Why do you want to work in private equity?
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How to Answer the Why Private Equity Interview Question
Why Private Equity is a common private equity interview question you’ll encounter if you’re going through the interview process at a PE firm. It’s important to plan ahead so you’re not caught flat-footed and so that you have a compelling answer to the question. This guide will help you think about how to structure your answer.
Why LBO? From CFI’s LBO Modeling Course.
Example Why Private Equity Answer
Note: the answer below is from the perspective of an investment banking analyst or associate.
After working on several consumer internet deals, I’ve realized that I’m extremely passionate about the sector, and I’d like to be closer to operating companies in the space. While I’ve enjoyed working on these deals in IB, I’d like to have a longer-term focus and believe the case for investing in consumer internet is still very strong. I believe the companies you’ve invested in here at PE Company Partners are great names and I’d like to be a part of building and growing this type of portfolio. While I thoroughly enjoy financial modeling work, I’d also like to get some exposure to theBoards of Directors and CEO or CFOof operating companies to help create value.
What to Include in Your Answer to “Why Private Equity?”
Based on the answer above you can probably identify a few key points that are strategically mentioned. Below is a list of the key points you should probably include.
What to discuss:
- Highlight that you have some transaction experience
- Express an interest in a sector that the PE firminvests in
- Position yourself as a long-term thinker or investor
- Show that you know what the PE firm has invested in
- Express a desire to work with portfolio companies to create value
While all of the above are great things to talk about, there are also some issues that it’s best to stay away from. It’s probably best if you don’t mention the following issues:
Don’t discuss:
- Money
- Hours
- Lifestyle
- Prestige
Different Paths to Private Equity
While the examples in this article have focused on investment banking (the most common path to private equity), there are other paths that should be mentioned as well.
Paths to PE include:
Since investment bankers work closely with PE firms on their transactions, IB is by far the most common path into the industry.
Top tier consulting firms (McKinsey, Bain, BCG, etc.) may also present opportunities, as well as people who worked on deals at public companies in the corporate development ground.
Finally, MBA recruitment can open the door to people from a wider range of backgrounds, though it’s rare to break into PE outside of coming from a previous job in IB, consulting, or Corp Dev.
For more practice to the Why Private Equity interview question, compare this guide to our Why Investment Banking?Guide.
Additional Resources
Thank you for reading CFI’s guide to answering one of the toughest private equity interview questions – Why private equity? To learn more and to ensure you’re well prepared, check out these additional resources:
FAQs
Examples of solid answers to the “why private equity” question: You want to work with companies over the long-term instead of just on a single deal. You want to get exposed to the operations of companies and understand all aspects rather than just the financial ones (note: “exposed to,” not “control” or “improve”).
How to answer why work in private equity? ›
What to Include in Your Answer to “Why Private Equity?”
- Highlight that you have some transaction experience.
- Express an interest in a sector that the PE firm invests in.
- Position yourself as a long-term thinker or investor.
- Show that you know what the PE firm has invested in.
As a leading global investment firm with a strong track record of success, kkr.com is an organization that aligns with my personal values and professional goals. I am drawn to the company's reputation for excellence, innovation, and commitment to making a positive impact on the world through its investments.
Why has private equity done so well? ›
Since private equity funds have far more control in the companies that they invest in, they can make more active decisions to react to market cycles, whether approaching a boom period or a recession. The result is that private equity funds are more likely to weather downturns.
How to answer why private credit? ›
The short answer: It's a solution to volatility, providing capital preservation and stable returns.
Why are you a strong candidate for private equity? ›
Examples of solid answers to the “why private equity” question: You want to work with companies over the long-term instead of just on a single deal. You want to get exposed to the operations of companies and understand all aspects rather than just the financial ones (note: “exposed to,” not “control” or “improve”).
How do you stand out in a private equity interview? ›
Show your personality: Headhunters meet with dozens of investment bankers every day, so you need to be able to stand out with your own unique personality. Beyond the actual interview, create small talk with all of the people you meet at the headhunting firm and be able to talk about more than just finance.
Why do I want to do private equity? ›
You enjoy learning about businesses and what makes them great. You want to develop portfolio operations skillset in addition to financial analysis, which sets you up well for a career in investing. PE has proven to be the investment style that delivers the most consistent returns over the long-run.
Why PE instead of IB? ›
However, investment bankers tend to work longer hours, often working late into the night and on weekends. Private equity firms also tend to have a more relaxed work environment and offer more flexible hours. So, if you're looking for a career with less hours commitment, private equity may be the way to go.
What makes KKR different? ›
We bring an extensive network of operational, capital markets, industry advisors, geopolitical, macro and sustainability resources to help create value for our companies and clients that goes above and beyond simply investing.
Private equity is ownership or interest in entities that aren't publicly listed or traded. A source of investment capital, private equity comes from firms that buy stakes in private companies or take control of public companies with plans to take them private and delist them from stock exchanges.
What is unique about private equity? ›
Private equity investors believe that the benefits outweigh the challenges not present in publicly traded assets—such as complexity of structure, capital calls (and the need to hold liquidity to meet them), illiquidity, higher betas than the market, high volatility of returns (the standard deviation of private equity ...
What makes someone successful in private equity? ›
A successful private equity leader must have a strategic vision, adaptability, strong communication skills, financial acumen, and an entrepreneurial spirit. By implementing the right strategies, private equity leaders can drive growth and profitability in their firms and secure their place as leaders in the industry.
What is the loss ratio in private equity? ›
The loss ratio is calculated by dividing the percentage of capital realised below cost (minus any recovered proceeds) by the total invested capital.
Why is private credit so hot? ›
A confluence of factors: Why private-credit investing has become so attractive. As elevated interest rates and tighter lending standards have made capital more difficult to obtain from traditional debt markets, private credit is creating solutions for borrowers — and opportunities for investors.
Why am I interested in private banking? ›
For some, private banking is an entrepreneurial field where you build a client list, advance based on your own merits, and enjoy high compensation and a great lifestyle at the top. For others, private banking is where you go if you couldn't get into investment banking or sales & trading.
Why do you currently want to work in venture capital private equity? ›
You might say you want get into private equity because you're interested in investing and going deeper into finance. That's fine. But the answer would be much better if you could mention that you want to learn more about investing because you've loved it since college when you part of your school's investment club.
Why do I want to work in private sector? ›
Working for a private company is a great option for people who enjoy the benefits of working for a company that doesn't have to answer to shareholders, doesn't have to publicly report their earnings and can adjust quickly.
What should I prepare for a private equity interview? ›
Private Equity Interview Questions & Answers
- Technical knowledge (finance, accounting, modeling)
- Transaction experience (deals you've worked on)
- Firm knowledge (what you know about the PE firm)
- Fit and personality (how well you fit in with the culture of the firm)
A career in private equity is one of the most desired professional pathways for a number of reasons – it can be extremely lucrative, it's intellectually rewarding, and in general provides a better work/life balance than other highly competitive areas in finance such as investment banking.
