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Finance allah shmoop what are the top five questions you

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can expect to be asked in a private equity investing

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interview All right people first things first before you walk

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into the interview well you've checked out the company's website

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right You've looked at their history the companies they've invested

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in and then googled the crap out of those companies

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Right Then you've looked up on link thin in quasi

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stalker like fashion each of the key partners of the

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firm right and especially the people you're meeting with and

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of course you've jotted down the random connections like wealth

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one was also a nationally ranked squash player And be

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sure you note that this is very different from your

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grandfather who was a nationally ranked squash grower very different

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i don't want to hit those things explode all right

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So this is the very basics but more importantly you

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have to know whether it is actually a real private

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equity investment company the old school way or if it's

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really a growth capital investment company and they're huge differences

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and you've got to know the diff so before you

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go in all right well in the olden days private

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equity was all about finding fallen angels cos who used

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to be vaunted respected loved and growing Then for whatever

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reason demand suddenly changed Hi newspaper industry or its management

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did stupid things like tick off its distribution retail partners

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Hello coach luggage We're looking at you or the brand

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itself while just got tired Hi Adidas or adi das

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is they say today and the stock went from trading

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at twenty times even toe like five times as wall

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street fell out of love with company Well private equity

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investors back then would borrow a whole heap of cash

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and take the company private with a mindset of fixing

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it and then taking it public using higher profits to

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pay down debt and return the company to growth so

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that it would carry a multiple a whole lot closer

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to the twenty times it carried when people loved it

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Then the five times it carried when you bought it

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so that's private equity old school growth capital is something

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very different Growth capital is just money already healthy companies

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need thio grow maur if whatever dot com had another

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one hundred million dollars in cash well then it could

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Open No china Yeah china And then wow if everyone

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in china just bought one thing on whatever dot com

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well then wow The company would add eight billion dollars

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in profits to its bottom line so i could really

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use that hundred million bucks That's growth capital growth capitals

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Totally different Animal there's no debt no turn around No

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failed company no firing of half the workforce and redoing

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the union contract It's just about investing for growth at

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some price Got all that All right So here we

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go Five questions managed to not change one What investments

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from the industry have you liked or at least followed

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Answer Well you'd better have followed a few They're not

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necessarily going to ask you for specifics but it'd be

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fair if they had a big fat high profile winner

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in their portfolio and then they asked you about it

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at least asked what you thought of it The deal

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company product and the answer there You loved it genius

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Such insight So this is how and where i want

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to learn blob blob Blob of law in private equity

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with puckering and tongue Yeah All right Next question welkos

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Through the math of private equity there Okay so not

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technically a question but here you might start blathering about

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debt to even ratios and valuations of wildly optimistic internet

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companies and you'd have scorn and guffawing and then you'll

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realize that they were talking about their own compensation You

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know how they charge their limited partner investors and what

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carrier profit participation means to the partners their golden goose

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or peace and their three homes and second set of

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spouses or spice or whatever it is And families Yeah

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so you've got to know how private equity it's paid

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in two and twenty two percent fee twenty You gonna

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carry generally Alright next number three what's gonna be your

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industry We're talking like davey on that hill cartoon Alright

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if you've made it this far well then you already

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have some area of expertise right You're a semi young

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guru of banks or retail buying called amazon or tech

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or argentina How about drug distribution The legal kind Hopefully

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this one since your notionally an expert in it will

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be an easy answer You've followed the industry for at

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least three years and got a check plus on your

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final homework assignment Yeah congrats there Just remember that the

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guy sitting across the table from you has probably followed

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that industry for thirty years knows every ceo and their

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secret lovers and also got a check plus on their

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final homework assignment Yeah so take that All right moving

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on for so much Do you want to work Answer

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lots Whatever you need Anything you name it i take

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fully caffeinated i'll be there sweep the leg whatever it

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takes That's the answer got it Five why not public

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equity While public equity is about nerve like it's just

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a sense of where the danger lurks from where the

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opportunities are where the big fat drafted you could kill

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and eat for a month Private equity is all about

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muscle You can't brute force your way tio picking amazon

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overseers in nineteen ninety seven there's just a gut feel

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that public market investors get where they have access to

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scant data and very little knowledge that is direct to

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actually go on regulation fd or full disclosure requires companies

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to basically disclose little more than their quarterly reports and

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the name of their company anytime asked private equity however

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Has essentially no regulation So when you invest in it

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well you get every detail you'd ever want And through

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sheer force and will of doing amazingly detailed quality research

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talking to every vendor and every supply heart person and

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union factory workers and secretaries and on and on and

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on a private equity deal may not be one hundred

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eggs return but very few of them go big time

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bus the way public stock to do all the time

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and your temperament is simply set more for muscle in

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lots of hard work than it is for nerve And

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you know sensing the way the wind is blowing you

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know the way the innkeeper and lame is Rob does

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like that All right well there you go You're all

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set for your interview and most importantly don't forget the 00:06:24.045 --> [endTime] tanaka close quarters there

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