PE Interview Technicals

Ah, aiming for the MM PE jungle, are we? Well, you're in luck because I've got just the treasure map you need to navigate through those technical interviews. Based on the most helpful WSO content, here's what you should be prepared for beyond the standard modeling tests:

1. LBO Theory and Paper LBOs: Be ready to dive deep into Leveraged Buyout (LBO) theory. You might be asked to perform a quick LBO analysis on paper. This tests your understanding of the mechanics and your ability to quickly apply them without the aid of Excel.

2. Deal-Specific Questions: Be prepared to speak in detail about any deals you've worked on. Interviewers may press you on various aspects of the deals, such as valuation, competitive strengths, broader industry outlook, transaction structure, and risk assessment. This is to gauge your analytical skills and how you approach deal evaluation.

3. Financial Metrics and Credit Metrics: Understand key financial metrics like EBITDA, Free Cash Flow (FCF), and how they are used in assessing a business's performance. Credit metrics are also crucial, especially in understanding the debt aspect of LBOs.

4. Software-Specific Questions (for software-focused PE firms): If you're interviewing with a software-focused PE firm, be prepared for questions around key metrics in the software business, such as Lifetime Value to Customer Acquisition Cost (LTV/CAC), Net Annual Recurring Revenue (Net ARR), gross profits vs. operating profits, and others. These metrics are critical in evaluating software companies.

5. Behavioral Interviews Coupled with Technical Questions: Some firms might blend behavioral questions with technical ones, especially in later rounds. Be ready to discuss your rationale for moving into PE, your understanding of the firm's fund strategy and recent performance, and your take on the broader PE industry outlook.

Remember, each firm may have its unique focus or culture, so the technical questions can vary. However, being solid on these areas will definitely put you in a strong position. Don't forget to ask insightful questions back to the interviewers. It shows your genuine interest and understanding of the PE landscape. Good luck, and may your PE journey be as adventurous and rewarding as a jungle expedition!

Sources: A Non-Target's Perspective - My MM PE Recruiting Process, Ask me anything - MM PE Associate, 1 year in, PE recruiting technical questions (software specific), Tech MFPE Interview preparation, Notes for Technical Interview Questions