Private Equity interview preparation

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100

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83

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September 2026

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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

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1. 027How would you underwrite a carve-out from a large corporate?Investment judgementHardsuperdayPlatinum EquityPrivate Equity · Los Angeles · 2014

   Say this

   The core problem is that the carve-out financials are not the real financials. You have to build a standalone cost base, including everything the parent was providing for free, and then underwrite the separation itself.

   Then walk it

   1. Start with the standalone cost base. The division has been receiving IT, HR, finance, legal, procurement and possibly premises from the parent. Allocated corporate costs in the carve-out accounts are almost never what standalone will actually cost.
   2. Usually standalone costs more, because you lose the parent's scale in procurement and have to build functions from nothing. Sometimes it costs less, because the allocation was punitive. You have to build it bottom-up either way.
   3. Then the transitional services agreement: what the parent will provide, for how long and at what price. The TSA is the bridge, and running out of TSA before you have built the replacement capability is the classic carve-out failure.
   4. Separation costs are real cash: systems migration, rebranding, new contracts, recruitment. These are often 5 to 10 percent of enterprise value and must be funded on day one.
   5. Commercial questions: which contracts transfer and which need customer consent, whether the division sells to the parent, and whether that relationship continues on the same terms.
   6. The upside case is what makes carve-outs attractive: these businesses are typically under-managed and under-invested because they were non-core. Freed of the parent's bureaucracy and given a dedicated management team, margin improvement is often substantial. That is the thesis, and the separation risk is the price of admission.

   Where candidates lose it

   Modelling the division's reported EBITDA as if it were standalone. Stranded costs and the TSA are the whole substance of a carve-out, and separation costs are real cash that must appear in sources and uses.

   Expect next

   • What is a TSA and what happens when it expires?
   • How do you size stranded costs?
   • Why are carve-outs attractive to sponsors?

   Reported by candidates at Platinum Equity (Private Equity, Los Angeles, 2014). Source: Wall Street Oasis.

2. 081How would you value a business with negative EBITDA that a sponsor is still interested in?ValuationHardtechnicalPlatinum EquityGeneralist · Los Angeles · 2014

   Say this

   Value it on normalised or post-turnaround earnings, and cross-check against asset value. The question is not what it earns today but what it earns once the fixable problems are fixed, and what it is worth if they are not.

   Then walk it

   1. First diagnose why EBITDA is negative. Cyclical trough, a fixable cost problem, a loss-making division dragging a profitable core, or genuine structural decline. Only the first three are investable.
   2. Build normalised EBITDA: strip out the loss-making division, add back the cost the business should not be carrying, and assume mid-cycle volumes. That gives you an earnings base to apply a multiple to.
   3. Then value the downside on assets: what are the receivables, inventory, property and equipment worth in an orderly liquidation? For a turnaround, asset value is the floor and it is often what makes the deal safe.
   4. Then the cash requirement, which is the thing that kills turnarounds. How much cash does the business burn before it breaks even, and is that funded? A turnaround that runs out of money at month fourteen fails regardless of the thesis.
   5. Structure follows: often a low or nominal purchase price, sometimes the seller paying you to take it, with the real investment being the capital injected afterwards. Platinum Equity built a business on exactly this.
   6. So the honest framing: you are not buying earnings, you are buying an asset base and an option on a turnaround, and the price should reflect the probability that the turnaround works.

   Where candidates lose it

   Trying to apply a multiple to a negative number. The answer is normalised earnings plus an asset floor, and crucially the cash burn to breakeven, which is what determines whether the deal is survivable.

   Expect next

   • How much cash would you need to fund it?
   • When would you walk away from a turnaround?
   • How do you tell a cyclical trough from structural decline?

   Reported by candidates at Platinum Equity (Generalist, Los Angeles, 2014). 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.