28 questions reported in Ares Management interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
Questions
Easy · Medium
Hard
Model builds
Built in the spreadsheet grid
Blended return construction, PIK, warrants and intercreditor terms. 11 questions
Junior credit interviews use this to test whether you understand return and liquidity are different things.
A mezzanine note pays 8% cash interest and 4% PIK. Explain the difference and what each does to risk.
A process question for junior private credit analysts.
Walk me through the basic diligence you would do before committing to a mezzanine investment.
A first-round junior-capital question that tests whether a candidate can read a group structure rather than only a debt schedule.
Explain structural subordination. Why can a mezzanine note issued by a holding company be riskier than its stated ranking suggests?
A first-round private credit question to separate senior lenders from junior-capital thinkers.
Define mezzanine debt. Where does it sit in the capital structure and why would a sponsor use it?
Asked when a candidate knows the coupon but not the equity kicker.
Why might a mezzanine lender ask for warrants instead of simply charging a higher coupon?
A deal-team workflow question for analysts expected to turn an approved junior-capital commitment into a protected funded position.
Your investment committee approves a mezzanine commitment for a sponsor acquisition. Walk through the closing work you would complete between approval and funding.
A simple math question to test whether candidates can separate cash yield, PIK and exit value.
A $100m mezzanine note pays 8% cash and 4% PIK for five years, with no warrants. Roughly what is the total value received at exit before fees?
Private credit firms ask this because junior debt labels are often used sloppily.
Compare mezzanine debt with second lien debt. Which one is safer and why?
A judgement scenario on whether flexibility is credit support or lender give-up.
A borrower asks to toggle its 10% cash-pay mezzanine coupon to PIK for the next two years. How do you respond?
A stressed-credit committee scenario on whether new liquidity preserves or transfers value away from a junior lender.
You own a $75m second-lien mezzanine note behind $250m of first-lien debt. The borrower has $8m of liquidity and needs $35m of working capital to reach its seasonal peak. First-lien lenders propose a…
A junior-capital underwriting question that distinguishes a contractual covenant cure from a durable reduction in default risk.
A sponsor-owned borrower will fail its springing fixed-charge coverage test. The credit agreement allows an equity cure, and the sponsor proposes to inject $12m two days before testing. The agreement…
NAV discounts, J-curve mitigation, continuation vehicles and pacing. 10 questions
Tests core market structure in a secondaries interview.
What is the difference between an LP-led and a GP-led secondary transaction?
A junior case-study check on whether an analyst separates cash paid at closing from future funding.
You buy an LP interest with reported NAV of $120m at 75% of NAV. The interest has $35m of unfunded commitments, expected to be drawn evenly over the next two years. What cash is paid at closing, what…
A foundational pricing concept in a secondaries interview.
An LP interest is offered at 85% of NAV. What does that tell you, and what does it not tell you?
A standard first-round motivation question at secondaries investors.
Why does secondaries investing appeal to you relative to direct private equity?
A basic pricing check in every LP-led case study.
Why do unfunded commitments reduce the price a buyer pays for an LP interest?
A common secondaries case-study modelling prompt.
What are the key inputs in a cash-flow model for an LP secondary purchase?
A GP-led diligence question at secondaries funds.
Which terms tell you whether a GP is aligned in a continuation vehicle?
Tests whether a candidate can combine valuation and liquidity risk in a fund-level case.
What should a credible downside case include for a secondary portfolio?
An advanced secondaries interview case involving a GP seeking liquidity and fresh primary capital.
A GP offers you a $150m LP portfolio at 82% of NAV, but only if you also make a $50m commitment to its next primary fund. The portfolio has two years of unfunded commitments, and the GP's prior fund…
A structured-solutions question for advanced secondaries candidates.
Why might an LP choose preferred equity rather than sell a fund interest outright?
Leverage capacity, documentation, downside cases and portfolio construction. 4 questions
A direct-lending credit-agreement review where a lender must connect covenant arithmetic to the provisions that can erode it.
You are the underwriting associate reviewing a sponsor-backed unitranche amendment. Calculate headroom using lender-defined EBITDA, test the proposed add-on, identify the document leakage, and prepare…
A direct-lending underwriting case testing liquidity sequencing, collateral quality and lender protections.
You are the underwriting associate on a unitranche loan to a distributor. The company misses plan after close and requests an amendment. Evaluate each update and prepare a credit-committee…
A direct-lending scenario lab testing leverage capacity, interest coverage and underwriting discipline for a sponsor add-on.
A sponsor requests incremental unitranche debt to fund an add-on. Calculate the headroom, test the pro forma interest burden, and decide whether the lender should fund the request as proposed.
A direct-lending analyst screening a sponsor-backed unitranche before credit committee.
You are reviewing a sponsor's data room for a $240m unitranche to finance a healthcare-services acquisition. Work through the materials as they arrive, make the required decisions, and write the…
Recovery analysis, capital structure relative value and covenant leakage. 1 question
Tests whether a candidate can avoid overstating carry and upside in a high-yield bond pitch.
A bond purchased at 102 can be called at 100 in one year or mature at 100 in five years. Its coupon is 8%. Why should you assess yield to worst rather than simply quote its yield to maturity, and what…
Cap rates, NOI, going-in versus exit yield and levered returns. 1 question
A standard investment committee follow-up after an analyst presents a base-case return.
Your model shows a 16% levered IRR on a value-add deal. Which sensitivities would you show investment committee, and how would you distinguish a real downside case from arbitrary spreadsheet toggles?
LTV, DSCR, debt yield and structuring against a property's cash flow. 1 question
A real-estate-debt scenario lab testing debt yield, stressed DSCR and refinance sizing under a rising-rate maturity wall.
A floating-rate multifamily loan matures next year. Calculate the lender's current income protection, stress the debt service, and quantify the refinance gap before recommending a modification or…
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Company tags reflect where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with Ares Management.