10 questions reported in Carlyle 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
LBO modelling, leverage capacity, value creation plans and exit paths. 5 questions
Opening question in most private equity interviews.
Describe the characteristics of an ideal LBO candidate, and then name a type of business that would be a poor LBO candidate despite being a good business.
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 see whether you understand sponsor behaviour and its critics.
What is a dividend recapitalisation? Walk through the mechanics, its effect on sponsor returns, and the case against it.
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.
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?
Leverage capacity, documentation, downside cases and portfolio construction. 1 question
A modelling-style prompt used to test whether EBITDA becomes real deleveraging cash.
A borrower generates $30m of EBITDA. Cash interest is $9m, cash taxes are $3m, maintenance capex is $5m, and working capital consumes $4m. How much cash is available for debt paydown? What could make…
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.
Strategic fit, synergy underwriting, dis-synergies and post-close ownership. 1 question
Corporate buyers frequently acquire divisions rather than whole companies, and the risks differ entirely.
You're buying a division from a larger company rather than a standalone business. What changes in your analysis?
Leasing spreads, capex programmes, refinancing and hold-sell analysis. 1 question
The recurring decision an asset management team brings to investment committee.
An asset has hit its business plan two years early and could be sold today at a 20% IRR. The fund has three years left. Do you sell?
Cap rates, NOI, going-in versus exit yield and levered returns. 1 question
The economics of every real estate deal and every sponsor's compensation.
Explain how leverage drives real estate returns, and walk me through a typical promote waterfall between a sponsor and its limited partner.
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 Carlyle.