PE Interviews - Talking about one of the fund's investments

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How should someone approach the question "tell me about one of our investments that particularly interests you" or something similar?

Is it best to just know the basics of the business model and key investment highlights from the CIM if you have it? Should you also maybe talk about potential risks you see (without being too negative of course)? I guess it's also good to have some investment-specific questions prepared

Any advice would be appreciated!

Comments (10)

 
Jul 1, 2020 - 6:10am

Your approach is absolutely right (investment merits and risks + biz model).

I would add that outstanding interviewees probably 1) show depth of understanding when discussing risks, 2) have a high level view on the value creation plan post acquisition. Doing these two shows your maturity as an investor if done right.

what NOT to do: usually the less ‘mature’ candidates just sound very rosy / blue sky to the point where they don’t sound balanced and thoughtful. they usually also talk abit too much about how fantastic the biz model is.

I think anyone can highlight the positives fairly well (it’s probably even on the website & CIM), but risks discussions are where the differentiation in candidates showcase (you can’t find it in a sell side CIM)

hope that’s helpful

 
Most Helpful
Jul 1, 2020 - 2:33pm

There are a few options:

(1) Find a good public comp for the private investment e.g. many PE firms buy insurance brokerages, which aren't always simple to understand. But you could look at 10-Ks and investor presentations for AJG, WSH, MMC etc. Many PE firms buy payments companies - you could look at Wex, EVO, Adyen etc.

(2) Be in the industry group for that company and find past CIMs for peers/comps. Also could ask an Associate/VP who has been in the industry silo for a while about the industry or target you are interested in. If the acquisition was high-profile e.g. Thyssenkrupp, Virgin Australia, many supervisors would be happy to discuss it (without it raising recruiting red flags).

(3) Find better sources: read PE Hub, Axios or market research reports that go into greater depth into famous deals than you expect. Find past exits in the same business category e.g. you could look at Vista's Marketo exit for marketing software businesses. Once a PE firm exits a business successfully and at a large enough TEV, there is usually decent commentary by the media about what happened to the investment / what the firm did to it.

In all cases during an interview, you should clarify your frame of reference. "Of course, I don't know a lot of specifics about X private investment directly but I understand the model is similar to private comp Y or public comp Z, and that is a particularly attractive business model because of..."

If you are completely off and you have chosen the wrong comp/frame of reference, the interviewer will correct you and it will likely lead to an interesting discussion around the differences in business models. Ideally you are able to find a good comp. But even if you don't, you will come across as well researched and thoughtful.

 
Jul 1, 2020 - 8:21pm

Super helpful - thanks a lot for the input!

What's your view talking about one of their investments that is outside your sector background (e.g. let's say I come from a consumer and retail background but the investment is question is in the TMT space, because that's the only CIM/information resource on one of the fund's investments that I can find)? Would they still expect you to have tons of sector knowledge and grill you accordingly? I presume it's still probably better to go with talking about the TMT business rather than a consumer one since that's the one on which you have the most info.

Thanks!

 
Jul 2, 2020 - 3:40am

If you raise an investment to talk about, I presume they will expect you to have a reasonable knowledge (otherwise why pick that investment?).

Of course nobody expects you to know all the quirks of the industry and all the players there, but you should be able to know why the industry is attractive and what are the risks (this is the basic level). If you focus on those 2 things to the point where you are comfortable explaining it, then I wouldn't worry too much.

Goodluck!

 
Jul 2, 2020 - 1:31pm

I think it is better to talk about the investment you can find more information about. But make sure you actually think it is a good investment, and understand the thesis/risks. If the investment is not going well (the interviewer would know but not you), it makes for somewhat awkward conversation. Try to find a sweet spot of information and personal liking/belief.

Generally, they will expect you to have decent knowledge about the industry group you are interviewing for rather than the investment you bring up. So if you are interviewing for TMT and you bring up a TMT investment, then yes, some industry knowledge is expected, even if you come from a consumer background. The good news is that for some industries (such as TMT), there is a lot more public information available (vs. say niche financial services).

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