Even though the industry has been going through some tough times, it’s still a lucrative place to work. Salaries and bonuses are good, yes, but the real money to be made in the industry is in carried interest.
This is a mechanism that rewards top PE managers (usually MDs or Partners who’ve worked on the deal) a portion of the increase in equity that they’ve presided over. At top funds, this can reach the tens of millions of dollars over the roughly five-year lifecycle of a deal.
It’s very, very difficult to get into private equity, however. Competition is insanely tough – PE firms tend to recruit from top investment banking analyst programs, and very few offer graduate opportunities. Those that do, such as Blackstone, have acceptance rates of less than 0.6%. That’s even lower than Goldman Sachs, which has an acceptance rate of 0.8%.
As such, if you’re interviewing at a private equity firm, you should be very, very prepared. And that means preparing for the questions you’ll be asked – a list of which we’ve assembled here for you, from diverse sources including Glassdoor, Wall Street Oasis, and Reddit, among others.
If you make it through these questions, you should also prepare for the case study. This functions as a private equity deal in miniature, with candidates being given some established financial information about a firm and being asked whether or not to invest in it. It’s a crucial part of the recruitment process and can make or break your application once you get to it. We have a whole article about the case study process here.
General private equity interview questions
What is private equity?
Why do you want to work in private equity?
Why do you not want to work in [banking/hedge funds/asset management/etc.]
Why do you want to work at [firm]?
Why do you want to work in [this sector team]?
Walk me through your resume.
Why should we consider you?
What is your biggest strength?
What’s your career plan?
What technical projects have you done in the past?
What other roles are you applying to?
Tell us about a time you failed.
Tell us about yourself.
What do you like to do outside of work?
Do you consider yourself a risk-taker?
What’s an industry you’d invest in right now? Why?
How do private equity firms add value to portfolio companies?
What make a good private equity associate?
What are you currently reading?
Is there anything you’d like to ask us?
Technical private equity interview questions
How do you model a CLO waterfall?
Calculate the PP [Purchase Price] based on cap rate [capitalization rate] and NOI [Net Operating Income].
What KPIs [Key Performance Indicators] would you do DD [Due Diligence] on when investing in commercial real estate?
If a company is targeting a 20% IRR [Internal Rate of Return] in a five year period, assuming “x” amount of initial sponsor equity and “y” dollars of EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization] / net debt at exit, what is the required exit multiple?
Why would two companies with identical statements be valued differently?
What are the three statements?
How do the three statements link together?
Why are the three statements insufficient to value a company?
How does an increase or decrease in depreciation affect the statements?
What is deferred revenue? How does its change affect the three statements?
Walk me through a DCF [Discounted Cash Flow].
Walk me through an LBO [Leveraged Buyout] model.
Why would you use leverage to buy a company?
How would you value your local coffee shop?
How do you calculate free cash flow?
What is vested interest? Why is it important?
Blackstone interview questions
What is a recent Blackstone deal that you found interesting?
Tell us about a macro-economic event that has impacted the alternative asset management industry.
What do you know about Blackstone?
What is your biggest strength, and how does it lend itself to Blackstone?
If you were given 1 million dollars, what would you do with the money?
KKR & Co. interview questions
What single investment would you make? Why?
Which of KKR’s values most resonate with you?
What have you done in your career that is both international and geopolitical?
Is it important to be the smartest person in the room?
Talk about a time you faced a setback.
Carlyle Group interview questions
Why Carlyle?
What asset class interests you the most?
Where do you see yourself in five years?
Explain Private Equity the way you would to an alien.
What is the difference between Venture Capital and Private Equity?
Apollo Global Management interview questions
How do you manage conflicting priorities?
How do you approach deadlines?
What are you currently working on?
How do you apply an investment philosophy in deal analysis?
How do you maintain work-life balance?
Bain Capital interview questions
What can you say about yourself that isn’t on your resume?
What DCF model would you use in [deal]?
Describe yourself in one word.
What is a weakness of yours?
Tell us about a time you made a mistake.
