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. 059How would you evaluate whether to lend to a construction company?Credit and financingHardsuperdayBain CapitalCredit · New York · 2024

   Say this

   Construction is one of the hardest credits there is: cyclical, low margin, with percentage-of-completion accounting that can hide problems and working capital that swings violently. I would underwrite the backlog quality and the contract structure before anything else.

   Then walk it

   1. Backlog is the revenue, so its quality is the credit. How much is contracted versus awarded, what is the execution timeline, and what is the cancellation risk?
   2. Contract structure is the single biggest determinant. Fixed-price contracts put inflation and overrun risk on the contractor; cost-plus contracts pass it to the customer. A book of fixed-price work signed before an inflation spike is where construction companies die.
   3. The accounting risk: percentage-of-completion recognises profit based on management's estimate of costs to complete. Optimistic estimates inflate current profit and reverse later. So I would test historical estimate accuracy, comparing forecast margin at each stage to the final outcome by project.
   4. Working capital is brutal: retentions held by customers, unbilled work in progress, and payables to subcontractors. Cash and profit diverge persistently, so I would underwrite cash conversion over several years rather than EBITDA.
   5. Then counterparty and concentration: who are the customers, are they creditworthy, and what happens if one large project is disputed? Construction disputes are slow and expensive.
   6. Given all of that, I would lend conservatively, at low leverage, with tight maintenance covenants and security over receivables, and I would want the historical record through a full cycle. If the business is mostly fixed-price with thin margins, I would probably pass.

   Where candidates lose it

   Applying a generic credit framework. The sector-specific risks are percentage-of-completion estimate manipulation and fixed-price contract exposure. Naming both, and saying how you would test estimate accuracy, is the answer.

   Expect next

   • How would you test their cost-to-complete estimates?
   • What covenants would you want?
   • What leverage would you actually lend at?

   Reported by candidates at Bain Capital (Credit, New York, 2024). Source: Wall Street Oasis.

2. 075What happens if a portfolio company breaches a covenant?Credit and financingHardsuperdayRestructuringPrivate credit

   Say this

   It is a technical default, which gives lenders the right to accelerate but rarely leads to them doing so. In practice it starts a negotiation, and the sponsor's leverage in that negotiation depends on whether it is willing to inject equity.

   Then walk it

   1. First, the legal position: a breach gives lenders the right to call the debt. They almost never do, because accelerating a business that is still operating usually destroys value for them too.
   2. So it becomes a negotiation. The standard outcomes are a waiver for one testing period, an amendment resetting the covenant levels, or an amend-and-extend that also pushes the maturity.
   3. The price of a waiver: an amendment fee, a higher margin, tighter covenants going forward, and often additional information rights or a requirement for an independent business review.
   4. The equity cure is the key sponsor tool. Most credit agreements allow the sponsor to inject equity that is deemed to count as EBITDA for covenant purposes, curing the breach. There are limits on how many times it can be used and in consecutive periods.
   5. The sponsor's decision is whether the business is worth more equity. If the equity is already worth nothing, the rational move is to hand the keys over and let lenders take control, and everyone in the negotiation knows that.
   6. The behaviour that matters most is timing: tell lenders early, before the test date, with a plan. A sponsor that surprises its lenders gets much worse terms than one that pre-negotiates.

   Where candidates lose it

   Assuming a breach means immediate enforcement. It almost never does. The examinable content is the waiver-or-amend negotiation, the equity cure mechanism, and the fact that the sponsor's willingness to put in more money is what determines the outcome.

   Expect next

   • What is an equity cure and what are its limits?
   • When would you hand the keys over?
   • How does covenant-lite change this?

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.