EM PE Interview

I have an interview with an emerging markets focused shop with AUM in the 2.5-3.5 billion range. From what I understand, there will be no modeling test, but definitely questions on finance, models and past experience. I'm beasting my way through Damodaran's class from last semester... including relearning about DCFs and LBOs (even though this shop doesn't do many LBOs... in fact leverage is a very small part of their overall strategy since many emerging markts aren't sophisticated enough to support an LBO). Any other things I should look out for? Should I spend time on LBOs just because it seems to be bread and butter PE even though it may not be so for this shop?

I'm coming from a pre-MBA general mgmt consulting (i.e. not-PE focused) background, so while I have quite a bit of financial modeling experience, little of it is transactional.

Less importantly, any idea what comp should be like? The position is in Asia for what it's worth. 1-2 years consulting experience.

tldr:
1. Emerging markets PE interview from consulting background (Pre-MBA)
2. Financial modeling experience but not transactional
3. What to focus prep on?
4. What comp to expect?

Comments (8)

 
Sep 12, 2012 - 4:28pm

From personal experience:
- Even though you don't see traditional LBO in EM you should still know how to derive your equity IRR - which is essentially what you're calculating in your LBO analysis
- Especially if you're not coming from a finance background, I would be prepared to do quick back of the envelope calculations (e.g. cash multiple/return calcs) to show that you have a basic concept of how a fund would evaluate an investment
- If you are coming from OECD, I would expect some question on the difference between investments in EM and mature markets. How might your risks, drivers and mitigants differ?
- Maybe it's a personal bias (which I think is shared by many colleagues of mine who came in from banking) but I expect consultants to show some technical preparation or at least show initiative to pick up modelling etc when interviewing for a finance position - especially at the junior level. Seems like you have some experience with modeling which is good but regardless I would not hide behind your consulting experience and make it clear that you are eager to do well with the technical aspect of the job
- At the junior level (at what seems to be a large fund), I would focus on the career progression/plan as much as compensation

 
Sep 12, 2012 - 4:42pm

kingb:
From personal experience:
- Even though you don't see traditional LBO in EM you should still know how to derive your equity IRR - which is essentially what you're calculating in your LBO analysis

I get the multiples part of doing this.... but is it necessary to memorize IRR tables?

kingb:
- Especially if you're not coming from a finance background, I would be prepared to do quick back of the envelope calculations (e.g. cash multiple/return calcs) to show that you have a basic concept of how a fund would evaluate an investment

Got it, thanks. I was more worried about questions like ____ changes, how does this impact balance sheet/income statement/cash flow statement? I really don't have a good understanding of the three statements as yet and can only memorize so many scenarios...

kingb:
- If you are coming from OECD, I would expect some question on the difference between investments in EM and mature markets. How might your risks, drivers and mitigants differ?

Interesting, will definitely take note. Thanks.

kingb:
- Maybe it's a personal bias (which I think is shared by many colleagues of mine who came in from banking) but I expect consultants to show some technical preparation or at least show initiative to pick up modelling etc when interviewing for a finance position - especially at the junior level. Seems like you have some experience with modeling which is good but regardless I would not hide behind your consulting experience and make it clear that you are eager to do well with the technical aspect of the job

Yup, I've done TTS, and have been focusing on more quantitative projects. As mentioned earlier... it's the skills you pick up while "doing" finance that bother me. Eg. three statements, how to drawdown a revolver, different kinds of debt and their impacts on a model...

kingb:
- At the junior level (at what seems to be a large fund), I would focus on the career progression/plan as much as compensation

Agreed.

 
Sep 12, 2012 - 10:22pm

When I interviewed for PE funds of this size (not EM) with a consulting background, and the interviewers also had a consulting background, it was much more a case interview, i.e. here's the target, what would you want to know in order to evaluate (i.e. what about the market, what financial data, etc) - and then maybe there was a detailed thing to solve for.

I definitely reviewed the basic mechanics of an lbo model - but I screwed up a couple of financial calculations/intuitions, and it wasn't an issue.

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Sep 12, 2012 - 11:33pm

petergibbons:
When I interviewed for PE funds of this size (not EM) with a consulting background, and the interviewers also had a consulting background, it was much more a case interview, i.e. here's the target, what would you want to know in order to evaluate (i.e. what about the market, what financial data, etc) - and then maybe there was a detailed thing to solve for.

I definitely reviewed the basic mechanics of an lbo model - but I screwed up a couple of financial calculations/intuitions, and it wasn't an issue.

Is your shop a consultant-heavy one a la Bain Cap, Golden Gate, Parthenon, Monitor Clipper etc.? Unfortunately the one I'm looking at is pretty finance heavy so it might be a little different. I guess determining market conditions etc would allow you to project revenues a lot better, in turn giving you a more accurate DCF.

Also, are you on the investment or operational/strategic improvement side of things? While this fund does have an operational team pre-MBA positions are unfortunately all on the investment side.

 
Sep 12, 2012 - 11:37pm

Consultant heavy, and investment side - pretty much everywhere I interviewed was majority consultant, domestic focused and MM.

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