Happy Investor1
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Ever wonder how you can get your foot in the private equity door? Ever ask yourself how you can fight against the brightest and most competitive people out there?
For most of us, the world sharp-suited deal-makers and financiers has a reputation for keeping headcount low and hiring only from an exclusive set of business schools and strategy consultancies. Hence, we think that the only way to get into such world is to develop strong relationships and get lukewarm references.
The truth is there's no magic way of entering the private equity industry. Even within a firm, there's a difference in what they're looking for.
However, what's important your approach and how you articulate it. Here're some tips to help you break into private equity.
Junior level
If you're fresh off the boat, you need to demonstrate strong work ethic, solid modeling skills, business acumen, and ability to fit in with the firm.
Being from a top school gives you an advantage. However, it's very unusual for people to join a private equity firms right after graduation from an undergraduate degree. The reason is that most private equity firms are small and don't have the ability to train people within the firm.
Private equity firms like to see prestigious company names and impressive transactions on the record. Your past experience is therefore very important. How many years of experience do you have in investment banking, or at a PE firm? Did you work for a well-known firm? How many deals have you done? Do you have any impressive transactions or other specific skills?
Ideal candidates also need to have a cultural fit. This is irrational and varies depending on the firm. Nevertheless, it's important to stay positive and cool-headed. Don't complain about work or how much sleep you didn't get. It won't reduce your workload, and will only destroy your mental well-being.
A bonus point if you can demonstrate that you can lead the due diligence process. Do you have strong project management skills? Are you organized? Try to have every detail at your fingertips and maintain a well-organized workspace. Showing that you're on top of everything can make a great difference in the eyes of others.
Mid-level and senior-level
Depending on which team you're on (Investment or Operations), the hiring criteria are different.
For the Investment team, firms usually prefer someone with 7 to 10 years of experience in investment banking and/ or private equity role. You need to demonstrate your ability to interface with clients, lead the due diligence process, and most importantly, lead and mentor the team members. In addition, firms would also look at your ability to vet the transaction before it gets reviewed by MDs and Partners you to save them time.
For the Operations team, ideally you also need around 7 to 10 years of relevant experiences. Companies often look for line managers, CFOs, and COOs of a business in the industry they're investing in.
Important criteria for senior level include the ability to raise capital, originate deals, interface with clients at all level, and represent the face of the fund. This typically requires 10 to 20 years of experience in investment banking and private equity.
At the end of the day, it all boils down to one crucial point: if you want to get hired in private equity, you need to either generate revenue or cut expenses. Or better, both.
Private equity firms can be quite brutal. They would rather not hire someone than hire the wrong person.
What if I hold an MBA?
Private equity companies are notoriously picky about education backgrounds, so even for MBA graduates getting into the field isn't any less challenging. It's helpful if you want to reach the MD level or above since it gives you a solid network and more credibility. However, keep in mind that unless your degree comes from one of the top 10 schools worldwide, don't expect it to give you much value.
Is it better to seek help from finance headhunters?
Headhunters are hired by investment banks, private equity firms and hedge funds to find potential candidates for hire. Remember, they work for the firms that hire people, NOT you.
Recruiters are helpful in finding good candidates. However, some of them are lazy and don't filter resumes or verify candidates' information well enough before sending them. Therefore, you need to take everything into account when making decisions.
Be skeptical: don't assume the headhunter is good just because he or she works for a firm with good reputation.
But what if I have little or almost zero experience in investment banking or private equity?
People come from different backgrounds and not everyone is the ideal candidate portrayed by recruiting managers. Your best bet if you don't have any PE experience in hands is to work at a company in the industry and get experience running a line of business, and then join the Operations team of a PE firm.
Don't go into other areas in finance such as sales and trading or asset management. They're not relevant for private equity, and can actually hurt your chances of getting in.
There's no short cut. If you don't have any previous experience, learn about the industry, study the firm, and try to get yourself in the firm to gain some valuable experience.
What should I highlight on my resume?
Everyone, especially at the junior levels tend to claim credits for things that they most likely didn't accomplish. Avoid this.
Listing too many deals on your resume can actually work against your benefits.
Focus on quality over quantity.
Detail your specific role on the deal. Did you do anything unique or make any significant contribution to the deal? Did you come up with with a better capital structure that allowed the deal to progress?
Have a strong opinion on each deal you did. It shows your ability to make decisions and think on your feet.
How does the interview process work?
The interview process varies depending on the level of the hire. Private equity interviews concentrate on technical skills and company-culture fit in almost equal measure.
Hiring managers will ask questions regarding your background, your goals, motivation, definition of success, your view about the industry, what's something that everyone else likes but you don't, as often as as they'll ask you to analyze a particular industry, describe previous transactions you worked on and something you did that created value.
Reasoning skill is equally as important as technical skill. Make sure you can tell the story before using a model to support your decision or opinion.
In short, what makes you stand out is your ability to add value to the firm. Private equity companies want people who could see opportunities that no one else could see, and who know how to optimize those opportunities to help generate revenue. Your track record of results will therefore set you apart.
For most of us, the world sharp-suited deal-makers and financiers has a reputation for keeping headcount low and hiring only from an exclusive set of business schools and strategy consultancies. Hence, we think that the only way to get into such world is to develop strong relationships and get lukewarm references.
The truth is there's no magic way of entering the private equity industry. Even within a firm, there's a difference in what they're looking for.
However, what's important your approach and how you articulate it. Here're some tips to help you break into private equity.
Junior level
If you're fresh off the boat, you need to demonstrate strong work ethic, solid modeling skills, business acumen, and ability to fit in with the firm.
Being from a top school gives you an advantage. However, it's very unusual for people to join a private equity firms right after graduation from an undergraduate degree. The reason is that most private equity firms are small and don't have the ability to train people within the firm.
Private equity firms like to see prestigious company names and impressive transactions on the record. Your past experience is therefore very important. How many years of experience do you have in investment banking, or at a PE firm? Did you work for a well-known firm? How many deals have you done? Do you have any impressive transactions or other specific skills?
Ideal candidates also need to have a cultural fit. This is irrational and varies depending on the firm. Nevertheless, it's important to stay positive and cool-headed. Don't complain about work or how much sleep you didn't get. It won't reduce your workload, and will only destroy your mental well-being.
A bonus point if you can demonstrate that you can lead the due diligence process. Do you have strong project management skills? Are you organized? Try to have every detail at your fingertips and maintain a well-organized workspace. Showing that you're on top of everything can make a great difference in the eyes of others.
Mid-level and senior-level
Depending on which team you're on (Investment or Operations), the hiring criteria are different.
For the Investment team, firms usually prefer someone with 7 to 10 years of experience in investment banking and/ or private equity role. You need to demonstrate your ability to interface with clients, lead the due diligence process, and most importantly, lead and mentor the team members. In addition, firms would also look at your ability to vet the transaction before it gets reviewed by MDs and Partners you to save them time.
For the Operations team, ideally you also need around 7 to 10 years of relevant experiences. Companies often look for line managers, CFOs, and COOs of a business in the industry they're investing in.
Important criteria for senior level include the ability to raise capital, originate deals, interface with clients at all level, and represent the face of the fund. This typically requires 10 to 20 years of experience in investment banking and private equity.
At the end of the day, it all boils down to one crucial point: if you want to get hired in private equity, you need to either generate revenue or cut expenses. Or better, both.
Private equity firms can be quite brutal. They would rather not hire someone than hire the wrong person.
What if I hold an MBA?
Private equity companies are notoriously picky about education backgrounds, so even for MBA graduates getting into the field isn't any less challenging. It's helpful if you want to reach the MD level or above since it gives you a solid network and more credibility. However, keep in mind that unless your degree comes from one of the top 10 schools worldwide, don't expect it to give you much value.
Is it better to seek help from finance headhunters?
Headhunters are hired by investment banks, private equity firms and hedge funds to find potential candidates for hire. Remember, they work for the firms that hire people, NOT you.
Recruiters are helpful in finding good candidates. However, some of them are lazy and don't filter resumes or verify candidates' information well enough before sending them. Therefore, you need to take everything into account when making decisions.
Be skeptical: don't assume the headhunter is good just because he or she works for a firm with good reputation.
But what if I have little or almost zero experience in investment banking or private equity?
People come from different backgrounds and not everyone is the ideal candidate portrayed by recruiting managers. Your best bet if you don't have any PE experience in hands is to work at a company in the industry and get experience running a line of business, and then join the Operations team of a PE firm.
Don't go into other areas in finance such as sales and trading or asset management. They're not relevant for private equity, and can actually hurt your chances of getting in.
There's no short cut. If you don't have any previous experience, learn about the industry, study the firm, and try to get yourself in the firm to gain some valuable experience.
What should I highlight on my resume?
Everyone, especially at the junior levels tend to claim credits for things that they most likely didn't accomplish. Avoid this.
Listing too many deals on your resume can actually work against your benefits.
Focus on quality over quantity.
Detail your specific role on the deal. Did you do anything unique or make any significant contribution to the deal? Did you come up with with a better capital structure that allowed the deal to progress?
Have a strong opinion on each deal you did. It shows your ability to make decisions and think on your feet.
How does the interview process work?
The interview process varies depending on the level of the hire. Private equity interviews concentrate on technical skills and company-culture fit in almost equal measure.
Hiring managers will ask questions regarding your background, your goals, motivation, definition of success, your view about the industry, what's something that everyone else likes but you don't, as often as as they'll ask you to analyze a particular industry, describe previous transactions you worked on and something you did that created value.
Reasoning skill is equally as important as technical skill. Make sure you can tell the story before using a model to support your decision or opinion.
In short, what makes you stand out is your ability to add value to the firm. Private equity companies want people who could see opportunities that no one else could see, and who know how to optimize those opportunities to help generate revenue. Your track record of results will therefore set you apart.