In any interview, and certainly in private equity interviews, you should walk in armed with questions about the company so you can glean more about your potential employer and the company can come away with some appreciation that you’ve done your homework. That said, this won’t be the time to ask about benefits and pay—ask too early and you look greedy. Instead, you'll want to ask smart questions about the company to learn more about what it does, how it operates, and what your position might look like. And so, here are four sample questions to ask during your next private equity interview.
1. Roughly, how many people do you hire each year? What’s the turnover like here?
This is a good basic question for any company, let alone one in private equity. This question gives you a sense of the rarity of openings, as well as how long people stay at the company. The demand for good private equity employees is strong, and anybody with private equity experience can go elsewhere for more money, so don’t get too alarmed if turnover seems a little higher than you might expect. That said, low turnover is a very good sign—people are making plenty of money, and the work keeps them interested and fulfilled.
2. How do you deal with the issue of employee retention?
Following the previous question, this is the sneaky way of asking about pay and benefits without actually asking. You’re likely to start a conversation about “aligning the interests of the company and employee” through various bonus programs and the like. You may also get a sense of the company’s culture, especially if they actually bring up things like work environment, corporate values, and work/life balance. (Admittedly, work/life balance discussions will be rare—you won’t be expected to have that much of a life outside a work.) Be wary of the interviewer who says he or she isn’t worried; every firm on Wall Street should be. There’s plenty of demand for top talent throughout finance, and private equity firms are still up against tough competition from hedge funds, on the riskier side, and from more traditional Wall Street firms that may now be more averse to risk. You want to hear reassurance that this is a top priority for the firm.
3. How much do you plan to take advantage of the recent interest in private equity investing to grow the business?
Knowing the current mindset of private equity fund investors and the ebb and flow of the business is important, and this question shows you have some interest in that. This will also give you a sense of the strength of the company’s business and its future plans for expansion.
4. In your acquisition of Company X, you opted for Exit Strategy A instead of Exit Strategy B. Why is that?
Asking smart questions about recent or historical acquisitions is always a nice way to show off your research and intelligence; it also gives you a better sense of the company’s investing philosophy. That said, the key word here is smart. If you’re going to ask about any deals, know them cold, and ask specific questions. “Were you happy with the way Deal Y turned out?” is not going to make you look good, and the interviewer is going to sit back and say, “Well, sure.” But if you can ask a smart question about the financing structure of Deal Y, that will get your interviewer talking. And that, of course, is a very good thing.
The above was excerpted from the Vault Guide to Private Equity and Hedge Fund Interviews.
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