28 questions reported in Blackstone 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
Currently advertised programmes.
LBO modelling, leverage capacity, value creation plans and exit paths. 10 questions
Underwriting an entry requires a view on the exit. Funds ask this at IC.
A sponsor is ready to exit a portfolio company. Compare a strategic sale, a sponsor-to-sponsor sale, an IPO and a continuation vehicle.
Asked to test whether you understand the business you're joining, not just the deals.
Explain the economics of a private equity fund. Management fee, carry, hurdle and the distribution waterfall.
A judgement question with a sharp right answer about time and scale.
Define IRR and MOIC. A deal returns 3.0x over 7 years; another returns 1.8x over 2 years. Which is the better outcome, and what does that tell you about the limits of each metric?
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…
The standard private equity modelling test. Expect a hard time limit.
Build the returns for a five-year buyout. Compute the entry enterprise value from LTM EBITDA and the entry multiple, split it into debt and sponsor equity using the leverage assumption, then grow…
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…
The standard private equity screening exercise. Expect to do it on paper in under 10 minutes.
A sponsor acquires a company with $100m LTM EBITDA at 10.0x, funded with 6.0x debt and the rest equity. Assume: - EBITDA grows to $140m by year 5 - Cumulative free cash flow over the hold pays down…
Buy-and-build is the dominant mid-market strategy. Expect the maths without a calculator.
A platform was bought at 10.0x EBITDA with $100m EBITDA and 6.0x leverage. It acquires an add-on with $20m EBITDA at 6.0x, funded entirely with new debt. What happens to the sponsor's equity value and…
A private equity associate case in which the facts move after the initial underwriting.
You are the associate on a control buyout of Northstar Field Services, a route-based maintenance business. The partner wants a recommendation before final IC. Work through each update, commit to a…
Increasingly used as a take-home exercise in private equity recruiting.
Outline the structure of an investment committee memo recommending a buyout. What makes a memo persuasive, and what is the most common failure?
Merger models, accretion/dilution, purchase accounting and deal judgement. 5 questions
Foundational for both merger and LBO models; expect it as a build-it-now exercise.
Construct the sources and uses for an acquisition of a company with $500m equity purchase price, $150m of existing debt to be refinanced, $40m of cash on its balance sheet, and $25m of fees. The buyer…
Tests whether you can reason from the balance sheet identity rather than recall a rule.
Can a healthy, profitable company have negative shareholders' equity? Explain how it happens and name situations where it isn't a warning sign.
A judgement question. The interviewer wants structured thinking and a view.
Studies consistently find most acquisitions fail to create value for the acquirer. Why? What separates the deals that work?
Asked to test whether a candidate uses EBITDA thoughtfully or reflexively.
EBITDA is often used as a proxy for cash flow. Explain why that proxy breaks down, and name the specific items that separate EBITDA from actual free cash flow.
Separates candidates who memorised the formula from those who understand it.
Debt is cheaper than equity and tax-deductible. Does adding debt always lower WACC? Explain what actually happens.
Blended return construction, PIK, warrants and intercreditor terms. 4 questions
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?
A foundational question on why junior capital can lose money even when enterprise value looks healthy.
A company has $300m of senior debt, $100m of mezzanine debt and $200m of sponsor equity. Enterprise value falls to $360m. What happens?
Junior lenders ask this because their recovery can depend on sponsor behaviour before formal default.
You are lending behind senior debt in a sponsor-owned company. How do you assess whether the sponsor will support the credit if performance weakens?
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?
Margin bridges, pricing, procurement and 100-day plans. 3 questions
A portfolio-operations case sequencing a corporate carve-out separation without disrupting customers or cash collection.
You are supporting a sponsor-owned carve-out of a distribution business. The purchase agreement is signed, but the target relies on the seller's ERP, cash-management and customer-service teams.…
A portfolio-operations prioritization lab where every initiative competes for the same management capacity.
A newly acquired industrial distributor is behind plan. The operating partner has capacity for only two major workstreams this quarter. Rank the interventions as operating facts and management…
A portfolio-operations case requiring an associate to sequence a turnaround plan under tight management capacity.
You support the operating partner at a sponsor-owned food-service distributor. EBITDA is below plan and liquidity is tightening. Rank the interventions as the facts change, then issue a 60-day…
Stochastic calculus, VaR and expected shortfall, and model limitations. 2 questions
Mental math screen. Expect several of these in rapid succession, no calculator.
An investment compounds at 9% annually. (a) Roughly how long to double? (b) What is it worth after 24 years, as a multiple? (c) A fund returns 2.5x over 6 years. What is the approximate annualised…
Foundational maths underpinning every valuation method.
Derive the formula for a growing perpetuity. Then value: (a) $100/year forever at a 10% discount rate, (b) the same cash flow growing at 3%, and (c) $100/year for 10 years at 10%.
Structuring for downside, collateral, priming risk and recovery. 1 question
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?
Credit statistics, capacity analysis, flex terms and syndication risk. 1 question
Mandatory for private equity interviews and standard in investment banking.
Walk me through a leveraged buyout model from start to finish.
Cap rates, NOI, going-in versus exit yield and levered returns. 1 question
A real-estate acquisitions live case testing rent-roll analysis, leasing assumptions and bid discipline.
You are underwriting an office acquisition for a value-add real estate fund. New leasing information arrives before the bid deadline. Decide what to underwrite at each stage and prepare the investment…
Development spreads, cost overruns, lease-up risk and construction draws. 1 question
A sponsor-level question on promote economics in development deals.
Why do development deals often use joint ventures with promotes, and what should the capital partner watch for?
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 Blackstone.