There is almost a guarantee you'll get this question if you are interviewing for a job on the principal side coming from Investment Sales / Debt Brokerage / Lending, and I feel that this question is harder to answer if you're not already in acquisitions. IE in lending we're focused on credit metrics / operator track record / financial wherewithal of borrower / Historical Financial Statements / demographics of MSA and sub-market. While some of those areas overlap with PE, we don't take as deep of a dive into comparable properties and our projections are less forward looking than a buy-side real estate company (when lending on stabilized properties).
So my question is if anyone has a go-to format for answering this question? Would be especially helpful if you had a way of doing so from the perspective of a lender / broker
Here is how I've been thinking of breaking it down:
Background
-Transaction type (refinance, acquisition, construction take-out, credit facility)
-Borrower history
-Property overview
-Overview of City
Financial and Demographic Metrics
-LTV/DSCR/NOI/Cap Rate / Expense Ratio etc.
- Median House Value / Median Income / Population Growth / Supply & Demand of Property Type
- Compare the above metrics to Comparable properties
Strengths and Weaknesses of Property
-Highlight weaknesses and why your team was okay with them
-Strengths are self explanatory
Outcome of Transaction
I feel like I'd just be throwing out information at an interviewer if I were to say these things. Is there a more fluid way to break down a deal? Should I talk more about my responsibilities even if they're largely the same on each deal? Appreciate any help on this
One thing I'd caution you on is with respect to the strengths. In a lot of cases, they are not self explanatory. They may appear to be so to you, but definitely take the time to flush this out. This is an important thing that a lot of principal groups will want to make sure you understand - 'why do you believe in this deal?'. Especially with respect to investors, in a lot of cases you are going to be educating and re-educating them on a certain market, location, product type, attribute, etc. Other than that I think this is pretty solid. If someone asks you this question they are basically just trying to get a gauge for your work process and what your general experience has been on the transactions you've completed. Ideally you would also bring up a deal that wasn't 'clean' from start to finish and what you and the team had to do to execute and go the extra mile to close.
Thanks for the response. I meant strengths are self explanatory as in I’m not going to type out several examples of strengths for my outline. I’d obviously speak to them in an interview.
You brought up another issue I have though. On my resume, I list a $230mm property I worked on because it shows my team does institutional deals. But it wasn’t necessarily too difficult outside of legal issues we encountered, because the financials and market were so favorable. However, everyone asks about it cause it’s listed on my resume. I guess I should remove it and put average deal size instead? That way I’ll have a choice in which deal I talk about
Got it, that makes sense.
For the $230 M deal, I don't think it's necessarily bad to leave it on there, but you could put a smaller deal on as well. That way it's clear that you've seen all different sized transactions and it gives you a relatively easy and more difficult one to talk about. Anyone worth their salt is going to know that usually the larger $ size and higher profile transactions have less hair on them because they typically have been passed back and forth between institutional entities. The smaller deals usually have more stuff that can go wrong because of both the ownership profile and the fact that a lot of stuff flies under the radar just due to the lower $. i.e., stuff like environmental, seismic, etc. is a lot more likely to go unnoticed for a period of time on a $25 M deal than a $230 M deal.
Other people have given very good advice here, so no need for me to re-hash that, but the trick to this part is to tell it like a story. You have all of the key points organized in a list, which is fine for a post on this site, but you definitely don't want to present it as reading through a list.
Think about the structure of a basic story. You set the stage, get into the plot, get confronted with adversity, overcome it, and succeed. This structure can apply from anything to novels to a story you tell your coworkers Monday morning about your buddies getting wasted at the strip club, but it's what makes stories interesting to listen to.
Similarly, when you present your deal, your presentation style matters. Set the stage with your "background info," talk about why your team got into or liked it, talk about struggles you were confronted with, talk about how you overcame that adversity, and then talk about the result. Intermingled in that you drop the various metrics as details, just like you would say what you were drinking or what the stripper looked like in order to add color to the story. Be animated with your story and really tell it like you were telling a story at Thanksgiving dinner or before the Monday morning meeting.
This fits well with what MonkeyWrench was saying too about the smaller deals with more "hair" on them, because what a $230 M deal is impressive, that smaller deal that gave you a lot of problems, but also a lot of opportunities to overcome those problems, can make a much better story and also be a prime vehicle for you to show you are capable of overcoming adversity.
The details and return metrics matter, and the purpose of the question is to definitely gauge whether or not you know what you're talking about, but you also need to remember that during an interview you are being judged holistically as well. Are you someone who they want to spend 8-12 hours a day with? Are you someone they can trust to have small talk to clients? Do you, when they think back on the interview, "feel" right. Some of this sounds like bullshit but it definitely is not.
Literally all of the ownership side of real estate is coming up with conservative, but idealized, underwriting, and then consistently being slapped in the face with issues, problems, overruns, etc. and having to fix or manage it. It's true in acquisitions. It's true in Asset Management. It's true in development. Problem solving is the #1 most important skill, so you want to get your ability to problem solve across in your interview.
Mic drop CRE
I'll also chip in and say that when I'm asked about deals I usually pick a deal that I was most proud of/was really excited about. Even when prefacing the deal (size, market, strategy, etc.) whoever you're talking to is going to pick up on the demeanor in which your story is told. If you're talking about a deal that was a nightmare and you just wanted to close, go home and drink a beer odds are they're not going to be that interested. However, an interviewer will definitely be able to tell if were really pumped that it passed the IC and excited to tackle any issue that presented itself because you were proud and excited about the deal. The little details definitely shine through when you're talking about a stripper story you humbly want to brag about vs. one that's flat chested and didn't get you hard.
Yeah this is all so true, well said.
nailed it
I'll also echo that there is a lot of good advice already so I'll try to keep my add short. Regarding the perspective question, **I think your response should be tailored differently if you're interviewing with a lender vs. a broker. **
Brokers are salespeople so you should tailor your response with that in mind. Tell the story of the deal in a sentence or two (that's your intro). You can then highlight a few of the details, but only highlight what moves the needle the most (think 80/20 rule). If they want to hear the details, they'll ask. Sell them liked you'd sell a client if they hired you.
If you're interviewing with a lender, keep in mind that they usually don't participate in the upside of any deal....so they're primary concern is downside protection. The narrative can be similar with a slight tweak...highlight risk mitigants (submarket supply/demand, borrow track record, etc).
I can't reiterate enough keeping it high level and let the interviewer take you into the details if they chose to go there.
Appreciate the response. I'm currently in RE lending and interviewing for acquisitions, so that's the situation I was referencing with my question, but your response is helpful regardless.
So even though we care more about downside protection, I should present the upside aspects of the deals I've underwritten on the lending side? I feel like I would have less to discuss on that front. Should I figure out the upside myself? Or just present the facts that our credit memo actually covers?
Sorry for the both the delay & the confusion on my end. I wouldn't get locked in on identifying the upside as much as the ability to summarize a deal...so maybe focus on the facts the credit memo actually covers. If you start high level and tell the story about a deal, I believe it presents much better than jumping into the details.
How nuanced can interviewers get when asking about prior deal experience (for lateral)? (Originally Posted: 06/21/2017)
Curious to what degree laterals get grilled on prior deal discussion. The obvious questions relate to motivations for deal, price, multiple, buyer universe, financing, valuation, etc.
What else can one expect?
How granular can an interviewer get?
CEO's mother's 2nd cousin's dog name.
You'll be best served if you enter the interview prepared to be asked "why" or "how" after you answer a question related to a transaction on your resume. The types of questions you are asked will depend on the types of transactions on your resume. I would expect everything from your contribution to the initial pitch to how you modeled the transaction (be prepared to remember every minute detail) to any difficulties you ran into during diligence to just about everything regarding the client's products, services, and/or IP.
EDIT: You really should look into the WSO Mentors Program, but if you post a sample transaction that you worked on (obviously mask names for your anonymity), I would be happy to give you some sample questions that I would give you if I were still in IB.
How to nail a PE interview if you did not close a deal in your prior PE job? (Originally Posted: 06/18/2016)
The title says it all. I am currently working as an investment analyst 2nd year in NYC and about to go back to Europe (London) because of Visa-related issues... I am going to interview for 8-10 funds but I want to make sure I can sell my PE experience even though I did not close any deals while I was in NYC...
I did not go to IB (directly to PE after few internships) and I want to make sure that the PE that will interview me feels comfortable about my ability to close deals and/ or build financial models (which I can do pretty well).
Thanks! Mr Yoga
Also interested in this even though I am not in the same position
Interview advice - Best way to describe deal experience? (Originally Posted: 07/21/2010)
Hey everyone:
Just like the title says, what would be the best way to describe your deal experience when an MD asks you about it in an interview. This is an Associate-1 level position, fresh out of b-school interview. I have only an internship's worth of banking experience prior to my MBA (not sure if that makes a difference or not)
Let's say I worked on the buy-side acquisition of a mid-sized firm which was in danger of going under because of its looming debt obligations. Do you talk about the rationale behind the deal, industry perspective, how it was structured or the numbers? I'm trying not to bore him to death as well.
What I'm really trying to figure out here is what the firm/MD would be looking for from the interview and I would accordingly tailor my response.
Thanks!
//decided to post this in the job search forum as I believe it is more relevant here
make it sound interesting. emphasize those parts.
Anyone ever created a deal addenda at interviewers request? (Originally Posted: 12/16/2015)
Curious if anyone has ever created a list of deals at an interviewers request. How did you structure it?
Deal/value/status? Or more info?
Google PE deal sheets and you'll get a few good examples.
Revealing M&A Deal Experience to a Recruiter (Originally Posted: 01/17/2018)
Currently working as strategic development manager for large industrial firm, specifically M&A and partnerships. I've been contacted by a recruiter who is asking how many deals I've closed or are near closing.
I wouldn't divulge any specifics on the deals, but is it generally safe to say how many deals are near closing? I've been told by the recruiter that they're working with the hiring VP directly but it makes me think twice, especially since the hiring company is in our industry and could be an indirect competitor for certain technologies.
Any thoughts you guys have would be appreciated, thanks in advance.
I wouldn't read too much into it unless he presses you for more than purely quantitative measures. There is liability in any further disclosure that could lead to some form of competitor discovery.
I'm going through recruiting / interview cycles now and have had similar discussions with recruiters. The recruiter is just trying go gauge your deal experience, whether you have gone through a full M&A or Partnership cycle from beginning all the way to execution. I think something like this is fine: "I've worked on over ~12 live engagements in the last 18-24 months and have been able to close a few M&A deals and few Partnership deals. I'm currently working on a few that are at various stages of the M&A cycle." If the recruiter keeps pressing for exact numbers, just tell you can't disclose and he/she should understand that.
You also mentioned that the hiring company could be a "indirect" competitor so the following probably may not apply to you, but is something I think is important to be aware of. Something that I was not aware of and that I only became aware of now because I'm interviewing is that most companies have you sign a non-compete agreement when you first start (very prevalent in the Tech Industry). Essentially, it says that you are restricted from joining a direct competitor for the first 12 months after you leave your current firm. I believe almost all U.S. States abide by similar rules except California. In reality however, if you are relatively junior, most companies would not go after you if you "broke" this agreement (e.g. an analyst that goes from Walmart -> Target). I've had a few colleagues who switched to direct competitors at a junior level. At the mid-management & Exec level, companies would be more inclined to pursue legal action if you broke your non-compete (extreme example: Tim Cook going to Samsung; execs at this level could have non-competes that restrict them indefinitely or for a long period of time like 5 - 10 years).
I would not disclose anything that is not publicly available. You can use some vague language like FWU mentioned to describe your deal pipeline, but that's about as far as I would go.
That being said, corp dev isn't like PE that requires you to go through a recruiter. I would first make sure this recruiter is being retained to fill an actual position and is not just going on a fishing expedition.
Talking about deal (Originally Posted: 12/11/2012)
I'm currently interning at a boutique and haven't worked on any live deals. For SA interviews, can I talk about a recently closed deal without actually working on it?
No
Even if my MD tells me to read up on the deal so I can talk about it in an interview?
anyone else have an opinion on this? would like to know about this as well
It's dumb to lie, since if/when they start digging, you won't be able to talk about anything substantive you did.
There's nothing wrong with working on pitches. Sometimes dealflow is shitty. It's not your fault, and plenty of BB SAs never see anything go live. Doesn't make the experience less legit.
did my analyst stint in a top group at GS and didn't close a deal until ~8 months in (and this was a capital raise, not even M&A). don't worry about just talking about pitches in your interview
Working on a live deal (Originally Posted: 10/15/2017)
I was working on a live deal that involved an LBO over the summer and have an interview with a BB coming up. Just wondering what I are the key details i should know about the deal in preparation for the interview?
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