Private Equity Analyst Interview Questions UK: 8 Real Questions and What Interviewers Want

Before your Private Equity Analyst interview, it helps to see the questions from the interviewer's side. We have picked eight from our set of 15 and added the reason each one gets asked.

Eight Private Equity Analyst interview questions, and what the interviewer is thinking

1. Walk me through a basic LBO model and explain what drives returns.

Why they ask: The staple technical question for any private equity analyst interview.

2. What makes a good private equity target, and what would make you walk away?

Why they ask: Tests investment judgement rather than mechanics.

3. How would you calculate IRR and money multiple, and why do funds look at both?

Why they ask: Checks core return metrics understanding.

4. What are the key things you look for in financial due diligence and quality of earnings?

Why they ask: Tests ability to scrutinise a target's numbers.

5. Explain the difference between enterprise value and equity value and how you move between them.

Why they ask: A fundamental concept that must be precise in a PE interview.

6. Your model shows an attractive IRR, but you notice the case depends heavily on an aggressive exit multiple. What do you do?

Why they ask: Tests intellectual honesty and sensitivity thinking.

7. Tell me about a time you analysed a company or deal on your own, and what your analysis showed.

Why they ask: Tests practical analytical experience, even from academic or internship work.

8. Why private equity, and what do you think a day in the life of a PE analyst looks like?

Why they ask: Tests that your motivation and expectations are realistic.

A sample answer to question 1

Walk me through a basic LBO model and explain what drives returns.

An LBO buys a company using a mix of equity and debt, with the debt serviced from the company's cash flow, and then exits after typically four to six years. I'd start with the entry price: an EBITDA multiple times the LTM EBITDA gives the enterprise value, plus fees. Then I set the sources, for example senior debt at four to five times EBITDA, perhaps a second lien or mezzanine layer, and the sponsor equity as the balancing figure. I project revenue, margins, capex and working capital to get free cash flow, which pays interest and repays debt. At exit I apply an exit multiple to year-five EBITDA, deduct net debt and arrive at equity value, from which I calculate IRR and money multiple. Returns come from EBITDA growth, multiple expansion and deleveraging, so I'd show how much each contributes. Realistically I'd treat multiple expansion cautiously, as it's the least controllable.

Common mistake to avoid: Reciting steps without drivers; relying on multiple expansion

Want the rest?

Full model answers, key points and common mistakes for all 15 questions are on the Private Equity Analyst interview questions page. The first five are free, no sign-up needed.