Venture Capital interview preparation

Questions

100

Traced to a firm

31

Firms

12

Updated

September 2026

Asked at

All firmsGeneral Atlantic9Insight Partners7Silver Lake6Vista Equity Partners4Bessemer Venture Partners3ACAccel2Advent International2Battery Ventures2Andreessen Horowitz1Coatue Management1Sequoia Capital1WPWarburg Pincus1

Topic

All topicsSourcing and deal flow5Market sizing and estimation8Founders and teams5Unit economics and cohorts11Term sheets12Cap table and dilution7Early-stage valuation7Portfolio construction6Board and governance4Down rounds and secondaries4Exits and liquidity4Fund economics5Sector theses and markets6India venture market6Fit and motivation10

Level

AnyCoreIntermediateHard

Type

AnyTechnicalFitCaseMarket viewBrainteaser

1. 027What metrics would you look at when valuing a retail company?Unit economics and cohortsIntermediatetechnicalSilver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Same-store sales growth, gross margin, sales per square foot, inventory turns, and the payback on a new store. Retail is a unit-level business, so I would value the existing store base on cash flow and the growth story on how many more units can earn their cost of capital.

   Then walk it

   1. Same-store or like-for-like sales growth is the single most important number, because it strips out the flattering effect of opening stores. A chain with 30 percent revenue growth and minus 2 percent same-store sales is buying growth with capital.
   2. Unit economics of a new store: build-out cost, time to maturity, steady-state four-wall EBITDA, and therefore payback. Good specialty retail pays back in 18 to 30 months. Beyond that, expansion destroys value.
   3. Working capital and inventory. Inventory turns, weeks of cover, and the markdown rate. Retail failures are almost always inventory failures first — the P&L looks fine while the balance sheet fills with unsold stock that later gets discounted through gross margin.
   4. Cost structure: occupancy as a share of sales, because it is fixed and it is what kills you when traffic falls, and labour. Then the operating leverage question — how much can sales fall before four-wall EBITDA goes negative.
   5. For an omnichannel or e-commerce-heavy retailer, add CAC and repeat rate, contribution margin after delivery and returns, and the return rate itself, which in apparel can run 30 percent and quietly destroys the reported gross margin.
   6. Valuation itself: EV/EBITDA against peers, adjusted for lease obligations, since capitalised leases are debt in substance and post-IFRS 16 they sit on the balance sheet. And a sanity check on EV per store against replacement cost, which sets the floor.

   Where candidates lose it

   Valuing it like a software company on a revenue multiple, or quoting only same-store sales without the new-store payback. And forgetting leases — a retailer with $2bn of lease obligations and a headline low EV/EBITDA is not cheap, and in a tech-focused fund this is exactly the trap the question is set to catch.

   Expect next

   • How do you treat operating leases in enterprise value?
   • What is a good payback period on a new store?
   • How does the answer change for a pure e-commerce retailer?

   Reported by candidates at Silver Lake (Technology, Media and Telecom, San Francisco, 2022). Source: Wall Street Oasis.

2. 046If a company raises one hundred dollars of debt and buys back one hundred dollars of shares, what happens to enterprise value and equity value?Cap table and dilutionIntermediatetechnicalSilver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Enterprise value is unchanged and equity value falls by one hundred. Nothing happened to the operating business, so enterprise value cannot move. Debt went up by 100, cash is unchanged because it went straight out to shareholders, so net debt is up 100 and the equity is down 100.

   Then walk it

   1. Enterprise value equals equity value plus net debt. It is a measure of the operating asset, and neither raising debt nor buying stock changes the cash flows that asset produces.
   2. Trace the cash. Raise $100 of debt: cash up 100, debt up 100, net debt unchanged, enterprise value unchanged, equity value unchanged. Then spend the $100 buying shares: cash down 100, so net debt is now up 100.
   3. Since enterprise value is fixed, equity value must fall by 100. And that is right — you handed $100 to the shareholders who sold, so the remaining equity is worth $100 less in aggregate.
   4. Now the part that catches people: share price should not change in a frictionless world. The aggregate equity fell 100 and the share count fell by 100 divided by the price, so value per remaining share is the same. The shareholder is not richer; the composition of their claim changed.
   5. Then the real-world second-order effects worth naming. The tax shield on the new debt has genuine value, which nudges enterprise value up. Higher leverage raises the cost of equity and the risk of distress, which nudges it down. Net effect is small at low leverage and negative at high leverage.
   6. And EPS goes up, which is why companies do it, and why buybacks get announced as if value was created. Fewer shares and only a partial earnings hit from after-tax interest. Accretive to EPS, roughly neutral to value. That distinction is the entire point of the question.

   Where candidates lose it

   Saying enterprise value falls because debt rose. Debt is in the bridge from enterprise value to equity value, not in enterprise value itself. The second trap is saying the share price rises because there are fewer shares — the aggregate equity fell by the same amount, so per share it is a wash before you get to the tax shield.

   Expect next

   • What happens to earnings per share?
   • Does the share price change? Why not?
   • At what leverage level would enterprise value actually fall?

   Reported by candidates at Silver Lake (Technology, Media and Telecom, San Francisco, 2022). Source: Wall Street Oasis.

3. 047Why would a distressed company have a high equity value?Cap table and dilutionHardtechnicalSilver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Because equity in a levered company is a call option on the enterprise value, and an option has value even when it is deep out of the money. If there is any chance the business recovers enough to clear the debt, the equity is worth something, and the more volatile the outcome the more that option is worth.

   Then walk it

   1. Set it up as the option: equity value equals the enterprise value less the debt, floored at zero. That is exactly the payoff of a call struck at the face value of the debt. Limited liability is what creates the floor.
   2. So even if enterprise value today is $800m against $1bn of debt, the equity is not worth zero. It is worth the option premium — the probability-weighted value of the scenarios where the business recovers above $1bn before the debt matures.
   3. And the counterintuitive consequence: volatility increases the equity value. A distressed company with a wildly uncertain outcome has more valuable equity than an equally distressed company with a certain modest decline, because only the upside tail accrues to the equity while the downside is the creditors' problem.
   4. Which explains the behaviour you see in distressed situations: management and equity holders favour risky strategies, because they capture the upside and creditors eat the downside. That is the classic risk-shifting conflict, and it is why credit agreements have covenants.
   5. Time to maturity also matters, same as an option. Debt maturing in five years gives the equity far more optionality than debt maturing in six months, which is why the maturity wall, not the leverage ratio, is usually what actually triggers a restructuring.
   6. The other mundane reasons a screen might show a high equity value on a distressed company: a large cash balance that has not been marked against the operating decline, an unconsolidated stake or real estate worth more than the operating business, or a retail-driven share price detached from the fundamentals. Worth naming, but the option answer is the one they want.

   Where candidates lose it

   Answering only with the mundane explanations — hidden assets, cash on the balance sheet. Those are real but this question is testing whether you see equity as a call option on enterprise value. Get to the option framing first, then add that volatility raises the equity value, which is the part that separates a good answer from a complete one.

   Expect next

   • What happens to that option as the debt maturity gets closer?
   • Why do equity holders in a distressed company favour risky strategies?
   • How would you value the debt in that situation?

   Reported by candidates at Silver Lake (Technology, Media and Telecom, San Francisco, 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.