Private Equity interview preparation

Questions

100

Traced to a firm

83

Firms

40

Updated

September 2026

Asked at

All firmsAdvent International6Apollo Global Management6Audax Group6Carlyle Group6EQT6Silver Lake6Vista Equity Partners6WPWarburg Pincus6HIH.I.G. Capital5Oaktree Capital Management5Platinum Equity5TPTPG5General Atlantic4AMAres Management3Blackstone3Clayton Dubilier and Rice3GSGuggenheim Securities3Insight Partners3Invesco3Lazard3Neuberger Berman3NUNuveen3TSTruist Securities3Bain Capital2HWHarris Williams2Kohlberg Kravis Roberts2Millennium Management2Moody's2Rothschild & Co2WBWilliam Blair2Bessemer Venture Partners1Citi1Evercore1FTFranklin Templeton1Houlihan Lokey1HPS Investment Partners1KKR1Mizuho1MSMorgan Stanley1Sycamore Partners1

Topic

All topicsLBO mechanics7Value creation5Returns2Fund economics9Investment judgement18Valuation6Firm knowledge2Credit and financing9Operations4Due diligence8Career and fit11Sector knowledge4Accounting2Deal structuring7Industry knowledge3Brainteasers3

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1. 028How do you think about leverage levels, and what determines how much debt a business can take?Credit and financingIntermediatetechnicalLazardGeneralist · Amsterdam · 2025

   Say this

   Cash flow, not EBITDA. The test is whether the business can service interest and mandatory amortisation in a downside case with headroom left over. Lenders express that as leverage and coverage multiples.

   Then walk it

   1. The headline metrics: net debt to EBITDA and EBITDA to interest. In a normal market a stable mid-market business might support four to six times, a cyclical one less, a contracted infrastructure asset far more.
   2. But the real constraint is free cash flow after CapEx and working capital. Two businesses with identical EBITDA and different capital intensity support very different debt loads.
   3. Test it in the downside: model a 20 percent EBITDA decline and check whether covenants hold and whether interest is still covered. That downside test is what determines the structure, not the base case.
   4. Sector and cyclicality matter enormously. Lenders will fund a software business with recurring revenue at leverage they would never accept for a construction business.
   5. Market conditions set the ceiling independently of the credit. In a tight market the same business raises a turn or two less, regardless of its quality.
   6. And the sponsor's own judgement: more leverage raises IRR and raises the chance of losing the equity entirely. The optimisation is not maximum debt, it is the level that survives the downside you can actually imagine.

   Where candidates lose it

   Answering purely in EBITDA multiples. The underlying constraint is free cash flow and downside resilience. Naming the covenant test in a stressed case is what makes the answer sound like someone who has underwritten a deal.

   Expect next

   • What is the difference between incurrence and maintenance covenants?
   • How does private credit change what is available?
   • How much cushion would you want in a covenant?

   Reported by candidates at Lazard (Generalist, Amsterdam, 2025). Source: Wall Street Oasis.

2. 029What is the difference between incurrence and maintenance covenants?Credit and financingHardtechnicalLazardGeneralist · Amsterdam · 2025

   Say this

   A maintenance covenant is tested every quarter regardless of what the borrower does. An incurrence covenant only bites when the borrower takes a specific action, such as raising more debt or paying a dividend.

   Then walk it

   1. Maintenance: the borrower must keep leverage below a level, or coverage above one, tested quarterly. Miss it and you are in default even if nothing else has changed. This is traditional bank loan territory.
   2. Incurrence: the test applies only when you do something, like incur additional debt, make a restricted payment or complete an acquisition. If you sit still and deteriorate, nothing happens. This is bond and covenant-lite territory.
   3. Why sponsors want incurrence: it removes the risk of a technical default during a temporary downturn, which preserves control of the situation.
   4. Why lenders want maintenance: it gives them an early seat at the table when performance deteriorates, while there is still enterprise value to negotiate over.
   5. The market has moved decisively toward covenant-lite structures in broadly syndicated loans, often with only a springing leverage covenant on the revolver tested when it is substantially drawn.
   6. The consequence worth naming: with fewer maintenance tests, lenders find out later and recoveries in default have been lower. That is one of the live concerns about the current credit cycle.

   Where candidates lose it

   Getting them the wrong way round, or not knowing the term covenant-lite. Since covenant-lite is now the market standard in large-cap leveraged finance, not knowing it signals you have not looked at real deal documents.

   Expect next

   • What is a springing covenant?
   • What does covenant-lite mean for recoveries?
   • How much headroom would you negotiate?

   Reported by candidates at Lazard (Generalist, Amsterdam, 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.