The on-cycle interview process for private equity is known for its intensity and speed, often occurring over just a few days. And the 2025 recruiting season is shaping up to be particularly competitive.
A lack of exit options, stricter regulatory scrutiny, and intense competition for top deals are forcing PE firms to rethink their strategies and raise their expectations for new hires.
Candidates won’t just be expected to understand complex financial modeling—they must also demonstrate an acute awareness of market trends and have the agility to navigate an increasingly volatile landscape.
To help you navigate these interviews, we’ve collated expert advice on answering next year’s key questions.
1. “Walk me through a deal you worked on.”
PE firms will want to assess your ability to evaluate deals and overcome challenges.
When answering this question, structure your response to cover the deal’s objective, your specific role, the problems you encountered, and the outcome of the deal. It’s important to highlight how the deal relates to current market conditions or any recent shifts in industry focus.
You want to show that you understand the financial mechanics of the deal but also that you can think critically about how the deal fits into a broader strategic vision.
“The key to effectively structuring your discussion of past private equity deals is to balance technical detail with strategic insight,” says David Acharya, Managing Partner of Acharya Capital Partners.
“You want to show that you understand the financial mechanics of the deal but also that you can think critically about how the deal fits into a broader strategic vision. Always tailor your narrative to the position you’re applying for, emphasizing the most relevant skills, whether they are related to financial analysis, operational strategy, or deal sourcing.
“Start with the investment thesis, then use the financials to back up your investment case. Acknowledge the risks inherent in the deal and discuss the steps you took to mitigate them. Finally, tie everything together by discussing how the investment will eventually be realized—what the exit routes are and how you will prepare the company for that exit.”
2. “How do you prioritize investment opportunities?”
Private equity investors look for candidates who can assess both quantitative and qualitative investment factors.
Emphasize criteria such as risk-adjusted returns, current market trends and portfolio diversification in your answer. Make sure your response aligns with the firm’s strategic focus to show you understand their priorities.
“All candidates should have knowledge of all valuation techniques including DCF (discounted cash flow), comparative companies’ analysis, PTA (precedent transaction analysis), LBO (leveraged buy-out) analysis, and sum-of-the-parts (SOTP) analysis,” says Acharya. “The two key techniques are PTA and LBO analysis.
“Discuss the strategic rationale for the acquisition. Mention the importance of assessing potential synergies, including cost savings, revenue enhancement, and any opportunities to integrate resources effectively. Differentiating between hard and soft synergies can further demonstrate a nuanced perspective.
“Finally, acknowledge external risks (for example, regulatory or competitive issues) and internal risks (such as those relating to cultural integration). Conduct a scenario analysis to test different outcomes based on market and operational uncertainties.”
3. “Describe a time when you dealt with a failed investment. What did you learn?”
This question assesses your self-awareness and adaptability, which are some of the most sought-after qualities in private equity professionals.
Be transparent when discussing the project; don’t shy away from talking about what you found challenging. Focus on what you learned from the experience and any improvements you made to your investment process afterward.
The key is to select a meaningful but not catastrophic failure, concisely explain the context, and take clear ownership of mistakes without making excuses.
“The most effective approach is to frame the situation using the “STAR+L” method (situation, task, action, result, plus lessons) while emphasizing growth and subsequent application of lessons learned,” says Meridith Dennes, Managing Partner of Prospect Rock Partners.
“The key is to select a meaningful but not catastrophic failure, concisely explain the context, take clear ownership of mistakes without making excuses, and most importantly, articulate specific actions taken to prevent similar issues in the future.”
4. “What differentiates our firm’s investment strategy from others in the market?”
PE firms value candidates who understand the market and can clearly and succinctly articulate their unique value propositions.
Study team members’ backgrounds and investment philosophies through interviews or articles, and analyze the performance of portfolio companies to identify key patterns. Focus on investment patterns such as deal sizes, equity checks, preferred industries, geographic focus, and investment hold periods.
Pay attention to ownership structures, whether control or minority, and track how the firm navigates market cycles. Create a deal sheet summarizing recent transactions, ask specific questions about unclear investment strategies, and monitor recent exits to understand their success metrics and competitive differentiation from peers.
“Dive deep into their website to understand investment criteria, portfolio companies, and recent deals, while reviewing press releases and news coverage on recent investments and exits,” recommends Andrea Benson, Managing Director at Prospect Rock Partners.
5. “What’s your approach to valuing a potential acquisition target?”
This question invites you to demonstrate your technical proficiency and market insight, which are essential for making sound investment decisions.
Outline your valuation methodology clearly, discussing fundamental analysis, financial modeling and any relevant market conditions or trends in valuation multiples.
“Mentioning relevant metrics, analysis techniques, and considerations for each factor will show your depth of knowledge,” advises Acharya. “Where appropriate, delve deeper into technical aspects, such as the mechanics of financial models, risk modeling, and valuation methods. This shows that you understand the tools and techniques used to assess PE opportunities.”
“And don’t forget to discuss how each element ties into the broader investment strategy; this will set you apart from other candidates. PE is as much about execution as it is about understanding the long-term strategic vision.”
6. “How do you handle the pressure of high-stakes decision-making?”
PE firms are looking for candidates who display resilience and an ability to maintain composure in high-intensity environments.
Provide examples that illustrate how you manage stress and achieve successful outcomes in high-stakes situations.
The key is to highlight both the technical and interpersonal aspects of pressure situations. Explain how you maintained clarity of thought to solve complex problems.
“Focus on specific high-stakes examples that showcase your structured decision-making process and emotional intelligence,” says Dennes. “For instance, describe managing multiple competing deal deadlines, handling last-minute changes in transaction terms, or navigating challenging client situations.
“The key is to highlight both the technical and interpersonal aspects of pressure situations. Explain how you maintained clarity of thought to solve complex problems while simultaneously managing relationships with various stakeholders—whether they’re clients, senior bankers or counterparties.”
7. “How would you help a portfolio company increase its value in today’s market?”
This question highlights your understanding of value creation, which is what every PE firm is ultimately aiming for.
In a recent article, PwC highlights six areas to be familiar with: talent, GenAI, pricing, commercial excellence, operational improvement, and tax.
“To help succeed with value creation, firms typically don’t have to focus on every single area,” say the authors. “The key is to find the speciality or skillset that your firm wants to develop to bring down those improvements to your portcos.”
For example, if talent is a key area of focus for value creation, the article suggests it’s better to be decisive and fast with personnel changes. “Invest early in understanding your leadership team and their ability to execute, so you can make an informed decision sooner.”
In a private equity interview, be prepared to share specific strategies you would employ and tailor them to today’s economic landscape.
8. “What are the most important macroeconomic factors impacting our target industries?”
This question reveals your knowledge of how the macroeconomic environment intersects with PE strategy. Discuss critical trends such as interest rates and regulatory changes, and explain their implications.
Candidates should prepare specific examples of AI implementation in PE operations, stay current on major infrastructure projects and renewable energy investments, and understand operational value creation strategies.
“Infrastructure and clean energy investments remain crucial, driven by the Infrastructure Investment and Jobs Act and Inflation Reduction Act, with significant emphasis on renewable energy projects and decarbonization efforts,” says Dennes.
But AI is also top of mind for private equity firms, many of whom are expanding their AI implementation beyond back-office functions to enterprise-wide platforms, particularly for due diligence, investor reporting and portfolio value creation.
“Candidates should prepare specific examples of AI implementation in PE operations, stay current on major infrastructure projects and renewable energy investments, and understand operational value creation strategies,” Dennes recommends. “You can stand out by combining your technical knowledge with strategic thinking – don’t just discuss the trends themselves, but their interconnections and long-term implications for the industry.”
It’s also important to demonstrate your knowledge of the latest geopolitical shifts. “Tensions such as trade disputes or geopolitical instability are likely to be top-of-mind,” says Acharya. “Candidates should discuss the importance of geopolitical risk analysis and strategies for mitigating these risks, such as diversifying supply chains or investing in regions with stable governance. Demonstrating an understanding of how global inter-dependencies affect portfolio companies can set candidates apart.”
Understanding the economic significance of Donald Trump’s election is a key part of this. “New President, new approach,” says Acharya. “Candidates should demonstrate knowledge of how economic cycles influence deal-making, portfolio company performance, and exit strategies. For instance, slower growth may lead to a focus on recession-resilient sectors, whereas a robust economic outlook could open opportunities for growth-oriented investments.”
9. “How would you structure a deal to minimize risk?”
This question assesses your risk management capabilities, which are a priority for firms—particularly during volatile economic conditions.
Mention your experience with risk mitigation techniques that are relevant to today’s market, such as thorough due diligence, the inclusion of covenants, well-defined exit strategies, and how to assess the right mix of debt and equity financing.
“There are many conditions that can be included in a deal to help mitigate the financial risks. You need to be able to confidently talk to methods you’ve used in previous deals, and give context on why they were suitable in that context,” says Deven Monga, VP at Ideals VDR.
“As a starting point, you should consider clawbacks, earn outs, incentive schemes, and preferred equity.
“Ultimately, you need to demonstrate that you have an understanding of the different factors that influence how a deal is structured so it aligns with your company’s risk tolerance and investment strategy.”
Essential resources for interview prep
Securing a role in private equity requires more than just technical knowledge—it requires a keen understanding of industry trends, financial modeling and deal structuring.
Here are some useful resources that can help you prepare.
- “Private Equity at Work” by Eileen Appelbaum and Rosemary Batt
This book provides a comprehensive overview of private equity’s impact on companies and markets, giving valuable context for high-level discussions. - Wall Street Prep’s private equity interview prep course
Known for its rigorous approach, Wall Street Prep’s course covers financial modeling, case studies, and industry-specific knowledge for aspiring PE professionals. - PitchBook data
With access to global market insights, industry trends, and deal metrics, PitchBook is a valuable source of market knowledge, allowing you to hone your deal analysis skills. - Harvard Business Review case studies
These cases offer real-world examples of PE deals, helping candidates develop analytical skills and strategic thinking. - Podcasts like “Dry Powder: The Private Equity Podcast” and “Capital Allocators”
Industry experts discuss the latest trends, regulations and best practices, which can add depth to your interview answers. - Vault guide to PE and Hedge Fund interviews
This book covers all aspects of private equity and hedge fund recruiting, including checklists for the interviewing process.
