The chance to get into Private Equity is always competitive and challenging. In the top-notch private equity firm, the interview questions are much difficult to sort out the best from the rest. So, the more you prepare, the higher chance you pass the interview.
If you are new to Private Equity, you can have a look at these following resources
- Private Equity
- Private Equity Associate
- Private Equity Salary
1. Private Equity Recruitment Process
There are 2 types of recruiting processes: The on-cycle process and Off-cycle process. They both aim to recruit for the Associate role but they differ in timing, the hiring criteria, steps, and interview.
1.1 On-Cycle Recruitment Process
Who can join?
The on-cycle process is mostly meant to hire the top Associate from bulge bracket and elite boutique banks.
What should I notice?
- The process can start as early as after a few starting months of analysts at bulge bracket and elite boutique banks
- If you finish the process and you get the job offer, you can only start in the next 1.5 – 2 years. For example, if you get the job offer in 20×1, you will only start your job in 20×3.
- The process will be conducted very fast from the start to finish and the headhunter, they have the full power on the recruitment process so you’d better show up well prepared and win the headhunter.
1.2 Off-Cycle Recruitment Process
Who can join?
The Off-cycle process aims for recruiting the Analyst roles straight out from college or roles for non-experience in Investment Banks.
What should I notice?
- This type of recruitment offers successful candidates to start working instantly unlike the On-cycle Process. The process of recruiting will start earlier than the On-cycle one, instead of conducting in October, the process of this recruitment often starts in January.
- The off-cycle recruiting process has the duration longer, which recruiters want to assess your “fit” and critical thinking abilities on deeper levels and they also require more thought and preparation of a real investment thesis.
- Headhunters have little power here so you should try to catch his/her attention by networking and well represent yourselves.
So, how can I spot out the differences between the two cycles?
Investment Banking Analysts
Lots of heavy time pressures
Focuses on the in-depth thought process
When to start the job?
1.5 – 2.0 years after receiving the offer
2. The Interview Process
After passing the resumes round, you will receive the official invitation to the interview. Almost all Private Equity interview process has the similar characteristics:
- Multiple Interview Rounds: The number of this round depends on the firms. Typically, you’ll always go through at least 2-3 rounds of interviews with different levels such as speaking with junior to senior professionals at the firm.
- Interview Topics: is diverse so knowing them beforehand will help a lot. During the interview, you will have to answer many types of question, for instance:
There are something you should notice before coming to the interviews:
- Timing: In the mega-funds, it takes several months for the recruitment process from start to finish. Interviews at the largest firms duration is 24-48 hours. In contrast, at smaller PE firms, interviews start later and the entire process lasts for several weeks.
- Tests: In the on-cycle process of large funds, they focus more on asking you the modeling questions and deal/client experience question. In smaller funds and in off-cycle interviews, they will focus more on your practical experience with clients and deals or they want you to explain the reason behind case studies or modeling tests.
Firm and Industry Knowledge
Given that negative profitability will make most multiples analyses meaningless, a DCF valuation approach is appropriate here.
Quick IRR Maths
4. Tips to Ace the Interview
4.1 Prepare for the interview
Private equity firms look for the candidates who have the thinking like an investor rather than just being capable of performing the tasks for deal execution. The PE recruiting process is much more intense, and the firm is looking for something different than the investment bank. PE interview preparation is very similar to the preparation for investment banking interviews, but the real interview in PE is much harder.There are some simple steps for you to prepare:
- Prepare and remember what you write in the resumes.
- Think about the focus of the position or the industry you want to work in.
- Think about the type of private equity fund you want to get in (Mega/large fund or middle market fund), Geographic location of PE firm, and the investment style (buyout, growth capital,etc.)
- Practice the questions with others to prepare for the interview.
4.2 Sample questions to ask the Interviewers
The last important factor after the interview process is Q&A time. You will have the opportunity to ask the interviewers a few questions, and the interviewers will assess how interested you are to the firm. You shouldn’t take this part for granted yet prepare well for it. The following list provides some examples of questions for your reference:
- Can you elaborate on the typical day-to-day activities and responsibilities for this position?
- What is one thing you like about working at this firm and what is one thing you think you would improve about the firm? (This question shows that you are trying to get more insight into the reality of working at this specific firm)
- What’s your favorite deal that you’ve worked on at the firm?
- How is the quality of the investment opportunity sourcing at the firm?
- What are the key characteristics that you expect from an individual that will be selected for this position?
- In brief, what are the firm’s long-term goals?
- Is there an opportunity for an associate to build his or her career at this firm over the medium to long-term?
- How do you manage work, family, and community involvement?
- What part of this job do you find the most rewarding and challenging?
To get the offer from PE firms, not to mention the mega firms, you have to be the know-it-all guy. The wide knowledge and deep understanding in the financial industry, economics, statistics, mathematics, business management are needed to go through the interview process. Don’t forget to understand yourself, prepare your own story and define exactly what you want in the position you are applying for in PE.