Why Private Equity? – Interview Questions

How to answer “Why Private Equity?” Interview Question

After spending a few years in investment banking, analysts and associates may well be thinking about their next career move. One option could be private equity – it’s a natural progression for many, offering a chance to move from advising on transactions to driving them. Anyone keen to make this transition would likely be well prepared for the technical aspects: case studies, modeling tests, and deal discussions. But one question often goes overlooked: “Why private equity?”

It’s important to be carefully prepared on how to answer this seemingly innocuous question. A glib answer can be a red flag to a recruiter, especially if your motivation stems from dissatisfaction with banking rather than a genuine interest in investing.

What is the Private Equity Recruitment Process?

Understanding the private equity recruitment process is key when launching a job search. Most opportunities are sourced through headhunters, who primarily target analysts from top-tier investment banks and consulting firms. These candidates typically hear from recruiters between December and February of their first year or July and August of their second year. In recent years, recruiting has started even earlier-sometimes after just six months on the job.

Candidates from mid-tier firms may face a steeper path into PE, as they are not the immediate focus of most recruiters. To compete, they often need to take a proactive approach – cold emailing firms and building relationships with headhunters is a good way to get a foot in the door. Support this with strong knowledge of technical and deal experience. Once a recruiter is confident in a candidate, they will refer them to private equity firms for interviews. Private equity firms rarely have their in-house recruitment due to the smaller size of the companies. Thus, headhunters and recruitment consultants are the best way to get into this industry.

What are the Timings for a Private Equity Interview Process?

The interview process can be swift, sometimes concluding in a matter of days, and typically involves multiple rounds with team members and senior professionals. Most associate hiring wraps up by May for a summer start. Firms are generally flexible with start dates, recognizing that analysts will often wait for year-end bonuses. Smaller PE firms may recruit off-cycle and outside traditional timelines.

Here is an idea of the PE firms that recruit depending on the size of the firm and also on the seniority of the position.

Pre-MBA candidates seeking an introductory position will likely be interviewed in winter (or late winter for smaller firms) and then begin work as soon as it’s agreed by both parties.

Post-MBA candidates going into larger PE firms will tend to begin after graduation, having sought a position whilst still completing their studies. Again, smaller PE firms tend to recruit on a more ad hoc basis and may start to search for new hires depending on the company’s deal flow and capacity.

Benefits of Working in Private Equity

Here are some tips to help create a compelling answer to “Why Private Equity?”. These are some of the highlights of working in this fast-paced and demanding industry:

1. Meaningful Ownership and Long-Term Impact
   Unlike investment bankers, private equity professionals move beyond transactional work and take an ownership mindset. Projects are often long-term term and PE associates will follow investments over several years. PR teams help shape a company’s strategy, support management teams, and directly influence a business’s growth and performance.
2. Strong Career Progression and Compensation
   PE roles offer competitive compensation that increases significantly with experience and performance. Beyond salary and bonus, many professionals earn ‘carry’ (a share in profits), particularly as they rise through the team ranks. The skillset developed in private equity is highly transferable and valuable across finance and business. This includes financial modeling, strategic thinking, and being able to identify and initiate operational improvements to a business.
3. Exposure to Executive-Level Decision-Making
   Working in PE offers early exposure to high-level company strategy, board meetings, and regular interactions with CEOs and CFOs. This environment helps young professionals build maturity and business judgment quickly, making it one of the most accelerated paths for learning how companies operate at a deep level. This experience can be challenging and hugely rewarding.
4. Diverse Industry and Deal Exposure
   PE firms invest across sectors, giving professionals broad exposure to different business models, markets, and transaction types. Over time, associates develop a strong understanding of how value is created across industries, which can open doors to future roles in leadership, entrepreneurship, or fund management. PE firms tend to offer expertise in a specific sector or company size or financial position, so it is important to research roles carefully when applying. Healthcare funds tend to gravitate towards candidates with medical knowledge, whereas other funds may specialize in distressed companies and prefer candidates with strong accounting backgrounds.
5. Smaller, Collaborative Teams
   Most PE firms operate with lean teams, meaning associates take on meaningful responsibility early in their careers. There is often more visibility, accountability, and mentorship than in larger corporate environments, leading to faster professional development. This does require candidates to have a ‘can-do’ attitude to taking on a variety of roles and responsibilities within the firm.

The WORST Answers to “Why Private Equity?”

Some answers that might feel honest can instantly shrink your chances of securing a role in private equity. Here are a few pointers to avoid obvious pitfalls in an interview when asked, “Why Private Equity?”.

Don’t say:

• “The hours are better than banking.”
• “The pay is higher.”
• “It’s the next step after investment banking.”
• “I want to control companies.”
• “Everyone in my analyst class is doing it.”

These answers signal that:

• You haven’t done your homework enough to know exactly what the PE firm does
• You’re chasing prestige or money without being interested in the industry
• You’re running away from your current role, not toward private equity
• You have a fantasy view of what the job entails rather than a realistic understanding of what a private equity career looks like.

Sample Answer: “Why Private Equity?”

Here’s an example of a well-structured answer, tailored for someone coming from investment banking and looking to switch into private equity:

“I’ve enjoyed my time in banking, especially the exposure to live deals and the opportunity to work with senior leadership at client companies. But what’s stood out the most is my interest in what happens after the deal closes.

In several M&A transactions I worked on, I found myself asking: how will this business evolve post-acquisition? What levers will the acquirer pull to create real value? That curiosity led me to dive deeper into how investors think, not just about price and structure, but about strategy and long-term growth.

What draws me to private equity is the opportunity to take that next step: to move from advising on deals to making them, and to be accountable for the outcomes. I’m particularly excited about your firm’s focus on [insert specific industry or strategy], because it ties closely to my experience with [mention relevant deal, client, or sector].

Long-term, I see myself building a career in investing – and I want to be in an environment where I can take ownership, work closely with portfolio companies, and keep learning from smart, entrepreneurial people.”

This answer will likely impress an interviewer as it draws on positive experiences from investment banking and highlights a keen interest in the fundamentals of private equity, enhancing the value within a company. It also factors in the personal skillset of the candidate, including the willingness to work hard and take ownership of demanding projects that require innovative thinking.

Conclusion

Pursuing a career in private equity offers a unique blend of challenges and rewards, appealing to those eager to take on active investment roles and drive long-term value creation. By clearly articulating your motivations and aligning them with your experiences and the firm’s objectives, you can present a compelling case for why you’re suited for a career in private equity.
Download the free Financial Edge Resume template. Tailor your qualifications and experiences to catch the eye of headhunters and recruiters working in private equity.

Additional Resources

Private Equity Course 

Private Equity vs Venture Capital