Help! Private Equity interview in three days! PE Interview adivce?

mrbeancounter:

My PE interviews were more specific and related to practice than my BB IBD interviews. I interviewed at a restructuring PE fund and was asked how I would cut costs at a specific company in a specific industry. I also got a case on which items on a balance sheet would be possible to cash out immediately after purchase e.g. Accounts Receivable.

Thanks but I am still an undergraduate. I don't have any IB experience and limited understanding of P.E. I have done some research on the firm and P.E. in general over the last few days. I never really expected to get this interview and am not entirely sure what to expect due to that. I hear most interviews are based on past IB experience.

An 8 hour interview, I would say you're pretty much guaranteed to get a modeling test. They're probably trying to consolidate 4 or 5 rounds of interviews. My longest interview was 9AM to 2PM. They kept asking me if I had time to meet with another team member, I kept saying yes. Finally I had to say no, since I had to get back to work for a meeting and they had only mentioned a morning interview. That was a banking interview though.

Not to get away from the point of the thread, but how do you guys get away from the office for the interviews? Do you just say you have a dentist appointment or something, because I can't imagine leaving my office for that period of time, without a good excuse.

In reference to what grandpabuzz said,

I'd just be honest. I told my supervisor I was interviewing at a Private Equity fund. I think its best to be honest and respect your current employer. There have been occasions where partners have gotten honest analysts more interviews at top PE/HF shops just by making a call.

Best regards

Mmonkey

btw, that is small-cap, not middle.

It's a smaller PE fund no doubt, but I was under the impression that MM would be in reference to the size of deals, not AUM. For instance, the fund where I'm at may be considered small-, or even micro-, cap by AUM, but our deals are in the $100M-$300M+ range with our largest portfolio company at $1.4B equity.

any insight to the original questions about what to expect/prepare for in interviews?

Def. know your way around financial statements (that should go unsaid). (THIS IS AN ABSOLUTE)

Aside from that, I think I would prep for the following when interviewing.... (these are not in order of importance)

Know recent LIBOR trend and be able to discuss how it affects a prospective investment. Know ebitda multiples for industry that the company deals in. Know industry trends / players for the focus of the firm. Be able to discuss the lifecycle of an investment (leveraged buyout, portfolio company, various exit ops, and time frame over which this occures) and how the firm will increase its equity value. If you've modeled an investment before, I would prep to walk people through the model. If you've only done Wall Street Prep, be prepared to walk through that. Either way, be prepared to discuss what sorts of companies a private equity firm would want to invest in (LBO's require firms with cash flows to service debt) If you invest in stocks, be prepared to discuss the fundamentals of the company (solid management, solid cash flows, product suite, e.t.c.).

If you haven't worked in prviate equity, these may not come to you off the top of your head, but those would be points I would definately touch on in my interview whether I was asked a specific question or not (i.e. I would make sure to work those points in). That being said, I am talking about more of an entry level interview i believe.

I'm curious about this too

In my experience, PE interviews have been more focused on brain teasers and case studies. This is for UGrad. Not as much the traditional IB interview questions.

NEVER lose your BlackBerry www.conveniencesoftware.com

bump

Totally depends on the firm. I had friends who had to answer extremely technical questions on the spot. Personally, most of my interviews were very high level. Most of the technical aspects related to LBO modeling. Note: This is all for Middle Market firms.

~~~~~~~~~~~ CompBanker

Be prepared to answer: Why private equity? Why this group/industry? Anything on your resume. Be able to explain LBOs from a high-level Know macro trends and industry trends your fund invests in And fit questions, since you're talking to partners.

Not to advertise another site (of which I have no affiliation); but I found this (see below) a while back when searching for the same back-of-an-envelope type exercise. Very basic, but might get you pointed in the right direction.

Keep it simple and be sure to make an actual recommendation at the end, as Dosk has said in his various PE-preparation posts. What good is an insanely detailed and complex model if it doesn't back up an action?

Best of luck to you; hope this helps.

http://www.wallstreetprep.com/blog/?blog_id=36

I had to do that for my current job. From my experience the psychometric stuff isn't really something that you can prepare for. It's more of just an IQ test. If you're from good schools and did well on your GMAT's and all that you'll likely be okay. The one wildcard is the visual side of it (identifiying patterns and weird shapes and all that garbage), that's not really correlated to your scholastic abilities as much I think... some people are just better at it than others...

be natural and don't pretend you know more than you do. if you're background is consulting, think about why that equips you better than someone from M&A, or vice versa. we're always looking for range of people, who we would like to work with, normally everyone is highly competent.

hope that helps. this is for PE in london, it might be different for US.

thx goldmansachs101... i have a year of vc experience. how can i tie that into pe and what should i expect from the excel test?

i would really lile to hear from PE guys on here

excel will probably be a quick modelling test. They will give you summary financials and you'll have to build a model making your own assumptions in terms of entry/exit multiples, debt structures, etc.

Just a check to see if you know what is an LBO. Best way to prepare tis to grab a few financial, and building a model yourself. Have a friendly monkey check it for you.

I went through a similar process last year as a Sophomore, the call was pretty much a casual first round interview. MD introduced himself, spoke some more about the firm, and then asked me some questions. Tell me about yourself, why PE, asked about my finance experience (non-finance major), etc. and then some basic technicals to see if I understood LBOs. 30 minute call all in all, nothing too difficult.

What does your work consist of in IBM?

You could get through the BIWS IB interview guide in a few hours. This covers the basics of how to value a company, how to answer basic accounting questions, etc. Since you come from a consulting background this should probably be sufficient on the finance technical side as they don't exactly expect you to be able to bang out an LBO model with that experience. They're probably more there to hire you for your strategy/operational insights you've gained from consulting so speak well to that.

Hahah I'm afraid they're going to bring up things and I won't even be able to pronounce EBITDA properly in real life. I'm fairly confident in my background experiences, it's just the financials that scare me.

Also...What is the difference between “as-is" and "where-is” for stock purchases in a buyout deal?

interviews will be different depending on the size and what kind of shop it is. Nevertheless, if this is for a position straight from u-grad, I would imagine the technical questions would be similar to i-banking interviews and they may throw a case at you which you should be used to with your consulting background.

Yeah, I'm not sure why they are even interviewing me, as I don't know the first thing about finance - no finance/accounting classes and my experience has all been applied economics / public policy economics. Is there a general guide that could help me identify what kind of shop it is, how well regarded it is, etc?

Thanks again!

Hi all,

I also have a FoF interview coming up in a few days - and am fairly ignorant about the process. Can anyone tell me what to expect?

Many thanks.

For those who are interested, it went really well. We discussed an internship possibility.

What were the topics of discussion? Good luck on the internship.

We talked a bit about their line of work. They told me how they operate as a FoF, and they also co-invest along side other funds. We also discussed deal flow/size in Canada with the current credit crisis in the states. One of the guys told me that they really havent been affected too much since they are mid-market players. We touched abit on valuation, and some other small topics. They were also nice enough to walk me through a little "PE 101" crash course.

You know, I walked into there VERY intimidated. I was thinking "these guys will look down upon some ugrad 20 year-old"...I almost felt unworthy. But they turned out to be SOOOOO down-to-earth; always smiling, informative, never made me feel stupid when I asked a basic question. All-in-all, a great experience.

Which firm was this, if you don't mind my asking?

Sent you a PM

Sounds like a good meeting, glad it went well. Keep after the internship as it sounds like they would be a good bunch to work for in terms of educating you and walking you through their process.

I'll keep you updated on what happens!

well done buddy - stay in contact with those guys.

Even if the internship doesn't work out, I am sure that they will go up to bat for you when the time comes, seeing as how you made such a great impression. Good luck!

I hope! Thanks for the words of encouragement :)

Probably want to think about how you would look at the value of a firm from a high level. For example focusing less on "oh they have grown revenues at 6.2% for the past 3 years" but rather looking at macro things like market size, pricing power, industry growth, etc. Also probably want to be familiar with how an LBO works if you don't already know. They may throw a case study at you as well.

Thanks for the feedback. I forgot to mention that this position is entry level for recent graduates, so I highly doubt there will be a case study or a test assessing my knowledge of a LBO model. Any more thoughts?

My knowledge of LBO was tested by two different ibanks, and I dont even have LBO on my resume.

Why would MM PE hire someone who has 0 knowledge of LBO?

How much detail were they looking for in your LBO questions, The Phantom?

I mean, were they just looking for you to discuss the economics of an LBO (stable FCFs are used to pay down debt, magnifying equity, all the while increasing multiples), or were they looking for more?

if you said which fund..

you could get anything, what kind of question is this there is no way someone could tell you based on info you provided mate

more specifics please bra

Sure, sorry guys.

Middle Market Fund, concentrated solely on one specific region, with a specific focus on companies that allow not only for returns based on financial engineering (apparently they keep leverage at 2-3x EBITDA at max) but also on operational engineering (internationalization, consolidation etc.). Strong track record in Education and Health Care.

Does this help? If this is still too vague, please let me know if I can PM you.

So the LBO modeling test was done in the first round? Did they give you intentions of another test for the final round?

If the first round was heavy modeling/testing then expect the final round to be meeting the rest of the team and maybe talking more about your resume/background. Basically more fit than anything. However it's weird for PE shops not to do a full blown case, especially if operationally focused. If you got the job through a headhunter, I would just ask him/her because they usually let you know what to expect in each round.

Yeah, they did an LBO test in the first round. I sent them an email asking what the final round will entail. In the first round, they had me do an LBO Modeling Test, as well as a Consulting Type Case Study.

Okay great then I think the final round is definitely less technical and will involve repeating your story to different members of the firm. In my experience (3 rounds of interviews) the first two were technical/case/tests and the final one was just a "fit check" to make sure you are a fit for the firm and good to work with. I usually meet a lot of seniors/partners in the final round so it's a lot of repeating your story and most of the time the job is yours to lose at that point.

Best of luck.