Given how competitive the market is these days for securing a job in private equity, preparing to master the private equity interview can be intimidating. Many young professionals place extreme pressure on themselves to perform well in these interviews to land a position at their dream firms, but they often don’t have the tools to alleviate this stress and still succeed. While many people think that the technical questions are more important to focus on for private equity interviews, failing to master some of the most important behavioral questions will have a greater effect on jeopardizing your ability to secure one of these roles. Here are a few key tips and strategies for success in order to decrease your stress and adequately prepare for the important behavioral questions that will come up in private equity interviews.
Sell your story
When I was interviewing for my first roles in finance, I was often told by older mentors that your “story” is the most important question to nail in any interview. Since it is usually the first question the interviewer will ask you, either by asking “Tell me about yourself” or “Walk me through your resume and/or experiences,” you can either grab the interviewer’s attention right away by having an engaging answer or lose their interest in you entirely by rambling or not having a compelling story as to why you are interviewing for private equity. Having a great story can set a positive tone for the rest of the interview and leave your interviewer with the feeling that you have the relevant skills for the job and could fit in with the team.
The format that I recommend using is the following:
- The Beginning: Start with the city you’re from, anything notable or interesting about your upbringing, and where you went to college / what you majored in (and any notable college activities you’re involved with, like athletics or an investment club) – the interviewer might be able to relate to your life experiences, and sharing these details make you more “human” and likable.
- The Spark: Share what first got you interested in finance, and more specifically, investing or private equity. This can be an internship you had in college, experiences from family members or friends, or a variety of other things. Dig deep here to understand what event(s) got you interested in this industry.
- Growing Interest: Take the interviewer through the professional and/or extracurricular path you took to get to your current job. Start with your earliest relevant experience (college internship, investment club, research, etc.) and talk about how it grew your interest in finance or private equity experience (college internship, investment club, research, etc.) and talk about how it grew your interest in finance or private equity. Talk about any deal work you’ve done at your current job and what you’ve learned from that.
- The Future and Why You’re Here: At the end of the answer, you want to combine the prior investing experience you’ve mentioned with reasons why it will apply to a job in private equity and why you want to make this move now. You don’t have to get into the whole “why PE” or “why our firm” answer, but you can hint at it so that the interviewer can ask follow-up questions.
In crafting your answer, try not to go over 90 seconds total, or you could lose the interview’s focus or risk rambling for too long. If the interviewer wants to learn more about things you mentioned, they’ll ask, or you can try to bring it up in other questions later on in the interview. Remember, for this question, practice makes perfect! You should script and practice this answer extensively and try it out on friends and mentors to get feedback on your presentation.
Understand the basics of private equity and fund strategy.
In crafting your answers for “Why PE” or “Why our firm”, which are the next two most important questions in a private equity interview after the story, you will need to gain a good understanding of the basics of private equity and the strategy of the fund you are interviewing with.
For the “why PE” question, do some reading on what private equity professionals actually do on a day-to-day basis. Does creating presentations, working on financial models, and presenting to an investment committee about potential new investments sound interesting to you, and do you have applicable skills from prior job experiences that you can apply to these responsibilities? If you work in banking, you can use this opportunity to speak to your deal experience and how you’ve run a buyside or sellside process, giving you a better understanding of a junior team member’s role at the private equity firm. You can talk about models you’ve worked on or marketing materials you’ve put together (teaser, CIM, management presentation, etc.). Lastly, you will want to speak about why you want to be an investor since it’s very different from being a banker or advisor. Have you been investing on your own? Do you follow industries or companies that you think would make great investments, and why? Do you like the idea of creating value for companies through portfolio management and taking on a more active role in the company’s growth trajectory? Think about what genuinely applies to you and how you can draw on your experiences.
For the “why our firm” question, read up on the firm on their website, LinkedIn, and general Google. You should also know generally what industries they invest in, what geographies they invest in, what types of companies they invest in (from an earlier stage to more mature), what risk/return profile they target with their investments), typical check size, and what companies are already in the portfolio. You can speak to any of these aspects that interest you, and speaking to any companies in the existing portfolio shows your interviewer that you have done your homework. Lastly, you can speak to anyone you’ve spoken to at the firm or any impressions you have of them to talk about why you think you like the culture at the firm and how you would fit in. For example, if the fund is very international and you bring a diversity of experience from studying abroad in a country they invest in, that could be an interesting tidbit you bring in to separate yourself from the crowd.
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