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How to prepare for the case study in a private equity interview

How to prepare for the case study in a private equity interview

Over the last couple of weeks, hiring within private equity funds has certainly slowed down. However, there are some funds that are continuing with their hiring plans and where possible looking at starting candidates remotely. Therefore, if you are a candidate looking to make a move to the buy-side, one thing is for certain; the number of jobs available has reduced and your competition has increased for the available jobs.

Most candidates who are looking to move to the buy-side are worried about the case study rounds of the interview process. It is also the stage where you commit the most amount of your time and will form a significant part of the firms hiring decision on your application.

As a result, I thought I would share some useful tips for the case study round for candidates still interviewing or looking to resume their search once the COVID-19 crisis is behind us.


Make a decision. 

Candidates are sometimes too concerned with making the wrong suggestion to invest or not, some even avoid deciding all together or decide with several caveats. This is not going to work. There is no harm in highlighting a key risk, or at least you should think of the risks for when you are questioned on the investment. Decide, have an opinion and show logic behind that opinion. The last point is crucial. You will feel under pressure, perhaps run out of time and might not get everything right. But what you have done, it needs to make sense. I had one client that said they don’t mind if a candidate doesn’t finish a case study, if what they have done shows their thinking is along the right path. Some candidates under pressure and running out of time have guessed, made poor assumptions and both are hard to justify. Use your common sense. It’s important to state, whilst some firms don’t mind if the case study is not finished, all will expect you have got far enough to form an investment decision.


Modeling isn’t everything. 

Looking for a job in private equity without solid LBO modeling skills is probably not going to work. A fund doesn’t have time to train you in basic modeling, so you need to make sure you have practised this. However, in case studies I have known candidates spend too long on the modeling section and over complicate this aspect, to the point that it impacts their ability to finish the case study. The model should guide your investment recommendation, but you will have to analyse several topics in detail that the model doesn’t show. Which ultimately will make the decision to invest or not. A candidate who produces an excellent model but has not thought out their investment decision and isn’t succinct in their presentation is unlikely to get the job. Leave yourself time to think how you are going to articulate your decision. Funds want concise, structured and logical recommendations. Some funds will forgive slight errors in your modeling work if the rest of the interview goes well.

Investor mindset. 

Following on from how modeling isn’t everything, you need to be able to demonstrate you have an investor mindset. Most candidates for a Private Equity role will be coming from M&A teams in Investment Banks, where the work usually stops once the acquisition is complete and it’s onto the next deal. Private Equity is all about the long term and how that business is going to perform over typically a 3-5-year period and ultimately how the fund is going to get their exit from that investment. You need to demonstrate you have considered factors which are going to impact the business performance during that period (management team, customer base, competitors, location etc)


Think of the firm. 

Just because an investment in the case study could appear attractive from a return’s perspective, think of the firm you are interviewing for and does it fit into their investment strategy. Research their current investments and if you are interviewing for a sector specific fund, make sure you understand key ratios and multiples used in that sector. I had a candidate interview for a special situations fund and whilst the case study from a technical perspective went well, they felt the candidate lacked genuine enthusiasm for special situations and it came across as this is one of many different avenues the candidate is considering. This will not be enough in most circumstances.

So, if you are currently going through an interview process with a fund, I hope the above is helpful for preparing for case studies. If you have any future questions about how to prepare for the case study in a private equity interview, contact me on Adam O'Donnell adamodonnell@leap29.com.


Posted by Adam O'Donnell