Why this firm (private equity)? (1 min)

For this answer, you should combine some subjective reasons about the team and people as well as more objective reasons about the track record and focus of the private equity firm.

For example, you should mention any subjective reasons about the team, and it helps tremendously if you’ve had a chance to talk to somebody on the team. This gives you a chance to ask what they personally like about the firm, the group, and the people. For example, perhaps the firm is very dedicated to investing in the long-term growth of junior professionals, and there are lots of cases of folks progressing throughout the firm and staying with the firm. Other positive reasons could be a tight-knit and collegial environment, a strong focus on ethics and sustainable investing, and leadership within the team that has demonstrated itself through a combination of successful deals and dedicated mentoring.

When it comes to the track record and focus of the firm, you could mention your preference for their investment style and parameters (eg. buying growth companies vs. large established companies, doing deals with partners vs. by themselves, amount of leverage used) and sector focus, as well as how involved they are with their portfolio companies and their growth strategies. It’s a good idea to research some deals they’ve done to get a sense of their typical transaction.

For example, for a PE firm that focuses on buying growth-oriented companies, you could mention how you enjoy the idea of finding growth companies in attractive niches and being more involved with their growth strategy, as smaller companies can benefit from the expertise and economies of scale that PE firms have to offer. For a PE firm that does a lot of add-on acquisitions and tries to roll up the industry, you can mention how getting involved with portfolio companies and helping drive their corporate development strategy is very satisfying, as is the ability to buy add-on acquisitions at lower valuation multiples and roll them up to a higher valuation multiple once it’s integrated with the rest of the platform.

For a PE firm that focuses on larger companies, you can mention how you like working with more sophisticated management teams and more complex companies which are often involved in multiple markets. These deals often completely change the landscape of the industry they’re operating in. Because of the higher stakes, the analysis and due diligence is often more comprehensive and done by more parties, and the debt financing and financial modeling can be more complex as well. There is the opportunity to learn best practices both from the very smart and talented professionals on the team, but also from the portfolio companies which are usually very professionally run.