Preparing for An Interview at Private Equity Firm

Preparing for An Interview at Private Equity Firm
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A career in private equity calls for a high degree of expertise and dedication. Private equity firms look for candidates who are exceptionally talented, academically well-versed and possess knowledge in various sectors, research abilities, database tools, report preparation, and analytical skills.

Private equity (PE) firms invest a large number of funds in mature companies. They participate in stake holding, mentorship, advisory services, and increase the operational efficiency of the company during its ‘hold’ period. They get involved in fundraising, screening of potential investments, managing portfolio companies, and formulating an exit strategy. 

In PE interviews, they look for technical knowledge, transaction experience, knowledge about the firm, and cultural fit. This article will help you to prepare for an interview at PE firms.

How to prepare for an interview at PE firm?

The interview questions have four sections. As mentioned, they are subject knowledge, transaction experience, knowledge about the PE firm, and cultural fit.

Subject expertise

The questions revolve around your basic subject, including modeling, finance, and accounting. They may ask various types of questions on business models (– M&A model, discounted cash flow, LBO model), size of the market, fixed and varied costs, capital requirements, operational efficiency, customer satisfaction, management team, and culture.

The answers you give will be assessed on how you are updated about past, present, and future, the basis of models, the associated risks, and its improvement.

Transaction experience

Generally, PE firms prefer candidates who have experience in investment banking or attended internships during their Pre-MBA or Post-MBA period. They ask you to describe the deal you worked on. They expect you to elaborate the answer on the industry, business model, revenue, valuation, rationale, buyer’s and seller’s perspective, challenges faced and its solutions. They dig you deeper by asking in-depth questions so as to analyze your skill sets.

Getting into private equity jobs is indeed challenging.

Knowledge about the joining PE firm

This is a common question for any job interview. Most of the interviewers ask ‘why do you prefer our company?’. You should know something about the company you are giving the interview. ‘I am dedicated to the company’, ‘I want to work in your esteemed organization’, ‘I know your firm has a great reputation’, and, etc., kind of answers may not click well.

It is necessary to speak some of the specific answers. It is better to have a look at their website, understand their portfolio companies, their approach in dealings, track record, and say what interests you in that particular company. Be genuine and realistic while answering.

Read any founder’s or co-founders’ interviews published. Research in advance about the firm, their approach, portfolio companies, interviews, and jot down the main points that make you interesting and share them.

Cultural fit

The senior professionals at private equity look for candidates who have mastered soft-skills, gravitas, maturity, and communication skills as private equity qualifications. They may ask you questions that aim at assessing you personally with PE firm’s culture, how relaxed and organized you are, how likable you may be, how you get along with others, and your strong business sense.

In a nutshell

To summarize, you need to pass through a cut-throat competition to gain a career in private equity. Be prepared to stand out and beat the competition.

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