Private Equity Interview Questions

Private Equity interviews are notoriously difficult and will contain a mix of fit questions, technical questions, mini cases and investment pitches and brainteasers. Below are some of the questions that you would typically get in a Private Equity Interview

Qualifications, Motivations and Background

- Why are you interested in Private Equity, why our firm?

- Why won't you go to a Hedge Fund / Startup / Portfolio company?

Business Acumen / Ability to think like an investor

- What do you think are compelling industry trends for a potential investment?

- How do you source Investment Opportunities?

- If I wanted to protect my downside, how would I structure an investment

- Have you looked at our website? Which investment do you like the most/least? Why?

- If you can only have one financial statement which one would you choose? Why? What if you could have 2? Why?

- An investment banker gives you a deal book, how would you verify the information in it? 

- What should we buy next? What kind of IRR would we make? (provide high level financials/LBO model workings)

Technical Questions

- You buy a business at 8.0x EBITDA multiple and you believe you can sell in 5 years time at the same 8.0x EBITDA multiple. Your required return rate is 20%/year. Assume that you can get 4x EBITDA of debt and that half gets repaid after 5 years. How much do you need to grow EBITDA by in this time?

- You buy a company at 10x EBITDA. It has EBITDA of £100 in yr 1, and £150 in yr 5: what kind of multiple should we exit at to get at least 25% IRR

- What are the different levers you can use to improve IRRs?

- What is advantage of a vendor loan

Mini cases

- Would you invest in an airline? Why and why not?

You will find detailed answers to the above questions in our Private Equity Interview Guide, as well as more practice questions. The link to the guide is here