Private Equity Interview Process Explained

Private equity recruiting tends to be much more informal than banking or consulting, however there are some very common steps that most private equity firms take for interviews. A typical process in the UK (or Europe in general) is described below. For more detail on each step, please check our detailed posts on technical questions, case studies and psychometric tests.

The early rounds (first 1 or 2 interviews): psychometric tests, fit questions, mini case studies and random technical questions.

- Psychometric tests

These are numerical and verbal tests (most often SHL tests, examples here) designed to complete a first cut in the applicant pool. Anything between 30% and 50% of the applicants can be rejected at tis stage, sometimes more depending on the "pass" threshold. Sometimes, you will also be given a personality tests. Make sure to ask if you will need to take these tests as you will need some preparation.

- Fit and CV questions

These questions involve having to first introduce your background, walking the interviewer through your CV, and aceing questions like "why private Equity?" and "why our firm?". Needless to say you must have rehearsed this extremely well, as this is probably the most important question you will be asked in the interview.

Mini-case studies and investment cases

Usually, private equity firms like to give you small case studies to judge your business sense, see how well you understand how companies are run and to test your understanding of what drives return in an investment. This may consist of a SWOT analysis on a particular firm (very often one of their portfolio company), an investment rationale analysis or asking your opinion on spefic industries or firms. This could be as simple as "do you think an airline would be a good investment?" or more detailed questions with supporting data and charts that you will have to analyse. Very often, if you are a banker and have worked on a deal, they will ask you your views on the deal and whether you think it made sense.

- Technical questions

These are accounting or LBO questions; nothing too difficult for a seasoned investment banking analyst, but you need to be ready to discuss how you build an LBO, estimating IRRs and discuss various types of debt instruments without hesitation.

Later Rounds (if you passed the early rounds): full blown LBO Modelling Test or Case Study test

This often involves a full blown LBO modelling exercise and investment case analysis based on an Information Memorandum or a case study that the private equity firm will provide you with. You will be given a laptop or be in a room with a desktop for a couple of hours (one to four hours depending on the firm) to prepare a model and some slides based on the information provided. You will then need to present your results to senior members of the firm. Again, if you are an experienced analyst and if you get some LBO modelling practice this should not be too difficult. Before the interview, make sure you practice creating simple LBO models from scratch. You should be able to pull together a simple LBO model in less than one hour starting from a blank page by making reasonable assumptions.

Final Round: the likeability test

Most firms will do a dinner or drinks with the most senior partners in the firm in the final stages (with the CEO himself or the country head), so that you can get a final stamp of approval. Anything can be asked: some firms may try to drill down on your perceived weaknesses and ask more fit questions, you may just have a pleasant, simple chat (but don't be fooled, every answer will be scrutinised) or you may be asked a lot of very personal questions. At this point it will all come down to your personality, your career goals, and how likeable you are as a person.

In conclusion, as a rule of thumb smaller firms tend to be less technical and the interviews largely based on fit and personality, while larger firms (Blackstone, Apax, etc.) tend to spend much more time testing your technical skills. But most firms will require you to meet everybody or at least 90% of the people in the fund, so be prepared for a very lengthy process that may last several months -and expect at least three months from start to finish.