How do PE firms fundraise?
A core Private Equity interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
LPs evaluate: (1) track record (net IRR, DPI, MOIC vs peers and benchmarks), (2) team stability (key person events are a major risk), (3) strategy differentiation (sector focus, value creation approach), (4) fund terms (fees, carry, hurdle). Fundraising takes 6-18 months. The GP roadshows to 50-200 LPs globally. First-time funds are hardest; established firms with top-quartile returns raise faster.
WHAT INTERVIEWERS LISTEN FOR
- ✓Track record evaluation
- ✓Team stability
- ✓Strategy differentiation
- ✓Fund terms
- ✓Roadshow process
COMMON MISTAKES
- ✗Ignoring LP due diligence criteria
- ✗Underestimating fundraising timeline
- ✗Overlooking first-time fund challenges
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