One contact at a PE firm told me they are going to ask questions about the firm's portfolio companies. But this particular PE fund has about 50 portfolio companies, so I wonder how many of them I need to know and how detailed my knowledge about them should be?
Does anyone have experience with PE interview questions about portfolio companies?
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i interviewed with several
i interviewed with several buyout shops that had a portfolio of at least a couple dozen companies, and currently work at one of them. i would be surprised if they asked you something about a specific company - heck, there's still a handful of companies in our portfolio that i'm barely familiar with. anyway, as for interviews, i didn't prepare that hard by memorizing random stuff about the companies -- in fact, most of the time it's impossible to find much detailed information on them -- but what i did to prepare was to try to understand broadly what types of companies they owned and how that seemed to fit in with their investment philosophy. as such, some things you ought to key in on would be what type of industries they invest in, what types of companies they're more likely to grow via add-on's, and what the fundamental characteristics are for the companies they own. things you might want to be prepared to talk about would include market leadership, positive competitive dynamics, barriers to entry, low WC and capex commitments, stable and predictable cash flows, and so forth.
overall, my approach to answering this question is NOT about memorizing what every company in their portfolio does. maybe you can do that, but my memory's not that good. i was never asked about a SPECIFIC company that was owned, with the exception of one case study, which asked me to evaluate a potential investment that i successfully identified as a possible add-on to an existing portfolio company...but i had time to prepare for that.
overall, i really don't expect them to ask you a question about a specific company unless you proactively bring that up on your own. rather, they'll more likely to ask you to talk about one company or industry group in their portfolio that you thought was interesting, and you should have an idea of how to answer that. your response should basically entail those things that i mentioned in the first paragraph of this post, as the objective of such a question would be to assess whether you spent any reasonable amount of time reviewing their portfolio, and also how well you understand the firm's investment approach.
i hope this helps. i'd be interested to hear the opinions and experiences of the other PE folks on this forum, too.
Thanks
Great comment, numi! Thanks, it really helped because I was about to start memorizing random facts about almost 50 companies from various different industries. Now I will try to focus on the KIND of companies they invest in, and maybe pick 1-2 companies to talk about in more detail.
no problem alcman. i would
no problem alcman. i would agree that your approach is the right way to go. also, make sure you have in front of you the firm's investment philosophy and what makes them "different" -- it's very important to understand the identity of the PE firm and how it might be different from others that also compete in the same target industry or capitalization. also, even though each portfolio company is different, there are certain underlying characteristics about those companies or industries that made them good acquisition targets for that particular PE firm, be it market leadership, high barriers to entry, product differentiation, low cyclicality, and so forth -- and you just need to be able to articulate what those characteristics are. have a look at the PE firm's press releases too to see what they said about why those portfolio companies had been acquired.
hope this helps, and best of luck to you.