Training · PE-1 · Lesson 07 of 08
The private equity interview
The rule
Expect an LBO on a whiteboard, a paper model, and a firm question about whether you would invest. The interview tests judgement under an incomplete dataset.
Interview formats
PE interviews mix fit, technical, deal discussion, case study and modelling test. On-cycle processes can run from first call to offer within a weekend. Off-cycle processes are slower and often include a take-home case.
Walking through your deals
Expect detailed questions on every deal on your resume. Prepare a structured answer for each: company and rationale, valuation and multiple, financing, your role, outcome and your view on whether it was a good investment.
- ·Would you have invested at that price? Why or why not?
- ·What were the key diligence risks?
- ·How would you have structured the debt?
The paper LBO
Solve a simple LBO aloud in a few minutes, with round numbers. State your steps clearly.
- EBITDA $50m, entry 8x
- EV $400m
- 60% debt
- $240m debt, $160m equity
- EBITDA grows to $65m in 5 years
- Exit at 8x = $520m
- Debt paid down to $140m
- Exit equity $380m
- Return
- 2.4x / ≈ 19% IRR
Investment judgement questions
'Pitch me a company you would buy' is common. Choose a business that fits buyout criteria, explain why it is a good business, outline the value-creation plan and how you'd exit. Be equally ready to say why you would not invest in a popular company.
Fit questions
Why PE? Why this firm? Why now rather than after more banking? Answers should show you want to make investment decisions and have thought about the firm's strategy specifically. Firms also ask about long-term goals — they want people who will stay through promotion.
Hold onto this
- ·Be ready to value a business in ten minutes with three assumptions stated aloud.
- ·Have an opinion on a sector and a reason you would not touch a deal.
- ·Know your fund's recent deals well enough to disagree with one politely.
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Education, not financial advice. Figures may be simplified for illustration.