Private Equity And LBO Analyst Interview Questions #5

  1. Please walk me through the process of calculating free cash flow.

  2. What is the purpose of a convertible preference note for a private equity firm?

  3. Explain me how do you calculate amortization of intangible assets?

  4. What is the use of excess cash flow?

  5. Depreciation for Company A is $10 million overstated. Explain how this overstatement will affect the financial statements.

  6. The asset's tax depreciation is $20 million over ten years, but the asset's financial statement depreciation is $10 million over ten years. Assuming a 40% tax rate, walk me through the impact of these variances on the financial statements.

  7. What's the difference between gross and net revenue?

  8. What makes you want to work in private equity?

  9. What do you want PE to be when it comes to a career?

  10. What is the current Private equity market?

  11. Which teams are now attempting to improve their personnel? / Do you want to increase your headcount?

  12. What qualities do you believe a successful private equity professional must must have?

  13. How can your previous experience benefit you in many ways in private equity?

  14. Do you currently invest, possibly through non-work-related means?

  15. What's the most recent book you've finished?

  16. What happened if you were part of a team and one of the members wasn't contributing properly? What was your reaction?

  17. What do you consider to be your biggest strengths? What are your greatest weaknesses?

  18. Are you a risk averse or a risk seeker? What are the conditions under which you crave risk the most, and why?

  19. What would your top manager say about you if I asked about yourself?

  20. In five years, where do you see yourself?

  21. Give an example of a period when you showed your commitment and effort.

  22. What has been the track record of the firm's funds? How did past funds perform in terms of IRR?

  23. What is the firm's history, and what are some of the firm's important historical portfolio experiences?

  24. What is a leveraged buyout and why is it helpful?

  25. When buying a company, why do private equity firms use leverage?

  26. How do you evaluate a private company when you just have limited information?

  27. What factors have the most impact on a leveraged buyout?

  28. What qualifies as a "ideal" candidate for an LBO?

  29. How do you evaluate a firm using an LBO model, and why do we say it establishes the "floor valuation" for the company?

  30. What are the advantages and disadvantages of LBO?

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