Consultant Interviews for Investing Roles at Consultant-Friendly PE funds

I strongly disagree with the quoted post. Once upon a time I worked in consulting and had to take dozens of interviews to make it into large cap PE.

>TLDR; You don't need that much finance knowledge. These firms hire consultants because they value the consultant toolkit, and that's what they'll test first and foremost. Yes you should be prepared to do a basic LBO, but don't stress because it doesn't get much more technical than that.

I disagree. Two salient data points: interviewing for the growth equity arm of a European megafund for a role that was 1/3 sourcing, 1/3 portfolio company growth, and 1/3 transaction work (this was their standard investment associate role) required doing a full three statement LBO. Interviewing for HIG involved doing a two-hour full three statement LBO with a convertible/mezz instrument. Et cetera...

A third more nuanced data point on how consulting expertise is tested: the firm I ultimately accepted with required a full three statement LBO. The LBO model they gave banking background candidates required more accounting nuance and the LBO model I received required more focus on the operating model (read: testing for consulting expertise, still needed commensurate technical knowledge).

A fourth data point on how technicals are key to acceptances: I became professionally close with an interviewer at a MF at which I interviewed and he indicated that the reason they accepted another candidate (banking background) over me specifically was because of his accounting facility despite my superior understanding of their investing style and portfolio company operations. It came down to one question on a returns analysis.

A fifth data point about importance of general finance knowledge: with an interview for an analyst role at a top technology firm (SL/TB/V) they asked the classic "factory write down / depreciation question" that's on the M&I 400. The focus had thus been on software (and for the purpose of my example, consider that the context until that point had been software). The clear purpose of this question was to test general finance knowledge in particular.

A counterpoint to my above statements: two firms I interviewed with (name-brand MM & atop MF) only gave paper LBOs, but only gave paper LBOs to all candidates. In this case it is clear they value the broader skillset of critical thought beyond technical prowess, but regardless of whether you are a banking candidate or consulting candidate you will be judged against the same yardstick of the technical exercise provided. QED, your technical skills matter.

A second counterpoint: I do agree that, potentially, the interviews for consultants could be less technical than for bankers, and you may get the benefit of the doubt occasionally. However, I would advise not to count on it because 1) it's likely that because you're in an industry dominated by professionals who came from banking, it's more likely that if your finance knowledge isn't equal to a banking candidate, your interviewer will feel nervous about extending you an offer, and 2) there likely will be more of an emphasis on fit questions around why consulting and the desired transition to PE, because it's not as logical or well-worn of a path as banking to PE is.

In short, I think that' it's absolutely key to have finance knowledge. You should prep the M&I 400, paper LBOs, and full three statement LBOs. You should present yourself as a two-for-one: you have the consulting skillset and can model as well as any analyst on the street. You will have to sell it, and your interviewers will understand that a banking candidate will have superior modeling skills, but you will want to come across as having both commercial and financial acumen. Stories give you power and selling this story will do you great service.