Private Equity interview preparation

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September 2026

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1. 021What is a quality of earnings analysis and what are you looking for?Due diligenceHardtechnicalHWHarris WilliamsInvestment Banking · Richmond · 2025

   Say this

   It bridges reported EBITDA to a sustainable, normalised EBITDA that a buyer can actually underwrite. You are looking for anything in the reported number that will not be there next year.

   Then walk it

   1. Add-backs the seller proposes: one-time legal costs, owner's excess compensation, discontinued product lines, pro forma savings from actions already taken. Some are legitimate; many are not.
   2. The ones to challenge hardest: pro forma synergies from actions not yet taken, run-rate adjustments annualising a single good month, and recurring restructuring dressed as one-off.
   3. Revenue quality: customer concentration, contract terms and renewal rates, cut-off testing around the period end, and whether any revenue was pulled forward to flatter the sale process.
   4. Cost completeness: costs the business has not been bearing, such as an owner working unpaid, rent below market on a related-party property, or under-investment in maintenance and IT that a buyer will have to fund.
   5. Working capital: establish a normalised level, because the purchase agreement will have a working capital peg. Sellers manage working capital down before a sale, and if you set the peg from the manipulated level you overpay at completion.
   6. The output is an adjusted EBITDA and a defensible working capital target, and those two numbers are what the price is actually built on.

   Where candidates lose it

   Treating it as an audit. It is not; it is a normalisation exercise. And missing the working capital peg, which is where real money changes hands at completion and which most candidates never mention.

   Expect next

   • What is a working capital peg?
   • Which add-backs would you refuse?
   • How would you verify the pipeline to forecast revenue?

   Reported by candidates at Harris Williams (Investment Banking, Richmond, 2025). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.