Recruiter's Glossary

Examples: Secondary Buyout • Portfolio Company • Dividend Recapitalization

Net Debt

Term from Private Equity industry explained for recruiters

Net Debt is a basic financial measurement that shows how much money a company really owes after counting its available cash. Think of it like looking at someone's credit card bill ($1000) but also considering the money in their wallet ($200) - their 'net debt' would be $800. Private equity professionals use this number frequently when evaluating companies for investment or acquisition. It helps them understand if a company can handle its debt payments and how much additional borrowing capacity it might have. You might also see it referred to as 'net financial debt' or 'net indebtedness' in job descriptions and company reports.

Examples in Resumes

Evaluated investment opportunities by analyzing Net Debt levels and cash flow metrics

Led due diligence process focusing on Net Debt and working capital requirements

Structured deals considering Net Financial Debt levels across portfolio companies

Typical job title: "Private Equity Associates"

Also try searching for:

Investment Professional Private Equity Analyst Investment Associate Financial Analyst Deal Professional Investment Banking Associate

Where to Find Private Equity Associates

Professional Networks

Industry Resources

Job Boards

Example Interview Questions

Senior Level Questions

Q: How would you evaluate if a company's Net Debt level is appropriate for a leveraged buyout?

Expected Answer: Should discuss analyzing industry standards, company's cash flow stability, growth prospects, and ability to service debt. Should mention comparing Net Debt to EBITDA ratios and industry benchmarks.

Q: How does working capital impact Net Debt calculations in a transaction?

Expected Answer: Should explain how changes in working capital affect cash position, discuss typical working capital adjustments in deals, and mention importance of normalized working capital targets.

Mid Level Questions

Q: What items would you include in a Net Debt calculation?

Expected Answer: Should list major components: bank debt, bonds, capital leases, minus cash and cash equivalents. Should mention treatment of restricted cash and credit facilities.

Q: How do you handle Net Debt in a purchase agreement?

Expected Answer: Should discuss how Net Debt affects purchase price adjustments, closing mechanisms, and importance of clear definitions in purchase agreements.

Junior Level Questions

Q: What is Net Debt and why is it important in Private Equity?

Expected Answer: Should explain basic concept of total debt minus cash, importance for company valuation, and role in determining purchase price.

Q: How do you find Net Debt information in financial statements?

Expected Answer: Should identify relevant sections in balance sheet, explain how to locate debt items and cash positions, mention importance of notes to financial statements.