Private Equity Interview Question

I said yes. But my reasoning might be wrong. I said that the value of the property would be low and since the firm specialized in value-add properties I explained that the property might require a significant amount of investment during the holding period that would decrease the IRR.

Is that an acceptable answer?

Did the interview from Butner Correctional. They know

Thanks TxTiger I didn't even think about losing tenants. Appreciate the help. I think I also mentioned tax implications because NOI is pre-tax and IRR is calculated with after-tax cash flows. At least I got one part right.

quote:

---

Bernie_Madoff

---

Do you have an mba? I work in commercial real estate for a bank and would like to move to private equity at some point. I have a b.s. in finance and 2.5 years of work experience as an analyst.

quote:

---

Get in line.

---

There are ways to get from the back of the line to the front of the line. This is what I am inquiring on.

txtiger79:

1) Do you work in PE?
2) How early is "early?" How late is "too late?"

I don't work in PE, but have been in corporate finance for all of my career and have worked very closely with private equity on a number of transactions.

By early, most PE firms want to bring in people who have "learned the ropes" for that particular industry under someone else's watch and pay. I.E., they are usually not interested in training you because they run lean. If you get into PE pre-MBA, then you are getting in at the entry level position (usually as an analyst or associate), many PE shops will hire that level with the understanding that it is for a couple of years only. Then they will decide whether to promote you to their post-MBA position or tell you to go get an MBA. After that, they may hire you back or not. In terms of "getting in", many PE firms have companies they like to hire from. Namely investment banks that have groups specializing in that specific PE firm's industry. The big LBO shops usually focus on the NY offices of the i-banks, while tech shops would focus on silicon valley banks, energy in Houston, etc.

If you miss the entry level, it is difficult to go in later because you are more expensive and you are unproven. If the PE firm is expanding in general (or a new PE shop altogether is formed), then there may be opportunities to move into a mid-level position, but its generally difficult.

That is until you can go in at the principle/partner level and bring something to the table like industry relationships or deal flow.

All of my experiences have been with multi-billion dollar PE shops, so this is probably not the case for the smaller / mid-market players.

quote:

---

been in corporate finance for all of my career and have worked very closely with private equity on a number of transactions.

---

Based on your name I assume energy, but what space (upstream, services, midstream)?

txtiger and Bernie - I would like to stay in touch/pick your brains a little. Any chance you guys could share your e-mail? Mine is in my signature line.