Front Office Investing interview prep.

Behavioural questions to expect

1. Walk me through your CV.
2. Tell me about your most impressive financing or structuring analysis.
3. Tell me about a weakness, a failure, or feedback you've received and worked on.
4. Why mezzanine / junior capital? Why not senior direct lending or PE?
5. Why the firm?
6. Why junior capital over senior lending — what's the trade-off you're choosing?
7. How would you describe the firm's junior-capital approach and edge in your own words?
8. How does the firm think about its position relative to the senior lender?

Technical concepts to master

• The mezzanine structure

  Filling the gap · Cash coupon · PIK / PIK toggle · Equity kicker (warrants)

• The return blend

  Current yield · PIK accretion · Warrant upside · Target gross IRR

• Intercreditor + subordination

  Subordination · Standstill · Payment blockage · Enforcement + buy-out rights

• Downside + recovery

  Downside / stress case · Recovery (junior) · Equity cushion · Conversion / control in stress

• When mezzanine is the right tool

  LBO gap financing · Growth / acquisition capital · Recap / dividend · Mezz vs 2nd lien / unitranche

Practical drills

• A sponsor needs junior capital to complete an LBO. Structure a mezz tranche to a ~15% target gross IRR. 5 min prep, 5-7 min delivery. Be ready to be probed on the blend, intercreditor, and downside.
• You invest $100m of mezz: 12% cash coupon, 2% PIK, plus warrants for 5% of the equity. Hold 5 years; at exit the equity is worth $500m. Roughly what's the blended gross IRR, and which piece drives it?
• A company restructures with a stressed enterprise value of $700m. Ahead of your mezz: $500m senior secured. Your mezz is $200m (subordinated). What's the senior recovery, the residual to mezz, and your mezz recovery rate?

Smart-question anchors

• Sourcing + sponsor relationships — where junior-capital flow comes from and how an analyst contributes
• Structuring philosophy — the firm's preferred return blend (cash / PIK / warrants) and how it sizes the equity kicker
• Intercreditor posture — how the firm negotiates standstill / enforcement and protects its junior position
• Downside + workout — how the firm handles a stressed junior position, including conversion / control
• Equity participation — how the firm thinks about warrants / co-invest and value-add to the business

Sourced from

Mergers & Inquisitions — Private Credit / Mezzanine · CAIA — Mezzanine Debt (curriculum reading) · Financial Edge / Ryan O'Connell, CFA — Mezzanine Financing · Wall Street Oasis — Private Credit / Mezzanine threads · Cambridge Associates — Private Credit Strategies · Simpson Thacher — Leveraged Finance 101 (covenants / intercreditor)