• Acid tests are frequently used to evaluate candidates or to measure the success of a product.
  • Top-notch candidates will be able to illustrate their talents and pass with flying colors.
  • Utilize an acid test to demonstrate your skills and flaunt your strengths.

The acid test originally referred to the process of using chemicals to separate solid gold from base metal. In modern times, it refers to a test of a character or the performance of a product. The goal in both historical and present use is to separate the mundane from the extraordinary.

The term has become commonplace throughout the private equity universe. Some firms that hire FALCON to conduct their executive searches will require an acid test for the specific skills they require to hire a successful and dynamic leader. As with any interview, these qualities are discovered through detailed examples and behavioral questions. 

Acid Test in Private Equity 

In a 2014 report, EY introduced an acid test at the beginning of their quarterly report to increase the audience’s comprehension of their key arguments. The elements included business model, strategy, risk appetite, KPIs, viability, and other principal risks. These are the kind of topics PE executives refer to with their use of the phrase. 

In an April 2020 Private Debt Investor article concerning debt lending, the article argues that the economic turmoil caused by the COVID-19 pandemic will be an acid test for private equity to discover which firms are above water and which will drown. 

Bain even has an employee loyalty acid test to review the leadership skills of their managers and profit that arises from a team that believes in their purpose. Review of any private equity company will no doubt find the term used somewhere in the company’s materials as a method of improving performance, skill, or profit. 

How to Leverage an Acid Test

When vetting new opportunities and building relationships with firms, it is vital to use meticulous testing as a tool to illustrate your ability to work well under pressure, surpass the expectations of your superiors, and build trust and rapport w...