Growth Equity Interview Business Model Question

Hey guys!

I recently had a very initial interview with a growth equity fund. They were relatively advanced in their process so I was slightly late, but they cut me off after this first interview. They asked me to compare three business models and pick which one I would invest in. I gave my comparison and my reasons but apparently I must have not performed to the standards. Just curious how you guys would approach this situation?

They told me to compare these three:

  • Casino

  • Bank

  • Fast food chain

Very thankful if you guys could give me your thoughts. It was my first growth equity interview so I would appreciate those who maybe have more experience to guide me since I didn't get any feedback...

Thank you!!

Private Equity Interview Course

  • 2,447 questions - 203 PE funds. Crowdsourced from 750k+ members
  • 9 Detailed LBO Modeling Tests and 15+ hours of video solutions.
  • Trusted by over 1,000 aspiring private equity professionals just like you.

Comments (4)

Jun 5, 2021 - 8:21am

I don't think there is a right or wrong answer here but you need to give one and it does not seem like you did. But I assume that they were looking for something as follows:

1) Casinos - stable cash flow (recurring people coming to spend money) but need licenses to expand - so quite regulated. Regulatory risk and money laundering risk. 

2) Bank - very large balance sheet, growth of your PnL is driven by growth in balance sheet so may be too capital intensive to make it a worthwhile investment. 

3) most "traditional business" here, however need to understand differentiation vs other restaurants, cost base structure, etc. Would invest in such a business but would like to understand the above and more DD points.

Start Discussion

Total Avg Compensation

June 2021 Private Equity

  • Principal (7) $694
  • Director/MD (18) $575
  • Vice President (65) $371
  • 3rd+ Year Associate (66) $270
  • 2nd Year Associate (133) $256
  • 1st Year Associate (273) $223
  • 3rd+ Year Analyst (24) $164
  • 2nd Year Analyst (60) $136
  • 1st Year Analyst (177) $118
  • Intern/Summer Associate (19) $70
  • Intern/Summer Analyst (206) $59