures
  • find out about their investor base and nature of investment
  • learn about their past investments and analyse why those investments were good or not
  • be aware of the investment strategy employed by the firm

All these information will create questions in your mind. Write down those questions and during interview, take the opportunity to place them in front of the interviewer. This will prove your awareness about the PE firm and thus, enable them to judge your suitability with the firm in a better way. You can ask about their recent investments, their investment screening procedure and so on.

Breaking into PE Interviews – The D Day

Finally, the D-day has arrived and it’s natural to be nervous.

In this section, FinanceWalk underlines some important practical things which you should imbibe for better presentation and impact on the recruiters. These are:

  • reach for the interview at least 15 minutes ahead of scheduled time
  • maintain the interview schedule; avoid rescheduling
  • carry a folder with your documents and list of questions (as discussed earlier)
  • give a firm handshake during introduction and departure
  • don’t look down; look straight at the interviewer – maintain eye contact
  • be confident and speak everything with conviction
  • don’t ramble; structure your thoughts and speak
  • avoid aggressiveness, be polite and firm
  • maintain perfect body posture – sit straight, don’t slug

It is very essential for you to keep these pointers in mind.

Breaking into PE Interviews – CV Interview Round

This is the 1st stage which is basically about discussing your CV with the potential employer. Remember that whatever is mentioned on the CV can be picked up by the recruiter for further discussion. Therefore, keep a note of these pointers.

  • CV should define you. The CV shouldn’t be generic; it should be a valuable introduction and conversation holder. You should be aware of every point on the CV and be ready to discuss or explain anything related to it. For instance, if you’ve listed financial transaction skills, be ready to explain them. Spend 2-3 minutes giving an overview, not a second more.
  • Investment banking background people needs to explain. If you’re switching from the investment banking segment, be prepared to answer question on previous investment banking deals and how you aced them. Again, what the recruiter is trying to assess here is your business logic and credibility skills.
  • The reason for entering private equity will always be asked. Especially, if you’re switching from another segment. Practice this answer. You can’t tell a vaguely generic answer. The reason to switch or enter private equity should be convincing, and should match your interests, skills and experience given in CV.
  • The preference for choosing that particular firm should be clearly explained. It’s a very common but difficult to answer question. However, if you’ve done good research on the firm, it will be simple to answer.
  • Questions on private equity investment will arise. Recruiters are going to test your investment skills by asking which company you would like to invest in and why. You can either talk about the firm you’re interviewing for and explain why you would recommend investing in it or talk about some other company BUT be very accurate with data and statistics.
  • General knowledge will be tested. Recruiters may ask you to talk about any recent investment deal in the industry and your opinion on it. It is advised to follow finance news daily and choose a deal to talk about. Prepare well.
  • Your thoughts on the private equity industry will be tested. Again, this is something where they are looking for your opinions, that is, whether you have anything valuable opinion to contribute. They are not here to hire robots! They want a thinking mind and it is during such questions where you can make opinions count.
  • Your career perspective matters to them. Private equity firms are looking to hire people to be with them in the long-term. If asked where you see yourself five years from now, don’t forget to demonstrate your commitment and dedication towards the private equity industry.
  • Dealing with failures is important. This is a personal question designed to test your suitability or ‘fit’ within the firm. During such questions, remember to “be yourself”. Don’t fake answers, saying something foolish like you’ve never failed! You will be asked about strengths and weaknesses, your motivation levels and general working style. Respond honestly and with firmness.

The pointers and questions you read now depend entirely on your CV. Don’t mention anything on CV which you can’t explain.

Breaking Into PE Interviews – Case Studies / LBO Modeling

Either of the two will be discussed during interview. You move on to this round if the interviewer is really impressed by your CV and responses. Some questions asked in this stage are given below.

  • Your understanding of LBO modeling will be tested. Be well prepared. The best way to answer this is to pick an investment and explain its mechanics. You can either prepare this in advance or explain it on a sheet of paper at that time. Or, you may be asked to do a complete LBO modeling during interview. Time between an hour or three is usually given.
  • Difference between FCF and EBITDA will be queried. The private equity recruiters will test the understanding of these concepts and their relation with LBO. Keep basics clear and explain in simple terms.
  • Debt questions are common. You might be asked about debt on companies and you've to talk about business cash profiles and current debt markets.
  • Your strategy to attract targets will matter. Private equity firms are essential looking for people who is going to make money them and save their money. If you can convince them of this, the job is yours. Here you’ve to talk about how to identify targets and research about them. You've to talk about networking, attending conferences, cold calling and other strategies. You've to prove yourself as a good business manager.

Recommended Read: How Does Private Equity Work

These questions test your aptitude and as we mentioned in the beginning, don’t babble or get confused while answering. Be very specific and to-the-point while answering, and maintain a calm exterior.

Recommended Read: How to Become a Private Equity Analyst

Will You Fit in the Organisation?

They already have an idea whether you’ll ‘fit’ in the organisation or not from the CV interview round. Still, you may get invited to another interview round for this purpose. They will test your team playing abilities, strengths, weaknesses, communication skills and more.

In closing, private equity interview and hiring takes a lot of time when compared to getting recruited with investment banks or hedge funds. It can take weeks but don’t lose hope.

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2 thoughts on “Private Equity Interview Questions, Preparation and Tips Guide”

  1. sir ;
    i completed MBA in 2014 still i didn’t get any job bcz iam looking for only investment banking process . i want start my career in investment banking core but i don’t have any data regarding of IB process so that i want the to know the financial concepts clear information about the topics what is the main source collect this

    Thank you sir

    • Hi Sivananda,

      If you want to work in investment banking, acquire the skills mentioned on this page, update your resume and you’ll get relevant interview calls.

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