Ares interview questions

A first-round question testing whether a candidate can read a basic term sheet.

A lender offers a borrower a five-year $100m first-lien term loan at SOFR + 600bp. Explain the main economics and protections in plain English.

A distinct discipline from cash flow lending, and common in retail and distribution credits.

How does asset-based lending differ from cash flow lending? Construct a borrowing base for a distributor with $200m of receivables and $150m of inventory.

Tests whether you think about the fund, not just the individual credit.

You're building a $2bn direct lending fund. How many positions, how do you diversify, and what returns should LPs expect?

Tests whether candidates treat a maintenance covenant as an early-warning tool rather than a number to maximise.

A company has $50m of net debt, a 5.5x maximum net-leverage covenant and $12m of EBITDA. It expects EBITDA to fall 15%. Is it in breach, and what would you investigate before agreeing to a waiver?

A practical underwriting follow-up after management presents adjusted EBITDA.

Management reports $20m of adjusted EBITDA, including $3m of restructuring costs and $2m of projected synergies from an acquisition that has not closed. How would you decide what EBITDA to underwrite?

Direct lending interviews start with why private credit won share from banks.

Why would a sponsor choose a unitranche from a private credit fund over a broadly syndicated loan from a bank, when the unitranche is more expensive?

The situation every private credit portfolio faces, and where returns are actually determined.

A portfolio company breaches its leverage covenant. The sponsor asks for an amendment. How do you respond?

The analysis a credit committee actually decides on.

How do you construct a downside case for a credit investment? What does it have to survive?

A credit-agreement lab combining covenant arithmetic, document leakage and practical markups.

You are reviewing the first credit-agreement draft for a sponsor-backed borrower. Calculate covenant headroom, find the provisions that can move value away, and send the essential markup.

An offer-level judgement question about incentives during a stressed portfolio-company situation.

A sponsor-backed borrower needs $15m of liquidity. The sponsor says it has reserves but wants lenders to fund a super-senior delayed-draw tranche first. How would you evaluate the request?

A direct-lending associate review of a liquidity model and draft credit approval memorandum.

You are reviewing a unitranche underwriting for a healthcare-services company one hour before credit committee. Find the material flaws in the liquidity case, decide what the team must repair, and…

Private credit interviews go deep on documentation, because that is where the risk lives.

Beyond the leverage covenant, which credit agreement terms do you negotiate hardest, and why?

A direct-lending data-room exercise built around EBITDA quality, liquidity and documentation.

You have 45 minutes before the screening committee for a $275m unitranche. Review the extracts, choose the next diligence action, and draft a credit recommendation.

The core analytical exercise of a private credit investment team.

You're underwriting a $300m unitranche to a sponsor-backed software business at 6.0x leverage. What is your analysis, and what protections do you negotiate?

A common loan-documentation question for transitional real estate lenders.

Why might a lender require a floating-rate borrower to buy an interest-rate cap?

A first-round real estate credit question on what protects a senior lender.

Explain why senior mortgage debt ranks ahead of mezzanine debt and equity. What does that priority mean in a downside?

A maturity-risk case central to bridge and transitional lending.

A bridge loan matures in two years. How do you assess whether it can be refinanced?

Tests property-type judgement because hotel cash flow differs sharply from leased real estate.

What changes when you underwrite a hotel loan rather than a loan on a leased office building?

A lender judgement question that goes beyond property-level metrics.

What do you assess when underwriting a real estate sponsor?

A portfolio-management scenario for a lender monitoring a transitional office loan.

A floating-rate office loan has a 1.24x trailing DSCR against a 1.25x springing cash-management trigger. The borrower has made every payment, but a tenant representing 18% of rent expires in six…

A workout judgement case for real estate debt asset-management teams.

What would make you transfer a real estate loan to watchlist, and what happens next?

Common in stressed-credit interviews because it tests how lenders create time without giving away rights.

A borrower will breach a leverage covenant next quarter but needs six months to sell a division. What is the difference between a waiver and a forbearance agreement, and which would you prefer as…

A first-round question testing whether a candidate understands the mandate beyond generic private credit.

What does a special situations investor do, and how is the underwriting different from a normal direct loan?

A second-round documentation question for investors buying junior or structurally complex debt.

You are considering a second-lien loan. What intercreditor provisions can matter more than the stated interest rate?

Tests whether a candidate can translate a liquidity gap into protected new-money terms.

A company needs $40m to fund operations through a turnaround. What terms would you seek if you provide rescue financing?

Tests the mechanic that actually drives LBO returns. And the one candidates get wrong.

Build a three-year term loan schedule with a cash sweep. Each year: open with the prior year's closing balance, accrue interest on the opening balance, take mandatory amortisation, then sweep 100% of…

Leveraged finance and private credit interviews go deep here.

Explain the difference between maintenance and incurrence covenants. What does "covenant-lite" mean, and why should a lender care?

Essential for leveraged finance, private credit and restructuring interviews.

Walk me down the capital structure of a typical LBO from most senior to most junior. For each layer, explain pricing, security, and who buys it.

A quantitative reasoning question asked without a model in front of you.

Take the same business bought at 10x EBITDA. Compare the outcome at 4x leverage versus 6x leverage, in both a good case and a bad case. What does this tell you about how sponsors should choose…

A core product question for an analyst supporting the first days of a Chapter 11 process.

What is debtor-in-possession financing, and why might a lender provide it to a company already in bankruptcy?

A common terminology question in early-stage distressed situations.

What is a forbearance agreement, and why would a lender agree to one?

The two halves of the leveraged credit market behave differently, and desks trade both.

Compare leveraged loans and high yield bonds as investments. Which would you rather own if you expect rates to fall?

CLOs buy roughly two thirds of the leveraged loan market. Desks need to understand their behaviour.

Explain a CLO. Where does the equity return come from, and what happens when the portfolio deteriorates?

Junior capital providers choose between these regularly, and the reasons are not obvious.

A sponsor needs $150m of junior capital. When would you provide it as mezzanine debt versus preferred equity?

Junior capital interviews test whether you can build a blended return across instruments.

Structure a $100m mezzanine investment targeting a 15% IRR over a five-year hold. The borrower can afford 8% cash interest. How do you get there?

The question a leveraged finance desk answers before committing capital.

A sponsor asks you to underwrite the debt for a buyout of a business with $150m EBITDA. How do you determine how much debt it can carry, and what would make you say no?