Hey Heggie, I’m not a PE guy but I can provide a bit of insight for you (all my close friends work in private equity). This “simpler” question you talked about above is a LBO analysis: they want you think about a very basic LBO and if it would make sense to do the investment.
Whether you are at a Hedge Fund or PE Fund we’re all in search of the same goal: to make great investments and understanding what makes a good or bad company. Wherever you are at you have to ask yourself: is this a good or bad company and why.
Here’s a good article on the Key Characteristics of a LBO Candidate: http://www.streetofwalls.com/articles/private-equity/learn-the-basics/lbo-candidate/