How much are you expected to know about portfolio companies of a private equity firm during the interview stage?
I have a few PE interviews coming up and was wondering if I would be expected to know pretty much all the financial metrics and numbers related to a portfolio company that a PE firm owns…. or if a general understanding and a general opinion about the portfolio company is enough ?
When preparing for private equity interviews, it's crucial to strike a balance between depth and breadth of knowledge, especially regarding portfolio companies of the PE firm you're interviewing with. Based on the most helpful WSO content, here's a breakdown to guide your preparation:
General Understanding and Opinion: It's essential to have a solid general understanding of the portfolio companies. This includes knowing what the companies do, their market position, and any significant news or developments related to them. Having informed opinions about their business models, competitive advantages, and potential growth areas or challenges can also be very beneficial. This level of knowledge demonstrates your interest in the firm and its investments, as well as your ability to think critically about businesses.
Financial Metrics and Numbers: While having an in-depth knowledge of all financial metrics and numbers for each portfolio company might not be expected, you should be familiar with key financials and performance indicators of a few notable investments, especially if they are relevant to the role you're applying for or have been in the news recently. This could include understanding their revenue growth, profitability margins, and any public investment outcomes (e.g., IPOs, acquisitions).
Deal Experience: If the interview focuses on your deal experience, be prepared to discuss the deals on your resume in detail, including financial metrics and outcomes. This is where you need to be very detailed and specific, as it directly relates to your experience and capabilities.
LBO Modeling and Case Studies: For technical parts of the interview, such as LBO modeling or case studies, you might be asked to work with financial information related to a portfolio company. In this case, the focus will be on your analytical and modeling skills rather than memorized facts.
In summary, a general understanding and well-formed opinion about the portfolio companies are crucial, supplemented by deeper knowledge of a few select investments and the ability to discuss your own deal experiences in detail. This approach will help you demonstrate both your broad understanding of the PE firm's portfolio and your ability to dive deeper into specific investments when necessary.
Sources: Private Equity Interview Questions - 13 Topics to Know, Private Equity Interview Questions - 13 Topics to Know
Use ur head
Wow. That was super helpful! Thanks!
Everything available online about the portfolio your interviewer manages
Yeah… however, the question is: is it a pointless effort to memorize year-over-year numbers beyond a couple main bullet points or the most relevant numbers
Don't worry about memorizing numbers, just understand how the business works and what their thesis is and have an idea of size and trajectory
Pasting my response from another thread:
Two suggestions:
On financials, absolutely not. Not only is it far beyond what is expected, but effectively nothing will be in the public domain. If you somehow know non-public figures (e.g., your bank was on the sell-side of a relevant deal), it's still not even appropriate to share those.
But what if a couple companies in their portfolio have full financial information?
re-underwrite the entire deal including hiring advisors, but make sure your base case matches their base case driver by driver, no exceptions
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