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Which interview questions do private equity funds ask?

Everyone wants a job in private equity.

Competition is tough, though. Last we checked, Blackstone – one of the few private equity firms to offer a graduate program – had an acceptance rate of 0.6%, which is even lower than Goldman Sachs, which accepts a practically populist 1.27% of those who apply.

Private equity attracts a lot of attention for a reason. You get paid a lot of money, in terms of salary, bonus, and the mythical carried interest. At a top PE fund, this can be in the tens of millions over the course of an investment’s lifecycle. You also work less than in banking, although hedge funds beat both.

If you want to work in private equity, you'll need to make it through the notoriously difficult private equity interview. We spoke to Kévin Romanteau, a former investment banking analyst with Citi in EMEA and author of a book on banking careers, to understand the main questions to expect in private equity interviews. These are the questions he highlighted:

General questions

Why do you want to work in Private Equity?

Why our firm?

What from your previous experience makes you a good fit for our firm?

Which of our sectors are you most interested in?

What characteristics do you think are needed to be a successful private equity professional?

What would your previous boss say if I asked him/her where you needed to improve?

Are you risk-averse or risk-seeking?

Under what conditions do you seek risk the most and why?

What do you like to do in your spare time?

Deal-specific questions

Tell me about a deal you participated in in your last role and discuss the investment thesis.

- Do you think it was a good deal?

- Did the acquirer overpay?

- Discuss the synergies of the investment?

Tell me about one of our investments that you do/don’t like and why?

What sector/company should we be considering at the moment?

- What are the benefits of making this investment?

- What are the risks?

- How would you structure the deal?

- How would you incentivize the management team?

What are the pros and cons of using mezzanine debt to finance a transaction?

- In which cases will you consider it?

- What considerations should I be taking into account?

Technical questions

What makes a good LBO candidate?

Walk me through the mechanics of an LBO model.

Walk me through the calculation of free cash flow.

How do you model in PIK notes?

What three questions would you ask the CEO of a company you were looking to invest in?

How would you decide what amount of leverage to use in building a company’s capital structure?

What do you think lenders care most about when evaluating a capital structure?

What are some of the reasons EBITDA multiples might be different across industries?

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Have a confidential story, tip, or comment you’d like to share? Contact: Zeno.Toulon@efinancialcareers.com in the first instance.

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AUTHORZeno Toulon

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