The Private Equity Interview: What You’re Really Being Tested On
Let’s be blunt. Private equity interviews are not conversations. They’re stress tests designed to filter out 95% of candidates before lunch. I’ve sat on both sides of the table, and here’s what actually matters.
Category 1: The Fit Questions
Why do you want to work in private equity?
What they’re really asking: Do you understand what PE actually is? Are you running away from banking or toward investing?
Bad answer: I want to work on deals and learn about businesses. (Generic, could apply to any finance job.)
Good answer: Specific reference to owning outcomes, working with management teams, and the investment judgment aspect. Mention a deal the firm did that you admire.
Why our firm specifically?
Red flag: Generic praise about track record or culture.
What works: Reference specific portfolio companies, investment thesis, or recent deals. Show you understand their strategy.
Category 2: Technical Questions
Walk me through an LBO model.
Not a request for a monologue. They want to hear Sources and Uses, Income Statement projections, Debt Schedule, and Returns analysis.
How does 0 of depreciation affect the three statements?
Income Statement: Operating income down 0, taxes down .50, net income down .50
Cash Flow Statement: Net income down .50, add back 0 depreciation = cash up .50
Balance Sheet: PP&E down 0, cash up .50, retained earnings down .50
Category 3: Deal/Investment Questions
Would you invest in [Company X]?
Structure your answer: Business overview, Investment thesis, Risks, Returns, Verdict.
What makes a good LBO candidate?
Stable cash flows. Low cyclicality. Asset-light. Strong management. Clear value creation levers.
Category 4: Market Questions
What industry would you invest in right now?
Have a prepared answer with tailwinds, fragmentation, recurring revenue, and example targets.
Bottom Line
PE interviews test three things: technical fluency, investment judgment, and culture fit. Most candidates have one or two. The ones who get offers have all three.
Want more preparation resources? See our Wall Street Prep Review and complete How to Get Into Private Equity guide.