Private Equity And LBO Analyst Interview Questions #1

Question Asked For Private Equity Analyst Job Role


  1. What is an LBO, exactly?

  2. Walk me through the LBO model's mechanics.

  3. What are the different type of private equity firms?

  4. What characteristics distinguish a suitable LBO investment candidate?

  5. What are the many methods for determining a company's value?

  6. You have two companies in separate companies with different EV/EBITDA multiples. What are some possible reasons for the difference in their EBITDA multiples?

  7. What is the difference between senior and junior notes?

  8. What are the most important factors to consider when planning a carve-out transaction?

  9. How would you decide how much leverage to use in the capital structure of a company?

  10. What inspires you?

  11. What makes you so special that we should hire you?

  12. What is the biggest risk you've ever taken?

  13. How to calculate NPV and IRR?

  14. What is the investment strategy of the company or fund? What would be the prospective responsibilities for an associate at the firm? (e.g. size, area, industry, kind of control, primary/secondary, minimal operational outcomes, timing) Is there any sourcing involved? What do you mean by that?

  15. What is the company's financial performance? What is the investment structure of the fund? What is the structure of the investment committee?

  16. What's the difference between high-yield debt and bank debt?

  17. Why would you employ bank debt in an LBO instead of high-yield debt?

  18. Why would a private equity firm prefer high-yield debt over other investments?

  19. In the LBO model, how do transaction and finance fees play a role?

  20. In an LBO, what is the point of assuming a minimum cash balance?

  21. Can you describe how an LBO model adjusts the balance sheet?

  22. In an LBO, how you calculate goodwill?

  23. In an LBO, why are goodwill and other intangibles created?

  24. Why would a PE firm desire to employ debt in an LBO whereas a strategic acquirer would prefer to pay cash for another company?

  25. How can a private equity firm improve its LBO returns?

  26. What is a dividend recapitalization, and how does it work?

  27. What impact would a dividend recap have on an LBO's three financial statements?

  28. What's the difference between high-yield debt and bank debt?

  29. Describe the most recent transaction you worked on. How significant was your contribution? What were some of your responsibilities?

  30. What are the current trends in the oil and gas industry? What is the current state of prices?



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