The PE Interview Playbook: How to Land Your Dream Private Equity Role
Master PE Interviews: The Skills That Make Partners Say ‘We Need This Candidate’
What separates the candidates who secure placements from those who don't? It's not just technical knowledge—it's knowing exactly what PE partners are really looking for.
The Uncomfortable Truth About PE Interviews
This is what most candidates don't realize: Private equity interviews aren't just about proving you can build models.
I've seen brilliant analysts with ideal technical skills be rejected, while others with "good enough" modeling abilities secure multiple placements. Why? Because the strongest candidates understand that PE firms are looking for future capital-makers, not just spreadsheet jockeys.
The real question they're asking: "Can this person help us generate returns?"
🎯 PART I: Technical Mastery (But Not What You Think)
The DCF Question That Trips Up 80 percent of Candidates
"Walk me through a DCF model."
The Wrong Answer: Most candidates launch into a mechanical recitation about revenue flows and reduction percentages.
The Right Answer: Start with the "why" before the "how."
"A DCF—Discounted Capital Flow model—tells us what a business is actually worth based on the revenue it will generate for its owners. In PE, we use it to determine if we can acquire a company below its intrinsic value and sell it above that value."
Then walk through the mechanics:
Step 1: Project unlevered unrestricted revenue flows (typically 5–10 years)
Step 2: Calculate terminal value using perpetuity growth or exit multiple
Step 3: Reduce everything back using WACC
Step 4: Sum for enterprise value, subtract net borrowings for equity value
Pro tip: Always mention the limitations—DCFs are as reliable as your assumptions, which is why PE firms use multiple valuation methods.
The IRR Question That Reveals Your Experience Level
"What is IRR and how do you use it?"
Amateur answer: "IRR is the percentage that makes NPV equal zero."
Professional answer: "IRR measures the compound annual return on our capital. In PE, we typically target 15 to 25 percent IRRs depending on the strategy. But the key point—IRR can be misleading if you're not careful about timing and revenue flows."
Example:
"If we acquire a software company for 10x EBITDA, grow EBITDA 15 percent annually, and exit at 12x after 4 years, we might generate a 25 percent IRR. But if the same company takes 6 years to exit, that IRR drops to about 18 percent—which is why we also look at absolute returns and equity multiples."
🔍 PART II: The Case Study Questions That Make or Break You
The Negative EBITDA Trap
"How would you value a company losing capital?"
This question separates the rookies from the pros.
Most candidates panic and suggest "alternative" methods. Smart candidates recognize this as a moment to demonstrate real-world thinking:
Framework:
Understand the "why" — Is it a growth company investing in customer acquisition? A turnaround? A business model issue?
Look at unit economics — What's the path to profitability at the customer/product level?
Use forward-looking metrics — Revenue multiples based on when the company reaches steady-state
Consider asset value — What could you recover in a downside scenario?
Example: "If it's a SaaS company using capital for growth, I'd look at ARR multiples for similar companies, analyze the LTV/CAC ratio, and model when they hit break-even. If it's a distressed manufacturer, I might focus on liquidation value of assets."
💼 PART III: Capital-Thesis Questions That Show Your Instincts
The Capital Thesis Pitch That Actually Works
"Tell me about a capital deployment you would pursue."
Structure that works:
Hook with the challenge: "Small healthcare practices are drowning in administrative complexity..."
Present the approach: "Practice management software that reduces admin expenses by 30 percent..."
Show the angle: "It's a 15B market growing 12 percent annually, highly fragmented with the largest player having under 5 percent share..."
Explain why this timing: "Fresh regulations are forcing digitization, and global events accelerated adoption..."
Address the risks: "Key risks include regulatory changes and customer concentration, but we'd mitigate through..."
Show the returns: "At 8x EBITDA entry and 12x exit with 20 percent EBITDA growth, we're looking at 25 percent IRRs..."
🎪 PART IV: Behavioral Questions That Reveal Character
The "Why PE?" Question That Everyone Gets Wrong
Bad answer: "I want to own businesses and create value."
Good answer: "In banking, I analyzed transactions. In PE, I'd help execute the value-creation thesis. I'm drawn to the combination of strategic thinking, operational improvement, and long-term wealth building. When I worked on [specific transaction], I became fascinated by how [specific operational change] could drive [specific return]."
The Pressure Question That Tests Resilience
"Tell me about a time you worked under pressure."
Use the STAR method, but make it PE-relevant:
Situation: During a live auction for a healthcare services company, our client's financing fell through 48 hours before final bids.
Task: I needed to restructure the entire economics and find alternative financing.
Step: I worked through the night modeling different funding structures, contacted six lenders, and prepared three alternative bid scenarios.
Outcome: We submitted a successful proposal and closed the transaction. The company returned 3.2x over 4 years.
📈 PART V: Market Questions That Show Strategic Thinking
Framework:
Operational Excellence (40 to 60 percent of returns)
Strategic Growth (20 to 40 percent of returns)
Capital Structure & Conditions (10 to 20 percent of returns)
🚀 The Secret Tool: Questions You Should Ask
Smart candidates flip the script:
"What's the most surprising thing you've learned from your portfolio companies in the past year?"
"How do you think about ESG considerations in your capital decisions?"
"What operational-improvement initiatives have generated the highest returns across your portfolio?"
"How has your thesis evolved post-global events?"
Core Message
Private equity interviews aren't just about technical knowledge—they're about demonstrating capital judgment, strategic thinking, and the ability to create value.
Your homework: Pick three companies in your target sector and build capital theses for each.
📈 How Sutton Capital Helps You Master These Conversations
Breaking into private equity requires more than memorizing frameworks. It demands the ability to think strategically, communicate with conviction, and position yourself as someone who can create alpha—not just analyze it.
At Sutton Capital, we help ambitious professionals land roles at top-tier PE firms by focusing on:
✅ Personalized positioning strategies
✅ Real-world case studies & live simulations
✅ Executive interview coaching
✅ Direct introductions to our network
📅 Ready to take the next step in Private Markets or Strategic Advisory?
👉 Book a Private Planning Session with Our Team
We’ll review your background, identify your strengths, and build a tailored strategy to secure your ideal role.
To Your Growth,
The Sutton Capital Team