Credit Suisse First Boston second round, interview 1
(one on one)
What have you read that interests you?
Iraq
What effect might it have?
Oil prices could rise, but I don't think it would be long term - would probably be over soon.
[expressed mildly anti-war sentiments, at which point I was asked in a sarcastic tone whether or not I was going to the anti-war march. This question was quickly withdrawn, with a disclaimer that my political opinions would not affect my chances of employment]
What deals have you read about?
Safeway, KKR (your client)
Why KKR's lower bid more attractive to shareholders than rival supermarkets'?
All cash.
No reson for it to be blocked unless KKR already owns substantial supermarket assets (ie lower deal execution risk)
I said because KKR would do a good management job since they have expertise there. Stupid because why would ex-shareholders care?
How do private equity firms (like KKR) make money?
By buying a business cheaply, managing it well, earning money in the process (used to pay down the debt used to finance the buyout in the first place) then selling it on at a hopefully substantial profit (since it was high risk, they expect high reward).
If you were a bank, why would you lend to a private equity firm?
Good track record. [Potentially quite a high rate of interest available for this type of lending (because it's high risk)?]
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