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35 Private Equity Interview Questions (With Sample Answers)

This document provides an overview of common interview questions asked of candidates applying for private equity roles. It lists 35 questions divided into 10 general questions, 10 about background and experience, 10 that are more in-depth about private equity terms and processes, and 5 example questions with sample answers. The questions assess candidates' knowledge of the firm, private equity industry, financial modeling skills, previous work experiences, and ability to explain key private equity concepts.

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Japhet Charles Japhet Munnah
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1K views5 pages

35 Private Equity Interview Questions (With Sample Answers)

This document provides an overview of common interview questions asked of candidates applying for private equity roles. It lists 35 questions divided into 10 general questions, 10 about background and experience, 10 that are more in-depth about private equity terms and processes, and 5 example questions with sample answers. The questions assess candidates' knowledge of the firm, private equity industry, financial modeling skills, previous work experiences, and ability to explain key private equity concepts.

Uploaded by

Japhet Charles Japhet Munnah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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35 Private Equity Interview Questions (With Sample Answers)

Taking the time to review popular questions employers ask job


candidates in your industry can help you develop confident answers and
improve your chances of being hired. In private equity, there are several
key terms and topics that hiring managers may ask you to assess your
knowledge and experience. If you're preparing to interview for a private
equity role, then you can benefit from reviewing some of these important
topics.

In this article, we list 35 of the most common private equity interview


questions, discuss what hiring managers look for in job candidates and
share some examples of professional answers to help you craft your own.

10 general private equity questions

Here are some general questions a hiring manager may ask you during
an interview for a private equity position:

1. What do you know about our firm and our portfolio companies?
2. Why are you interested in working in private equity?
3. What are your career goals for the next five years?
4. How do you handle stress in the workplace?
5. What types of private equity investing do you enjoy the most?
6. What motivates you to perform your best work?
7. Do you have any questions about our firm or this role?
8. What are your salary expectations?
9. What makes you the best candidate for this position?
10. How do you think our private equity firm differs from our
competitors?

10 background and experience questions

Potential employers may ask questions about your work experience and
background to determine whether you have the skills and qualifications
needed to be successful in a private equity role. Here are some common
questions you may encounter throughout your interview:

1. Can you describe the biggest investment deal on which you've


worked?
2. Tell me about the most challenging leveraged buyout (LBO) model
on which you worked. What steps did you take to accomplish it?
3. What types of consulting projects have you worked on in your
previous roles?
4. How much experience do you have with different types of
investment banking transactions?
5. How would your former employers describe you?
6. Can you tell me about your daily job duties in your most recent
private equity position?
7. How would you rate your financial modeling skills?
8. Based on your previous experience, what challenges do you expect
to face in this role?
9. What do you enjoy most about working in private equity?
10. What's your biggest professional accomplishment to date?

10 in-depth questions

Hiring managers may ask you questions about specific terms and
processes related to working in a private equity role to determine
whether you're a good fit for their company. Here are some examples of
in-depth questions you may encounter during your interview:

1. Can you explain what an LBO is?


2. What steps would you take to build an LBO model?
3. How would you achieve EBITDA growth in this role?
4. What qualities do you think help a business become an ideal LBO
candidate?
5. Can you explain what industry cyclicality is?
6. How would you use customer concentration to assess a potential
investment opportunity?
7. Can you list the levers a private equity investor needs to increase
the IRR on one of their investments?
8. Can you explain what rollover equity is and whether you view this
as a positive or a negative sign?
9. When might a private equity firm use dividend recapitalization?
10. What are your thoughts on payment in kind (PIK) interest?

5 interview questions with sample answers

Here are five interview questions related to a private equity role that a
hiring manager may ask you and examples of how to answer them
successfully:

1. What are three strengths you can bring to our private equity firm?

Hiring managers may ask this question to determine whether you


understand what the requirements of the position are. Consider what
skills the employer listed in the job description and then select three
relevant strengths that can help you excel in this job role.

Example answer: "Three of my biggest strengths are collaboration, critical


thinking and data modeling. In my current role, I use my collaboration skills
to work closely with the CFO and other team members to develop accurate
revenue forecasts. My ability to think through situations critically and build
accurate data models also helps me analyze information to develop smart
business suggestions."
2. If you noticed that a potential investment opportunity had a high employee
churn rate at their company, what would you do?

Potential employers may ask you this question to determine what type of
risks you're comfortable with taking. Focus on explaining what a high
employee churn rate could mean and why it's important to understand
the potential long-term effects.
Example answer: "If I noticed a company had a high employee churn rate,
I'd be very cautious about investing in them. Typically, a high employee churn
rate is a sign of an underlying issue with a company's organizational
structure. It also often leads to a high customer churn rate, which can result
in revenue challenges and make it more difficult for the company to make
interest payments on time."

3. When you assess the financial health of a borrower, what types of credit ratios
do you look for in them?

Hiring managers may ask this question to get a better understanding of


how you approach financial investments. Explain the specific metrics you
look for and how you use them to make important decisions.

Example answer: "I carefully examine both leverage ratios and interest


coverage ratios. Leverage ratios are important because they demonstrate
how much debt a company has compared to its cash flow. Analyzing interest
coverage ratios is also helpful because it helps me assess whether a company
can afford to make their interest payments with the cash flow they have."
4. How do you stay informed about changes in the private equity industry?

Interviewers might ask this question to assess how passionate you are
about working in private equity and whether you're open to learning new
things. List several reputable sources you use to stay updated about
changes in the industry.

Example answer: "I listen to several private equity podcasts each week,


including Future Finance 360 and Private Equity Today. I'm also subscribed to
multiple industry newsletters that I enjoy reading in the morning to start my
day. At least once a month, I attend a networking event with other
professionals in the industry which helps me learn more about the
investments they're making and upcoming trends."
5. If our private equity firm needed to exit an investment, what strategies would
you explore?

Hiring managers may ask this question to assess your critical thinking
capabilities and private equity experience. Explain your thought process
as you list each potential strategy.

Example answer: "There are several strategies we could implement to help


your firm monetize its investment. The first option would be selling directly to
a strategic buyer. In my experience, these types of sales are often the most
convenient and can ensure we receive the highest evaluation. The next option
I would pursue is a secondary buyout, where another financial buyer could
purchase our synergies. Finally, since your firm is quite large, I'd consider
undergoing an initial public offering (IPO) to sell shares through the public

market."

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