This article was written by an OfficeHours Coach/Content Contributor with the following profile — Target Undergrad, Megafund Analyst, Megafund Associate Role, Target Business School, currently a Public Equity Analyst.
For better or worse, the mad dash of on-cycle private equity recruiting often occurs over a matter of mere days. In that time, you may have one singular thirty-minute opportunity to make a good impression on the firm of your dreams.
Depending on how that goes, you may be selected to advance to later rounds or eliminated with the door to that job potentially shut forever. Given the density with which firms pack interviews into a short time period, you may have the opportunity to interview with only a handful of firms at most.
Like it or not, the truth is that years of preparation to get into private equity – getting the best grades in undergraduate studies, padding your resume with extracurriculars, landing that prestigious banking job – all come down to these crucial interviews and it is incumbent on you to do the right preparation ahead of time to maximize your odds of success. Of course, there are opportunities to break into private equity through off-cycle or non-traditional paths, but statistically speaking your best odds to land one of these highly desired roles is to do so via on-cycle recruiting.
That begs the question: what can you do ahead of time to make sure you are as prepared as possible?
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As table stakes, you’ll want to ensure that you are rock solid with your technicals. That covers the full gamut from basic accounting (walk me through how ten dollars of depreciation impacts the three financial statements) to more advanced valuation and leveraged buyout questions. Unlike in your banking interviews, interviewers in private equity will probe to see how much you understand beyond what online guides are telling you to regurgitate. How do you react to a curveball question you haven’t seen before? Do you really understand the linkages between the financial statements, or did you just memorize the answer to the usual questions?
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To maximize your chances for success, make sure you are practicing your mastery of technical concepts. This means understanding the concepts and their applications rather than rote memorization of long question lists. Practice your Excel modeling and paper LBO work until it becomes second nature, and realize that it is much more difficult to do this sort of work in a high-pressure environment where a senior private equity professional is watching your work, or you have a short timer before you have to turn in a deliverable work product.
All that aside, you should assume that all of your peers will also be locked in on their technical preparation. Correctly handling most or all of your technical questions will never get you the job, but making serious missteps here will have you eliminated very quickly.
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One way to do this is to stay up to date on the recent transactions that your target firm has executed. If you can, find out as much as possible about their investment theses on these deals (such as by looking at the CIM for the acquisition financing) and try to contextualize that in the context of the firm’s stated investment strategy. To the extent you’re able to fold detail from these things into your interview responses, you’ll go a long way to showing you are capable of differentiated research and that you took initiative to set yourself apart from the pack.
Lastly, you would be well served to take a holistic look at the private market as a whole to understand how the market environment is impacting the firm you are interviewing for. For example, you may be an M&A banker, but private equity activity since the middle of 2022 has very much been impacted by leveraged finance market conditions. With many hung deals on bank balance sheets, there is little appetite for banks to participate in the broadly syndicated committed financings necessary to support robust LBO activity. Even if leveraged finance is not your specialty, it will be important to be fluent in these topics so that you can speak intelligently during your interviews. Beyond that, you should have an opinion on what your firm can do given that the firm is still responsible for deploying LP capital – should they look to private credit, or consider over-equitizing deals with the expectation of refinancing when the market improves? Whatever you suggest, showing that you can “talk the talk” like a true private equity professional is an important quality.
Entry-level associate roles are the most surefire way to break into the closely guarded private equity industry. Given the limited chances available to secure these seats, make sure you do everything you can to diligently prepare and put your best foot forward on interview day. Good luck!
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