Thursday, June 23, 2016 at 9am

Interview Tips for Post-MBA Jobs in Private Equity

Advice on the private equity interview

It is no secret that juggling classes, social activities and the recruiting cycle at a top MBA program can be incredibly stressful. On top of trying to pass your classes, you are faced with a wide array of choices when it comes to the industry you want to target for the long run. Some of your options are limited to your pre-MBA experience simply because you are competing with candidates that do have years of experience in a particular industry. The best way to offset this disadvantage is to make sure you can communicate clearly about an industry, understand its history and ace the interview questions. Private equity is one of the toughest of these industries in which to land a job. If you don't have pre-MBA experience in the industry, the odds are stacked against you no matter how well your private equity interview goes.

Private equity interview questions will usually not include an LBO (leveraged buyout) modeling test for post-MBA positions, but it's still important that you are comfortable talking about an LBO and the main drivers of IRR (internal rate of return). If you have worked in investment banking, management consulting or private equity before your MBA, be ready to dive into all of your deals in extreme detail. To do this, you are likely to need to prepare for any private equity interview and study cheat sheets so that you can remember the company financials as well as the industry and relevant metrics for each deal you worked on. Remember, if it's on your résumé, it will be considered fair game in an interview.

While investment banking interview questions are more likely to test your technical finance knowledge, they will tend to focus less on your instincts as an investor than questions asked during a private equity interview. Indeed, the goal of the interviewer here is usually to assess how well you think as an investor. Are you looking at details of a case like a true buy-side professional or are you still stuck in the sell-side mindset of investment banking? Do you understand what makes a good private equity investment, all things being equal? :

  • Strong and stable cash flows
  • Limited capex (capital expenditure) requirements
  • Limited working capital requirements
  • Strong management team
  • Strong competitive position in the industry
  • Significant revenue growth potential
  • Limited downside    

The list above is just brushing the surface of topics you'll have to address when discussing a potential investment in a private equity interview. That being said, remember that price is the ultimate consideration. If you can buy a company cheap enough, the numbers might make sense even if the list of traits above isn't true across the board.

Good luck with your private equity recruiting!

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Patrick Curtis is the Chief Monkey and founder of WallStreetOasis.com (WSO), the largest online community focused on careers in finance. The site focuses on preparing candidates for the toughest investment banking interview questions, PE interviews, hedge fund interviews and a variety of other competitive careers. After six years living in New York, working in investment banking and private equity, Patrick got an MBA from Wharton in 2010.

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