Private Equity Case Interview Practice

Reviewed by Fallon Han· Updated 2026-05-22 18:50:07.914

This conversation was generated using Cook'd AI's career assistant and reviewed by Fallon Han from our editorial team for accuracy.

Can you give me a realistic private equity case interview for a middle-market firm in New York? I am a second-year MBA student pivoting from product management, and I have US work authorization. I want the first prompt to be to evaluate a potential acquisition and explain the investment thesis.

Absolutely. Here is a realistic prompt to practice: You are interviewing for a middle-market private equity role in New York. The firm is considering acquiring a niche B2B industrial services company with recurring maintenance contracts and a fragmented customer base. Your first task: evaluate the potential acquisition and explain the investment thesis. As you work through it, I will expect you to cover: 1. Why this target is attractive now 2. What operational or commercial value creation levers you would underwrite 3. How you would think about entry valuation and whether the price is defensible 4. Key risks, including customer concentration, cyclicality, and integration Start by asking any clarifying questions you would want in a live interview, then give me your initial view on the investment thesis.

Before I answer, I would ask about revenue mix, customer concentration, contract duration, EBITDA margins, capex needs, and why the seller is going to market now. My initial thesis is that a niche industrial services business with recurring maintenance contracts could be attractive because of predictable cash flow, room to improve margins, and the ability to add tuck-in acquisitions. If the business has sticky customers and low capex, it could support leverage and generate strong returns.

Good start. Your framing is directionally right, but to sound more like a PE candidate, make it sharper and more specific. What you did well: - You identified recurring revenue and sticky customers as key quality drivers - You connected the business model to leverage capacity and return potential - You raised tuck-in M and A as a plausible scale lever What to improve: - Tie the thesis to a concrete buyer edge, not just generic attractiveness - Be more explicit about why this company, in this market, at this time - Translate the business traits into specific underwriting assumptions A stronger answer would sound like this: This target is attractive because it combines recurring maintenance revenue, fragmented end markets, and a customer relationship model that should support pricing power and retention. In a middle-market buyout, I would underwrite it as a platform where value creation comes from both operational improvement and consolidation. Specifically, I would look for margin expansion through technician productivity, better dispatch and scheduling, procurement savings, and pricing discipline on renewal contracts. If the business has modest maintenance capex and limited working capital needs, it could convert a high share of EBITDA to free cash flow, which supports deleveraging and multiple expansion. Now go one step further: how would you defend the entry valuation? Walk me through how you would think about an EV / EBITDA multiple and what evidence would justify paying it.

I would start by benchmarking the multiple against comparable middle-market industrial services businesses, but I would not rely on trading comps alone. I would focus on quality of earnings and durability of cash flow. If the business has high recurring revenue, low customer churn, and a track record of stable margins, I could justify a premium to a lower-quality peer. I would also look at growth prospects, such as price increases, cross-sell, and tuck-in acquisitions, because those can support a higher entry multiple. But I would want to be careful not to overpay just because the business looks defensive.

That is a solid framework. To make it interview-ready, you need to show that you can defend the valuation from both a market and a returns perspective. Here is how I would structure the answer: 1. Comparable market support - Use precedent transactions and public comps for similar industrial or business services names - Adjust for size, margin profile, and recurring revenue quality - Recognize that middle-market assets often trade at a premium if they have stable cash flow and strong retention 2. Fundamental support - Translate the multiple into expected IRR and MOIC at different exit outcomes - Ask whether the entry price still works if growth slows or margins do not expand - Make sure the upside is driven by controllable operational levers, not just multiple expansion 3. Underwriting discipline - If the company is being valued at, say, 11 to 13 times EBITDA, explain why that is justified by retention, contract length, and free cash flow conversion - Then stress-test it: what happens at 10 times, what happens if one large customer leaves, what happens if pricing is delayed? A polished interview answer might be: I would defend the entry valuation by comparing the target to precedent transactions in the sector, but I would place more weight on cash flow durability and return potential. If the company has recurring revenue, limited churn, and high conversion of EBITDA to free cash flow, a premium multiple can be justified because the downside is more protected and the business can delever quickly. I would still stress-test the deal by asking whether the return profile works if the exit multiple compresses or if margin improvement takes longer than expected. Now answer the following as if you were in the interview: what are the top three value creation levers you would underwrite, and how would you measure success for each one?

The top three levers I would underwrite are margin improvement, revenue growth, and tuck-in acquisitions. For margin improvement, I would look at technician utilization, procurement savings, and overhead reduction, measured by EBITDA margin expansion. For revenue growth, I would focus on price increases, cross-sell to existing customers, and expanding the sales force, measured by organic revenue growth and retention. For tuck-in acquisitions, I would look at how many smaller add-ons could be integrated, measured by incremental EBITDA and synergy capture.

Strong answer. You are thinking like a sponsor, which is exactly what the interviewer wants. A few refinements will make it more credible for a middle-market buyout discussion: - Be careful not to sound like growth at any cost. In PE, growth must be profitable and repeatable - For each lever, mention the operational mechanism and the KPI you would monitor - Add a comment on timing, since not every lever contributes equally in year one A tighter version: 1. Margin improvement - Mechanism: improve technician utilization, optimize scheduling, reduce subcontractor usage, and tighten procurement - KPI: EBITDA margin, labor productivity, and gross margin by service line - Timing: usually the fastest lever, visible within the first 12 months 2. Organic revenue growth - Mechanism: targeted price increases, improved customer retention, and cross-sell into installed accounts - KPI: same-store revenue growth, renewal rates, and average revenue per customer - Timing: more gradual, but highly valuable if recurring contracts are sticky 3. Tuck-in acquisitions - Mechanism: acquire local operators to expand geography and density - KPI: acquired EBITDA, synergy realization, and integration speed - Timing: medium term, depends on pipeline and integration capacity Final interview test: give me a concise investment committee style recommendation. Should the firm pursue the deal or pass, and why?

I would recommend pursuing the deal if diligence confirms recurring revenue, low churn, and room for margin expansion, because the business appears to have durable cash flow and multiple controllable value creation levers. I would pass if the valuation already assumes aggressive growth or if customer concentration creates too much downside risk. Overall, I would be supportive, but only if the entry price allows a reasonable margin of safety and the base case still produces an attractive return without needing heroic assumptions.

Good conclusion. That sounds like a real PE recommendation rather than a generic yes or no. Evaluation report: - Fit to prompt: Strong. You stayed focused on acquisition evaluation, investment thesis, value creation, and valuation - Persona alignment: Strong. Your answers fit an MBA candidate with PM experience transitioning into PE - PE judgment: Good. You showed awareness of downside risk, underwriting discipline, and return sensitivity - Specificity: Moderate. You named the right levers, but could add more deal-level detail like leverage, exit assumptions, or specific operating KPIs - Interview polish: Good. With a little more precision on comps, IRR, and customer concentration, this would read as very credible Best next step for practice: answer the same case again, but this time force yourself to include a rough entry multiple, a sample leverage level, and one explicit downside scenario.