Would You Survive Private Equity Interviews?

Every year the private equity recruiting process seems to start earlier and earlier as funds jockey for position to snag the best candidates. This year, there were already cocktail events being held in late January for the top potential employees.

Investment banking analysts typically only have 6-8 months of experience at this time and have often barely been staffed on their first deal. However, to survive this recruiting process, they are expected to prepare for tricky private equity interview questions, all while working 80+ hour weeks and trying to duck out of work at odd times for informational interviews and “doctor appointments.”

Do you think you’d survive this rigorous process? Here are 8 initial steps to make sure that you give yourself the best possible chance:

First off, is your resume is up to par?

Make sure you are quantifying your accomplishments as much as possible and that you are highlighting the deals that helped you develop the skills that PE funds are looking for: complex financial modeling, presentations to senior management, investment acumen, among others.

Recruiters are the gatekeepers.

Within the first few months on the job, make sure you have already started developing relationships with the top PE recruiters. Go on coffee chats and informational interviews any chance you get.

Know the Industry.

Study the private equity industry and the deal logistics to make sure that you are comfortable displaying this knowledge in interviews.

Know Your Deals.

Make sure that you know every single number on your own transactions. I can’t emphasize this enough. If you don’t understand your own deals and the model you built inside and out, the PE professional interviewing you will lose interest fast.

Fit Questions Matter.

Don’t underestimate the importance of acing the behavioral questions. If you don’t prepare for questions like “Why private equity?”, “Why this PE fund?”, “What is an example of a time you were asked to do something unethical and what did you do?”, etc. you can end up in an awkward situation.

Models & Quick Math.

Practice quick IRR math & modeling tests (LBO, 3 statement, DCF, etc) & to be ready for the technical PE interview questions.

Investing Mindset.

Start thinking like an actual investor: What makes a good deal? A few traits: Stable cash flow, minimal working capital and capex requirements, non-cyclical industry, sustainable competitive advantage…which brings me to my final point:

Be Ready for Case Interviews.

If you are thrown a CIM (confidential information memorandum) profiling a company, are you going to be able to skim through the 50+ pages in 1 hour and formulate a logical thesis? Are you ready for an in depth case interview as if you are interviewing for one of the top consulting firms? If not, I suggest you practice!

While all of this sounds doable if you had all the time in the world on your hands, it’s extremely difficult to manage when you are working such long hours. Several years ago, WSO developed and released a private equity interview guide to help IB analysts and top consultants manage this process. You can read more about the PE guide here.

Although investment banking interview questions were challenging enough with brainteasers and trick questions, the private equity recruiting process is even more difficult. Try your best and remember to stay positive no matter what happens. Even if you don’t succeed in PE recruiting, you still have great exit opportunities to hedge funds, corporate finance or even an MBA.

Good Luck!