01. Behavioral Flashcards
Tell me about yourself (~ 90 seconds, ~300 words).
I moved around quite a bit as a kid but finally settled in Chevy Chase, Maryland at the age of eight as my father worked hard to advance his business career. He ultimately became the CEO of a satellite communications company when I was twelve. This early exposure to business had a dramatic impact on my personal development, but I can only say that with the benefit of hindsight.
I attended an all-boy preparatory high school called Landon and was actively involved in both the art and athletic departments. During my senior year, I developed strong leadership and teamwork skills as the founder and captain of the Water Polo team and captain of the Varsity Swim team.
I chose to attend the University of Pennsylvania, because I wanted to receive a well-rounded education under the guidance of highly talented professors. It was not long before I discovered that my true passion was business. After completing my freshman year economics course, I made one of the most important decisions of my life and transferred into Wharton. I immediately fell in love with the quantitative and analytical aspects of my coursework, and subsequently decided to pursue a concentration in finance.
Outside of the classroom, I honed my interpersonal skills and became exceptionally good at managing and motivating people. I was elected to be treasurer and social chair of my fraternity during the same academic year. I was also elected to be president of Wharton’s senior society, Lantern.
Additionally, I created a fundraising platform for F.O.P. research and organized a charity concert that sold over 1,000 tickets with gross revenues of $30,000. Through this experience, I learned to leverage my natural enthusiasm and entrepreneurial drive in order to achieve financial results.
I chose a junior summer internship at Blackstone because I thought that it would enable me to learn about fundamental company valuations and strategic alternatives, both of which I found fascinating. I also thought that working one lean, M&A-oriented teams would expose me to a number of different projects in a shorter amount of time and enable me to learn as much as possible. When Blackstone extended me a full-time offer, I did not hesitate for a minute because the cultural fit was incredible and my exposure to senior professionals was unique.
Since beginning my investment banking career nine months ago, I have worked in a variety of different sectors and have had the opportunity to model DCFs, LBOs and merger analyses.
I believe that all of these experiences have shaped who I am today. Based on these experiences, I believe that private equity would be a great fit for me and would allow me to become the type of investor that I want to become: one who can spot market opportunities and capitalize on them through a combination of financial and operational skills.
Why private equity? (~30 seconds, ~100 words)
(1) I want to learn how to invest. I find principal investing to be fascinating, and I feel that working at a private equity firm will allow me to learn how to evaluate investments. Having spent several months advising companies on their investment strategies, I am excited to transfer to the other side and take on an investor mentality.
(2) I want to help shape companies from the inside. I am excited to learn about companies and work with management to improve their operations over several years in order to create value.
(3) I want to have a vested interest in the projects that I work on, as opposed to investment banking where we often “pitch then ditch”.
(4) I love being in a deal-driven environment, whether it is working with consultants to verify model inputs, being involved in the diligence process, or working alongside lawyers to assist with legal documentation. I believe that my personality combined with my experience in investment banking would allow me to excel in this type of role.
(5) I love modeling and the ability to get very granular with financial projections. I am interested in not only building the model, but also justifying and validating the drivers. I am an analytical thinker that enjoys looking at companies.
Why not a hedge fund?
(1) Minority vs majority interest. Hedge fund investments are typically structured as non-controlling or minority positions, which may fluctuate in value much more quickly than private equity. I am more interested in taking full control of a company in order to work with management over the long-run to improve operations.
(2) Short vs long time horizon. Hedge funds tend to attract market junkies who obsess over short-term earnings results and key news items and how these factors affect their portfolios. However, I am more interested in the long-term horizon to make improvements to a company.
(3) Value creation. Hedge funds do not typically work with management to help shape companies from the inside. This is a unique type of investor experience that private equity offers.
Why not corporate development?
Corporate development would be interesting because I would be able to plan and execute a wide range of strategies to meet specific organizational objectives. However, private equity is fascinating to me because you are able to execute corporate-level strategies across a number of different businesses, perhaps even across different industries. Rather than invest my time and energy into one company, I would rather build and improve a numbers of different businesses over the course of my private equity career. I find this diverse experience and sort of “serial entrepreneurship” to be attractive.
Do you want to start your own company?
Creating a business from scratch would undoubtedly be fascinating. In fact, I have experienced firsthand the deep satisfaction that my dad derives from running his own company. However, I believe that I would derive an even deeper sense of satisfaction from private equity because of what I like to call “serial entrepreneurship.” Rather than invest my time and energy into one company, I would rather build and improve a numbers of different businesses over the course of my private equity career.
Why do you think you would be a good investor? What makes you a good investor?
I believe that I would be a great investor because of my diverse set of life experiences: an early exposure to business, team captain of two varsity sports, heavy finance education, treasurer and social chair of my fraternity, founder of a fundraising platform, president of Wharton senior society and a career in investment banking.
Each of these experiences required a very different set of skills ranging from analytical thinking to leadership to process management, which embodies what it takes to become a successful investor. I view private equity to be the pinnacle of finance because it is a comprehensive form of investing that incorporates a little bit of everything: financial engineering, management consulting, deal negotiations, etc.
Based on my diverse set of experiences, I believe that private equity would be a great fit for me and would allow me to become the type of investor that I want to become: one who can spot market opportunities and capitalize on them through a combination of financial, operational and people/negotiating skills.
Where do you see yourself in five years? What are your long-term career goals?
I see myself having developed a solid foundation for fundamental analysis and hopefully be taking it to the next step and generating my own investment ideas. I strongly feel that private equity fits well with this long-term career goal. Ultimately, I am looking for a challenging career where I continuously learn and leverage my diverse skills to make a significant impact, and I will always be evaluating the best ways to achieve this goal.
Note: a mature candidate recognizes the skills that he would like to develop and how his job experiences will help realize them.
- Learn to objectively evaluate businesses as potential investments
- Generate my own investment ideas
- Source deals
Do you have plans to go to business school? Why or why not?
I will pursue an MBA only if the education provides me with the skills that I need to advance my professional development. I understand that many firms have a strict two-year program, in which case an MBA would be a logical next step in my career. With that said, I am extremely interested in finding one firm that fits with my personality so that I can plant my roots and make an impact.
Do you prefer a certain stage of investing? Why or why not?
I prefer investing in mature, late-stage companies that are not only profitable, but have a multi-year history of established operations. Unlike early-stage investing, this type of investing would allow me to capitalize on market opportunities through a combination of financial engineering and operational improvement. I am more interested in taking a conservative approach and analyzing all the potential pitfalls of an investment rather than focusing on all the potential upside and hoping for the next grand slam.
Why megafund?
(1) resources - more resources allows for internal knowledge sharing which can be extraordinarily useful, as at blackstone
(2) complexity - opportunity to work on some of the largest, most complex transactions in the industry
(3) financial engineering - opportunity to evaluate transactions using financial engineering as a lever to drive returns; not possible at middle market shop with small capital base and limited access to financing
Why middle market?
(1) responsibility - lean deal teams allows for more responsibility and more exposure to senior professionals
(2) relationships - as at blackstone, working in a small, collegial environment allows you to form close relationships and have a sense of everything that is going on
(3) operations - more focus on operations provides the opportunity to work closely with the management of portfolio companies in order to improve operations
What are your five greatest strengths? (Skills & Personality) What qualities do you have that will make you successful here?
(1) Driven. I am highly motivated, and as a result, I have a very strong work ethic and passion to learn and strive for excellence (e.g. transferring into Wharton)
(2) Analytical. I am incredibly detail-oriented and organized which allows me to visualize, articulate and solve complex problems while keeping the big picture in mind (e.g. spearheading charity concert)
(3) Collaborative. I genuinely enjoy working in team-oriented environments and learning about the interests of others in order to create value and achieve a goal (e.g. negotiation class)
(4) Enthusiastic. I have an extremely infectious enthusiasm and positive outlook that keeps those around me focused on the goal (e.g. varsity swimming)
(5) Leader. I consider my ability to manage and motivate those around me to be exemplary (e.g. social chair and treasurer, Lantern president)
What are your three greatest weaknesses?
Joke: I like to go above and beyond, and sometimes my enthusiasm causes me to go a bit over board (e.g. gifts for my girlfriend)
(1) Workaholic. Sometimes I can be so focused with or driven by the task at hand that I wind up tuning out other aspects of my life (e.g. keeping in touch with high school friends)
(2) Overly detail-oriented. Sometimes I obsess over the details to the point of frustration, but I often try to take a step back and take a look at the big picture (e.g. financial modeling)
(3) Public speaking. I have never been a tremendously confident public speaker in front of large audiences, but I improved upon this skill through a public speaking course during my senior year (e.g. management 100)
Have you had a performance review? What did it say?
Great combination of quantitative and qualitative skills
1) great attitude and outstanding work ethic; positive attitude and very easy to work with
2) incredible attention to detail; very thorough and diligent
3) strong technical skills and great analytically
4) incredibly organized and methodical
5) very efficient
Areas for improvement:
1) try to be more proactive in sharing your thoughts
2) ask more questions
What are three words that accurately describe you? How would your coworkers and friends describe you? (Personality)
The three words that best describe me are passionate, energetic and positive.
(1) Passionate: I am emotionally driven to succeed in all aspects of my life. My ambition allows me to consistently exceed others’ expectations, because my personal targets are usually much higher.
(2) Energetic: I wake up every morning with zest to seize every opportunity that I face. My infectious enthusiasm motivates those around me.
(3) Positive: I am extremely optimistic and never let life get me down. My optimism allows those around me to stay focused on the goal.
What are your interests and hobbies outside of work? What do you do in your free time? What do you do for fun?
(1) Painting / drawing (e.g. award winner, competition best in show). Even though I do not have very much time given my lifestyle, I find it to be incredibly therapeutic to sit down and draw for a few hours on the weekends)
(2) I really enjoy food and love restaurant exploring, but I have recently developed a hobby for cooking and recreating recipes of New York restaurants (e.g. Jean Georges story)
* Restaurants include: Nougatine, Mercer Kitchen, ABC Kitchen
* Favorite NYC restaurants: Nougatine, ABC Kitchen, Union Square Café, Tao
(3) Workout enthusiast (e.g. swim, run, bike, lift). I have aspirations to do a triathlon at some point in my life.
(4) Water sports including swimming, surfing and wakeboarding. I have travelled the world in search of the perfect wave
Tell me something interesting about yourself. (People would be surprised to know that I…)
People would be surprised to know that I am national award-winning artist despite not being related to Pablo Picasso and that I enjoy cooking.
Do you have any particular sector interests? Do you think our program should have generalists or specialists?
I do not have an overwhelming preference for any particular sector, because I am a generalist at Blackstone and have not yet specialized in a sector. I am more interested in ensuring a fit with the people within the sector. With that said, I feel that I would really enjoy working in consumer/retail, because I find product development and marketing to be fascinating and would be able to relate to the products.
Generalist: allows for comparative thinking, fresh perspectives and innovative thinking
Specialist: allows for deep industry expertise, quick reaction to industry changes and overall efficiency
What modeling have you done?
Between my heavy finance courses at Wharton and my eight months of investment banking experience, I have built a number of different models for various purposes. I built three-statement DCF models in my corporate valuation class, bankruptcy waterfall models in my restructuring class and pre-money valuation models for high-growth start-ups in my VC class. While at in the M&A group at Blackstone, I have performed all pertinent financial analyses relating to transaction evaluation and execution, including DCF, LBO, M&A, sum-of-the-parts, public comparables and precedent transactions.
Walk me through a model that you built.
The strategic advisory assignment that I am currently working has allowed me to construct a fairly complex scenario analysis model. I generated financial projections based on industry research and built in toggles that allow me to perform a fundamental valuation of the company assuming a divestiture of any one of its different business units. In addition to this analysis, I also analyzed how the company would be valued based on its sum-of-the-parts. Finally, I constructed an illustrative LBO in order to determine how much a financial sponsor would be willing to pay for the whole company.
How have you enjoyed banking thus far?
I have genuinely enjoyed my investment banking experience thus far, because it continues to provide a steep learning curve. Thus, I intend to fulfill my two year commitment in order to capitalize on the opportunity to learn as much as possible. With that said, I would like to transfer over to buy-side and learn how to evaluate investment opportunities.
What qualities/skills do you feel that you have that are directly transferable to the private equity industry?
(1) Analytical. I am incredibly detail-oriented and organized which allows me to visualize, articulate and solve complex problems while keeping the big picture in mind (e.g. spearheading charity concert)
(2) Leader. I consider my ability to manage and motivate those around me to be exemplary. This quality makes me exceptionally good at process management (e.g. treasury and social chair)
(3) Collaborative. I genuinely enjoy working in team-oriented environments and learning about the interests of others in order to create value and achieve a goal (e.g. negotiation class)
What is your favorite book and why?
My favorite book to date is called “Bargaining for Advantage” by Richard Shell. This book provides a basic framework for the principles of negotiations. Although the approach to negotiations that Shell outlines is not groundbreaking, it caused me to reevaluate the way I analyze and resolve complex situations, both in my personal and professional life. I quickly dropped all prior assumptions about the process and opened my mind to new ideas. In doing so, I discovered that my collaborative nature could be used to create value even in situations where there was seemingly nothing to be gained.
How do you define success?
I consider success to be a function of my overall happiness, which depends on the long-term balance across four main areas: achievement, fun, health and love.
(1) Health involves my ability to keep my mind and body in peak condition
(2) Achievement relates to my capacity to meet and exceed my personal and professional goals
(3) Love pertains to my ability to build and maintain close personal relationships. At times, short-term sacrifices are necessary to attain long-term balance.
(4) Fun has to do with my ability to sustain a personal life that brings me and those around me lighthearted pleasure
What motivates you?
I am motivated by my passion for excellence. I have an unwavering drive to pursue excellence in terms of health, achievement, love and fun, which results in my overall happiness and success. My outlook on life is that there is always room for improvement – we can always be better and we can always learn more. Whether I am striving for the best possible job in private equity or expanding my network and building personal relationships, I incessantly strive to be the best that I can be. I wake up every morning with enthusiasm, knowing that each day brings new opportunities and challenges.
What are you most proud of? What is your most substantial accomplishment?
I am proud of many different accomplishments in my life, such as winning national art awards or founding my high school water polo team. However, I do not think that any particular achievement is what matters. I consider the sum of my life achievements to be of utmost importance, because this total value is what defines who I am today. With that said, I am particularly proud of my ability to spearhead a charity concert that rose over $30,000 in total revenue because I think it takes a very unique and diverse skill set to pull off something of this magnitude.
What is your biggest regret thus far?
My biggest regret thus far was not discovering my passion for business earlier in my life. I entered college as a freshman and made a conscious decision to seek a well-rounded education rather than blindly follow my father’s footsteps into the world of business. However, it was not long before I realized that finance truly excited me, which spurred me to transfer into Wharton and pursue a career path toward the pinnacle of investing, private equity.
However, even with the benefit of 20-20 hindsight, my decision to follow a broad curriculum was not a lapse in judgment. This temporary setback allowed me to embark on a journey of self-discovery, which ultimately led me to where I am today.
What are you exceptionally good at?
Since the 5th grade, my teachers and peers have independently described me as the Renaissance man due to my wide array of exceptional talents: art, athletics, fundraising, mathematics, networking, etc. However, the one skill that I consider to be exemplary is my ability to manage and motivate people. My detail-oriented personality and infectious enthusiasm allow me to manage processes remarkably well.
Examples:
(1) I was elected to be treasurer AND social chair of my fraternity during the same academic year
(2) I was also elected to be president of Wharton’s senior society, Lantern
(3) I founded a fundraising platform for F.O.P. research, contracted a world-renowned artist, managed a promotional team of sixty students and sold over 1,000 tickets for gross revenues of $30,000
What is the best business you have ever seen? Why?
It is difficult to pinpoint the best business that I have ever seen, because businesses and business environments are constantly evolving. Ultimately, a great business is one that generates sustainable, growing cash flows while simultaneously delivering value to all of its stakeholders – investors, customers, employees and surrounding communities. Different businesses have fulfilled this at various points in time. Apple is a public favorite, because it has delivered across all of these dimensions in an exceptional way.
If you could emulate any investor, who would it be? Why?
An exceptional investor is able to recognize a great opportunity, create unforeseen value and successfully exit the investment. Warren Buffett is widely considered the greatest investor of all time having amassed a multibillion dollar fortune mainly through investing in stocks and buying companies. I seek to emulate his eye for great opportunity and patience in creating value across many different businesses.
Why did you pursue a career in investment banking?
I thought that investment banking would enable me to learn about fundamental company valuation and strategic alternatives, both of which I found very interesting due to my heavy finance curriculum at Wharton. I was also attracted to the prospect of working on lean M&A, project-oriented teams on a number of different projects and learning a lot in a short period of time.
Why are looking to leave investment banking?
I have genuinely enjoyed my experience in investment banking thus far because it continues to provide a steep learning curve: I have focused on fundamental company valuations, assessed strategic alternatives and had great experience modeling DCFs, LBOs and M&As. With that said, I want to learn how to invest. I find principal investing to be fascinating and I feel that working at a PE firm will provide me with the opportunity to learn how to evaluate investments.
What other job opportunities are you considering right now?
I have considered my various options and have decided that private equity is the best fit for me. As a result, I am currently being introduced to a limited number of other private equity organizations with a similar culture to that of this firm.
Tell us about the investing that you have done in the past.
I do not actively manage my own personal account, because I do not believe that one can be a market-beating investor without performing full-time diligence on investment ideas. Unfortunately, at this time, I cannot fully devote my time to researching and picking stocks. However, I am incredibly interested in learning the skills necessary to be an exceptional principal investor.
What is the most recent book that you have read? (Or, what books have you read recently?)
I have read a few books in the last few months, including the King of Capital, Barbarians at the Gates, and the Girl that Played with Fire (at the urging of my girlfriend. I didn’t have the patience to finish the third book).
What are your geographical preferences and why?
Although I am always open to new experiences, I would strongly prefer to live on the east coast because my roots are planted here. More specifically, my first choice is to live in New York City because the vast majority of my friends reside here. My second choice is to live in Washington D.C. because my parents and high school friends reside there. My third choice is to live in Boston because I have a few friends there and would love to explore a new city on the east coast.
