The key to landing your dream private equity role is preparation. As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” For private equity interviews, your preparation should be focused on your 1) deal experience, 2) modeling experience, 3) technicals, and 4) behaviorals, most specifically, your story. Here are some tips and best practices to help you prepare for these four key parts of your private equity interview.
Reviewing Deal and Work Experience
Coming from investment banking, one of the first items interviewers will look for on your resume is deal/work experience. Deal experience is one of the most important sections of your private equity interview to prepare for in-depth. Interviewers want to understand both what your role was in the deal process and how that experience is applicable to private equity.
For defining your role on the deal, make sure to refresh on what specific tasks you performed for your team. For a sellside deal, you could include your work on the investor/pitch decks, managing the data room and diligence requests, helping management respond to diligence requests, or working on the model and valuation. For a buyside deal, you could include work around helping your clients with industry and company diligence, pro forma company modeling, accretion/dilution, or LBO math.
If you are a candidate with limited live or closed deal experience, feel free to talk about potential ongoing deals (while remaining compliant with confidentiality) or pitch decks you have worked on. Specifically for pitch deck work, associates and analysts can have a larger role than on live deals. These projects can be a good way to show how you stepped on the modeling, research, or pitch deck-building process. For these types of projects, you want to show the interviewer you can drive output yourself and think critically about companies.
Beyond just the tasks you have performed on deals, interviewers want to hear what your thoughts are on deals, whether they were smart investments or not, and why. With this question, interviewers are trying to understand if you can think like an investor. For M&A deals, outline the strategic rationale for the deal (why the acquirer said they wanted to do the deal), any accretion/dilution math, revenue or cost synergies, etc. For private equity deals, outline whether or not you think the target is a good business, what are the key performance indicators (KPIs) of the target, what the projected LBO returns are, etc. For both types of deals, make sure to have a view on valuation, whether the acquirer paid too much for the company or if they got a good deal, and why? Remember, you do not have to agree with the acquirer’s decision, just make sure to have your own independent thoughts and reasoning to back up your claim. Interviewers want to see you can do more than just follow the directions of your clients.
Showcasing Real World Modeling Experience
If you have a wealth of experience on live deals across various investment banking tasks, the best tasks to focus on for your private equity interview are around financial modeling. In private equity, LBO models can be an associate’s full-time job. Describe exactly what areas of the model you built and helped work on, and how you may have advised the acquirer or target to model certain line items or valuation methodologies differently. Further, make sure to outline any modeling experience you have using accretion/dilution math or LBO models. These models tend to be more complicated than DCFs or comparable analyses and can help showcase you are truly a strong modeler. The last thing private equity professionals want to worry about is their associates’ ability to create an accurate model for an investment target.
When discussing your modeling experience with companies, make sure to outline where you helped the company you were advising either build or update their model. This can be in the form of changing their projections and assumptions, improving the layout and usability of a company’s model, or adding additional analysis that your client wants to see. What really separates good candidates from great candidates is their ability to prove they can make intelligent and dynamic models for companies, rather than just to be given a model by the company.
Be Sharp on your Technicals
After preparing your deal and modeling experience, the technicals are one of the most important parts of the interview, especially for initial rounds. While later rounds tend to be more behavioral-focused, you will not get there without strong technicals early on in the process. With all of the resources and preparation tools out there, being sharp on your technicals has become table stakes to moving beyond the initial rounds.
The best way to prepare your technicals is to follow and review interview guides. OfficeHours provides extensive technical guides and resources to help you prepare for any technical question you may receive. Make sure to review not only private equity and LBO questions but also basic accounting and finance topics. Interviewers like to see you have a strong fundamental knowledge of accounting and finance rather than the ability to just memorize some of the most commonly asked questions.
One of the most important technical parts of the interview process is the LBO. As a private equity associate, you will be building and refining LBO models all day, every day. Just like with the other technicals, the best way to prepare for the LBO questions is through studying and reviewing interview guides and doing mock case studies.
Create Your Story for Why You Want to Be an Investor
Even the smartest and most technically prepared candidates can have trouble landing a private equity job if they do not have their “story” down. Your story explains to your interviewer why YOU want to be a private equity investor. They do not want cookie-cutter answers, they want to know why you specifically want to work in this field and why it excites you.
To help form this answer, draw inspiration from two areas. The first is your life experiences. Did you join an investment club in college or high school and were hooked? Did you do any of your own investing? How does putting money to work make you feel? Excited? Energized? Do you like working in teams on projects with high-stakes outcomes? The second is through networking with private equity professionals. Learning about others’ experiences in the industry can help you draw parallels to your own work and life experiences.
Practice, Practice, Practice
As with anything in life, the only way you get good at something is through practice. Practice with your colleagues at your current job. Ask your bosses to practice with you as well, as they may be better at poking holes in your responses. Work with a coach to help you practice and do mock interviews.
Are you preparing for the buyside? Schedule a call now with our top coaches or submit your application directly here and we’ll be in touch! Our experienced coaches will work with you to set and achieve your goals and provide support and guidance along the way.
You can also check our various course curriculums for different careers (i.e. investment banking, private equity, VC, etc.) and how our process works.
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