Secondaries Interview

For secondaries interviews, the technical focus and case study structure differ significantly from buyout interviews. Based on the most helpful WSO content, here’s what you need to know:

Case Studies in Secondaries Interviews

1. Structure:

   • Case studies in secondaries often revolve around evaluating LP commitments or GP-led transactions. You may be asked to assess a portfolio of fund interests or a single fund's position.
   • Expect to perform liquidity analyses, return analyses, and capital call scheduling. These are critical in understanding the value and timing of cash flows.
   • You might also need to calculate the value of unfunded commitments and analyze distributions already made.

2. Key Focus Areas:

   • LP-Led Transactions: Evaluating a portfolio of fund interests, understanding the remaining unfunded commitments, and assessing the potential returns.
   • GP-Led Transactions: Analyzing continuation funds, restructuring deals, or single-asset secondaries. This involves understanding the underlying asset(s) and their growth potential.

Technical Concepts to Focus On

1. Valuation of LP Commitments:

   • Learn how to calculate the net asset value (NAV) of fund interests.
   • Understand how to discount future cash flows from distributions and unfunded commitments.

2. Liquidity Analysis:

   • Be prepared to analyze the timing of capital calls and distributions.
   • Understand how to assess the liquidity profile of a portfolio.

3. Return Metrics:

   • Focus on IRR (Internal Rate of Return) and MOIC (Multiple on Invested Capital) calculations, as these are critical in secondaries.

4. Pricing and Negotiation:

   • Familiarize yourself with how pricing is determined in secondaries transactions, including discounts to NAV and market dynamics.

5. Relationship Management:

   • While not purely technical, understanding the dynamics of GP approvals and relationship management is crucial, especially for GP-led deals.

How It Differs from Buyout Prep

• Less Focus on LBO Modeling: While LBO modeling is foundational, secondaries interviews emphasize portfolio-level analysis rather than single-company leveraged buyouts.
• Broader Analytical Scope: Secondaries require a deeper understanding of fund structures, cash flow timing, and portfolio diversification.
• Negotiation Dynamics: Secondaries often involve navigating GP relationships and approvals, which is less relevant in buyout interviews.

By focusing on these areas, you’ll be well-prepared for the technical and case study components of a secondaries interview. Good luck!

Sources: Differences between Co-invest and Secondaries?, Q&A: PE Secondaries Principal, Secondaries Comp / Culture in 2023