Private Markets
Buying companies, funding new ones and lending to them directly — with capital committed for years and a value that is an opinion until somebody buys it.
Buy-Side: Decides whether to take it. the whole map
The seats
five of them, each answering the same six questions so that they can be read against each other.
Next to it
The other groups on the same side of the price.
Asset Management Hedge Funds & Alternatives Wealth Management Insurance & Pensions
What an interview asks here
Every question here is really about the same thing: there is no price, so everything that looks like a measurement is an estimate with a date on it.
Try each one out loud before you open it. What is underneath is the shape of a complete answer, not a script — somebody who can produce those parts in their own words can also answer the four variations that follow, and somebody who has memorised a paragraph can answer one.
Q1How does a leveraged buyout actually make money?
What it is checking. The opening question, and the answer has three sources that are usually conflated into one.
A complete answer contains:
- Paying down debt with the company's own cash flow, which transfers value from lenders' claims to equity.
- Improving the business — growth or margin — which is the part that is actually work.
- Multiple expansion: selling at a higher multiple than was paid, which is the market's doing rather than the sponsor's.
- Attributing a return to the second when it came from the third is the most common overstatement in the industry.
Read it properly: What an LBO is · The transaction
Q2Why is IRR a misleading measure on its own?
What it is checking. The number the industry is sold on, and it rewards speed rather than value.
A complete answer contains:
- IRR is sensitive to timing: an early distribution flatters it enormously regardless of total value created.
- It also assumes reinvestment at the same rate, which is rarely available.
- So it is read alongside a multiple of invested capital, which is timing-blind and says how much money came back.
- And both depend on marks for anything not yet sold, which is where the estimate hides.
Read it properly: IRR and NPV · Private equity
Q3What is the J-curve and why does it exist?
What it is checking. Whether you know that a young fund looks bad for structural reasons.
A complete answer contains:
- Fees and costs are charged from the start; realisations arrive years later.
- So reported returns are negative early and recover as the portfolio matures — the shape of a J.
- It means a fund cannot be judged on its first years, and comparing funds of different vintages on reported return compares their ages.
- It is also why a secondary buyer entering halfway pays for having skipped it.
Read it properly: Secondaries · Private equity funds
Q4What is a capital call and why is it a liquidity risk for the investor?
What it is checking. The obligation that arrives on somebody else's schedule.
A complete answer contains:
- An investor commits capital and the manager draws it down when there is something to buy.
- So the investor holds an unfunded obligation with no fixed date, which has to be met in cash.
- Calls tend to cluster when opportunities are good, which is often when the investor's other assets are down.
- Which is why over-committing is the classic institutional mistake, and why pacing is managed rather than left to happen.
Read it properly: Family offices · Liquidity
Q5How is private credit different from a bank loan or a bond?
What it is checking. A market defined by what it is not, so the answer has to be structural.
A complete answer contains:
- It is lent directly by a fund rather than by a bank or through a public bond market.
- So there is no ratings requirement, no public market price, and usually a single lender or a small club — which makes amendments fast.
- The lender is a fund with locked capital rather than a bank with depositors, which changes who can be forced to sell.
- The cost of that is no visible price, so the mark is a model until something is sold.
Read it properly: Private credit · A bond against a loan
Q6A venture portfolio has one company worth more than everything else. Is that a failure?
What it is checking. The power law, and whether you understand what venture is actually underwriting.
A complete answer contains:
- No — that is the expected shape. Most investments return little or nothing and the outcome is decided by a small number.
- So the discipline is not avoiding losses but making sure the winners are owned in enough size and followed on.
- It also means the reported value depends heavily on the last round price of one company, which is a single negotiated data point.
- And that price is an opinion until somebody buys the whole thing.
Read it properly: Venture capital · Venture capital funds
Q7What makes a continuation fund awkward?
What it is checking. A structure where the same manager can be on both sides of the price.
A complete answer contains:
- An asset is moved from an old fund into a new one, with new investors buying and existing ones choosing whether to roll or exit.
- The manager advises both sides and is paid on the outcome of the new one, which is a structural conflict rather than a suspicion.
- It is managed with an independent valuation, a genuine choice for existing investors, and disclosure of the economics.
- The honest reading is that it can be the right answer for a good asset and is the wrong answer for an unsellable one.
Read it properly: Continuation funds · Secondaries
Do these against a clock — one at a time, ninety seconds each, answer before you look.
Whose questions these are. Every question on this page was written for this publication. None is taken from anybody else’s question bank, and none is a claim about what any named firm asks — that is neither verifiable from here nor ours to assert. They are our own reading of which mechanism a question of this kind is testing. Information and education only.
Test yourself: five questions
Five quick questions on this part of the industry — checked entirely on your device, nothing stored or sent. Wrong answers come with explanations, and the seat pages above hold every answer. For education only.