Having now spent time at a top BB and PE firm, I feel as if technical skills are vastly overblown in the interview process. I find that there is no strong correlation between technical (read: modelling / valuation / accounting understanding) and career success. Perhaps this is unsurprising, but I had thought that certain skills were table stakes, especially given some of the supposed technical questions in recruiting guides. To be clear, I am not talking about knowing how to create an LBO / DCF. Some example topics I thought most would understand, but find most do not:
- Tax modeling (DTA / DTLs / Section 382, etc.)
- Basic option modelling and nuances
- Lease accounting
- Detailed understanding of NWC
- Debt pricing
Do others agree? It's very possible it's just who I have worked with.
I’d say most people I’ve worked with have a good understanding of the basics, but they won’t know by heart the other more complicated technicals. However, if they read up on it, they would quickly understand it and how to use it in a scenario/model.
Agree with the above- I work at a firm that also hires consultants and they definitely don't understand the details but I don't really think knowing these things by heart are that important so much as you can figure it out when the task calls for it.
I also came from a banking background and my view is that modelling is arguably the most commoditized skill you can have in PE. Being able to a) bring in deals and b) think through risks, growth levers, and the returns you need to be compensated for the profile of the deal are much harder.
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