Acquisitions Interview Questions
Acquisitions interviews test one thing: can you form a thesis, underwrite conservatively, and make a decision with conviction. Here's how the questions actually get asked, what interviewers are looking for, and the answer framework that works at institutional sponsors.
What acquisitions interviews are really testing
The surface-level questions in an acquisitions interview sound like technical tests — underwriting, model mechanics, cap rate moves. The actual evaluation is different. Hiring managers are screening for three behaviors:
- Can you form a view? An analyst who can only describe what the pro forma says, without a point of view on whether it's realistic, doesn't scale. Interviewers are listening for a thesis — a one-sentence reason this deal wins — every time you describe a deal.
- Are you conservative by default? Junior acquisitions pros who anchor to broker assumptions get their shops into bad deals. Interviewers probe by asking what you haircut and why.
- Will you say no? The valuable analyst is the one who walks away from deals that don't work, not the one who pushes every deal forward. Interviewers test this with "would you buy it at that price?" and listen for whether you have the conviction to say no.
Your answer structure should explicitly cover all three. Even technical questions are evaluated through this lens.
The five-part acquisitions answer structure
- Thesis (why this asset wins in this market)
- Underwriting (what you haircut vs pro forma)
- Downside (what breaks + how you protect)
- Pricing (what you'd pay and why)
- Decision (do it / don't / do it with conditions)
Each of the five has a specific purpose:
- Thesis — the compression of your view into one sentence. "A B+ multifamily deal in a rent-controlled market where the sponsor's operational story doesn't hold up" is a thesis. "It's a multifamily deal with upside" is not.
- Underwriting — the specific assumptions you took down from the offering memorandum. "Broker is at 4% growth in years 1–3; I haircut to 3% because their comp set doesn't reflect the concession environment in submarket X" is good. "I cut rent growth" is not.
- Downside — what specifically breaks the deal. If you can't name two or three variables that would blow through the debt coverage, you haven't stress-tested.
- Pricing — the number you'd pay, with a reason tied to the return hurdles of your theoretical fund. "I'd pay $180/unit versus the $200 ask because the debt-yield at $200 doesn't clear 9% at our LTV target" is better than "I'd pay less."
- Decision — explicit. Don't say "it depends." Say "yes at $180, no at $200, yes at $200 if the seller seller-carries 20% of the equity."
Common questions by category
- Why this market? — Answer with the demand driver, supply picture, and a specific catalyst tied to the next 24–36 months.
- What's the demand driver? — Name it specifically: logistics absorption tied to Amazon network, life-sci demand tied to a biotech cluster, etc.
- What's the competitive set? — List 2–3 comparable assets, explain how this one wins on location, quality, or price per foot.
- What assumptions did you haircut? — Usually 3–5 of: rent growth, vacancy, expense growth, exit cap, lease-up timing.
- What's your sensitivity? — Which input moves IRR the most? Cap rate at exit > rent growth > financing cost > vacancy, usually.
- What's the biggest driver? — Be decisive. Pick the one variable most exposed to the thesis being wrong.
- Would you buy it today? — Yes/no. Then defend.
- At what price? — A specific number. Tie it to debt yield or DSCR clearing a threshold.
- What would make you walk? — A specific variable moving a specific amount: "cap rate expands 75 bps," "seller won't cap capex," "we can't get the debt at 65% LTV."
Technical questions you'll get asked
Expect at least a few technical prompts mixed into the deal discussion. The most common:
"Walk me through how you would underwrite this."
This is the core question. Your answer should flow: gather the data (rent roll, T12, market comps), build the pro forma with your own assumptions (not the seller's), apply a debt structure that matches the thesis, compute returns (IRR, multiple, cash-on-cash), stress-test the key variables, and arrive at a price. The full underwriting walkthrough covers the entire sequence.
"What's a good IRR for this deal?"
Don't answer with a number first. Answer with "what's the risk profile?" Core = 8–10%. Core-plus = 10–12%. Value-add = 13–17%. Opportunistic = 18%+. Then give the number that fits. If you skip the risk framing, the interviewer will assume you memorized ranges rather than understanding the risk-return relationship.
"What's more important, IRR or multiple?"
Neither in isolation. IRR rewards short holds; multiple rewards long holds. A 25% IRR on a 2-year flip generates less absolute profit than a 15% IRR on a 7-year hold. LPs usually focus on multiple for long-dated funds; sponsors focus on IRR because that's how promotes crystallize. Answer with the trade-off, not a pick.
"How does DSCR vs debt yield bind on this deal?"
Usually one metric binds at a given rate environment. In low-rate environments, debt yield binds (lenders can hit coverage easily, but they want a minimum unlevered return). In high-rate environments, DSCR binds (debt service eats cash flow before coverage clears). Know which one binds on your deal and why. See DSCR vs Debt Yield for the full framework.
How to prepare a deal for the interview
Bring one deal you've actually underwritten, or one you can describe in enough detail to make the thesis real. "I looked at a 240-unit multifamily deal in Raleigh where..." is better than hypothetical answers.
- Pick an asset type you know. Don't try to sound impressive by picking something you've never underwritten.
- Remember the rent roll. If you say "the rent roll looked underpriced," an interviewer will ask by how much and why. Be ready with specifics.
- Have a point of view on the seller. Institutional seller? Family office? Distressed? Who's selling shapes what matters in the diligence.
- Know the financing. What lender class, what LTV, what coverage terms, what rate. This is almost always the follow-up question.
- Have a post-close business plan. What would you do with this asset for three years? Which tenants do you push? What capex? What's the exit thesis?
Red flags interviewers listen for
- Anchoring to the broker. If every one of your numbers matches the OM, the interviewer assumes you didn't actually underwrite.
- False precision. "This returns a 17.3% IRR" without being able to describe the ±200 bps sensitivity means you're presenting one number from a model you don't understand.
- No downside. The phrase "there's no real downside" is a disqualifier.
- Can't walk away. Candidates who want every deal to work are a liability. Interviewers test this by presenting a deal with clear disqualifiers and listening for whether you pick them up or talk yourself into it.