Private Equity interview preparation

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100

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83

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Updated

September 2026

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

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1. 032How would you assess a fund's performance, and what metrics would you use?Fund economicsHardtechnicalNeuberger BermanPrivate Equity · London · 2022

   Say this

   IRR, multiple on invested capital, and distributions to paid-in capital, benchmarked against a public market equivalent. The key is distinguishing realised from unrealised, because unrealised value is the manager's own estimate.

   Then walk it

   1. IRR is time-weighted and can be flattered by early distributions or by subscription line facilities that delay calling capital. Treat it sceptically on its own.
   2. MOIC, multiple on invested capital, measures total value over capital invested and ignores timing. Reporting both together makes gaming obvious.
   3. DPI, distributions to paid-in, is the honest one: actual cash returned relative to cash called. A fund with high IRR and low DPI has not actually given anybody money yet.
   4. RVPI, residual value to paid-in, is the unrealised portion, marked by the manager. In a slow exit environment this can be most of the reported value, and it is an estimate, not a fact.
   5. Public market equivalent: compare against what the same cash flows would have earned in a public index. This is the test of whether illiquidity was rewarded, and it is the benchmark sophisticated allocators use.
   6. Then the qualitative work: return attribution across leverage, multiple and operations; loss ratio and how many deals were written off; consistency across vintages; and whether the team that produced the record is still there.

   Where candidates lose it

   Quoting IRR alone. The examinable content is the DPI versus RVPI split and the public market equivalent comparison. Also naming subscription lines as a way IRR gets flattered is a strong signal of real knowledge.

   Expect next

   • How do subscription lines flatter IRR?
   • What is a public market equivalent?
   • How would you compare two funds of different vintages?

   Reported by candidates at Neuberger Berman (Private Equity, London, 2022). 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.