How to prepare Private Equity interview ?

Private Equity is a type of investment in which firms pool funds from various sources, such as pension funds, institutional investors and high-net-worth individuals, to invest in private companies. Private equity funds are typically managed by private equity firms that raise capital from limited partners and invest in a variety of opportunities, including buyouts, growth capital, mezzanine financing and distressed investments. If you want to join the industry and succeed in a Private Equity interview, there are several ways to get there.

Few professions arouse as much interest from students in Grandes Écoles as Private Equity. Beyond the prestige and levels of remuneration, Private Equity is a fascinating profession thanks to the financial, entrepreneurial and strategic expertise it requires. However, investment fund teams are often very small, so there are few job offers. This gap between the supply and demand of young graduates makes recruitment extremely selective. Anne-Sophie, a headhunter for Private Equity funds at AE SEARCH, shares the keys to succeeding in your interviews: how many rounds a Private Equity process contains, what they consist of, and how to prepare to land an offer.

How many interviews in a Private Equity process?

Before applying to a Private Equity fund, make sure you are well prepared: once a process is launched, the first step can come very quickly. For an internship in Mid or Large Cap, there are generally 2 to 3 rounds of interviews. The goal is to meet as many team members as possible.

In a classic process, a student is likely to meet 2 Associates during the first round, then 2 Principals (or 1 Associate and 1 Principal) during the second round.

For a permanent position (after a few years of experience), there are no rules: there can be between 4 and 12 rounds of interviews.

The process varies depending on each fund, its size and the number of people per team. For example, for a Large Cap fund with offices in Paris and London whose teams work together regularly, the candidate will meet many more people than in a standard process.

A typical process for a permanent contract (CDI) in a Mid Cap or Upper Mid Cap fund after 2 to 3 years of experience usually consists of the following steps:

• Round 1: fit and motivation interview with a Principal or VP (usually in charge of recruitment)
• Round 2: fit and technical interview with Associates
• Round 3: case study followed by a debrief with team members
• Round 4: meeting with a Partner
• Round 5: meeting with another Partner
• Round 6: for some funds, a drink or lunch with the whole team

What questions should you expect in a Private Equity interview?

A Private Equity interview round is either a fit and motivation round or a technical round. There are generally 6 to 7 steps in a recruitment process to join a Private Equity fund.

1. Questions about your background

The candidate must be able to present themselves concisely, highlighting the key elements of their background. You should be able to walk through your CV, both your academic background and your professional experience.

The recruiter will challenge the candidate on their academic and professional journey. The candidate must be able to describe in detail the missions, M&A deals or due diligences they have worked on, whether as an intern or a permanent employee. If the candidate mentions the Tiffany / LVMH deal on their CV or in an interview, the interviewer may ask them to elaborate and give their opinion on the transaction. Is it a good acquisition, especially considering the state of the market? What do you think of the luxury market? Would you have made this acquisition?

For someone in strategy consulting, the interviewer can ask about a due diligence they carried out for an investment fund. The candidate must provide as much information as possible while respecting the confidentiality of transactions that are not public.

You must therefore always be able to explain every line of your CV. Mentioning a deal on your CV but being unable to talk about it in an interview can be a deal-breaker.

2. Motivation questions

These are fairly standard questions that allow the recruiter to understand the candidate’s motivations. The candidate must be able to explain clearly why they want to work in Private Equity, and why specifically in Small, Mid or Large Cap. Similarly, they must be able to explain why this particular fund interests them: company culture, team culture, investment strategy.

These questions quickly show whether the candidate has applied out of genuine interest in the team, or simply to find a seat in a fund and leave M&A or strategy consulting.

The candidate must build a coherent case for both the position and the fund. Saying that you are in processes with Large Cap funds while interviewing for a Mid Cap fund can be very compromising.

3. Fit questions

Over the course of the discussion, the interviewer will determine whether the candidate’s personality is compatible with the team. Private Equity teams are small, so the candidate must be able to get along with everyone. Fit can be judged on attitude during the interview, but also on interests and activities outside of work. A candidate and a recruiter who share a passion, such as golf or a particular style of music, have a point in common that will ease the candidate’s integration.

4. Technical questions

This is the part candidates fear most. The questions generally concern the LBO model: you must know its main characteristics, understand how it is built and be able to explain it easily. The candidate may also face more traditional questions found in investment banking interviews: steps of an M&A deal, accounting or valuation questions.

For a permanent contract (CDI), the questions will be more in-depth. For an internship, the candidate will be asked to complete an LBO paper, while for a permanent or graduate position there will be an additional round dedicated to an LBO case.

5. Business sense questions

The interviewer will want to know whether the candidate can think beyond the numbers. This is a strategic part where you must show the extent and relevance of your research: knowledge of deals, sectors and markets.

A few examples of business sense questions:

• Could you talk about one of our portfolio companies?
• If you could invest in a company, which one would it be?
• Is there a company in our portfolio that you would not have invested in?

6. LBO case or strategic case

This step is reserved for candidates who already have 2 to 3 years of experience and want to join a Private Equity fund on a permanent contract (CDI). In principle, the case lasts either 3 hours or between 24 and 48 hours, but there are no rules: everything depends on the format chosen by the fund.

Starting from an Investment Memorandum of 30 to 40 pages with extensive information about the target company, the candidate has to build an LBO model from scratch. This tests their ability to model quickly as well as their technical skills.

After this work, the interviewer may take the LBO case further with more strategic questions, such as: “Now that you have done all this modelling work, would you invest in this company?”

7. Informal meeting with the team

At this stage of the process, the team already has a very good idea of the candidate: they have passed all their interviews, and the goal is now to see whether they will get along with the whole team. During an informal drink or lunch, the team will observe how the candidate behaves in a social setting. Do they have a sense of humour? Can they bounce back on what their colleagues say? Are they confident? These elements help predict how the candidate will behave in professional exchanges. This informal meeting is therefore a decisive step, and the slightest mistake or inappropriate remark can jeopardise the entire process.