Table of Contents
PREFACE
When we sat down to write this guide, our goal was to paint an accurate picture of career prospects in the private equity industry. We wanted to excite candidates about the industry and encourage them to pursue their dream job. At the same time, however, we didnt want to give anyone false hopes. For most, finding a position in private equity will be difficult, as the number of candidates pursuing private equity opportunities has always far outpaced the number of available positions.
Perhaps never before has the private equity profession wielded such power or played as important a role in the financial markets as it does at present. The appeal of working in the industry is obvious: Private equity is about investing millions (sometimes billions) of dollars into companies and helping determine their fate by exerting influence on operations and strategy, and in todays market that includes some of the most prominent companies in the world. Private equity investors work with companies from the initial investment to the time they are taken public or sold. They are passionate about investing and have the ability to create tremendous value.
If youve already looked into getting a position at a private equity fund, you may have been warned that the challenge could be daunting and the competition fierce. This guide will give you a better understanding of the career path in private equity and how the hiring process works. However, we do not profess to offer surefire, cant-miss strategies for securing a position, because there simply arent any! Remember, too, as in other industries, there can be timing issues and natural business cycles that are out of your control. Instead, our aim is to give you insight into the elements that are in your control so you can put your best foot forward during your pursuit of a job. This guide also does not take a textbook look at private equity, give a detailed history of the industry, or explain how funds are raised and deals are done. You can get that information from many other sources (some of which are listed in Appendix A).
We segment candidates seeking positions in private equity by where they are in their professional careers, and thus we have chapters on the most common entry points: out of undergrad, pre-MBA (which, as you will see, often means being hired out of an investment banking or consulting analyst program as these are typical initial feeders into private equity jobs), from business school and postgraduate school. We devote a separate chapter to venture capital (earlier-stage investing) because the skill sets that venture funds look for, the timing of the opportunities to break in, and the career track can all differ significantly from later-stage private equity funds. There is also a chapter on private equity fund of funds, hybrid funds, and secondary funds, as those run slightly different recruiting processes and hire different types of candidates.
This guide focuses primarily on junior and senior (non-partner) roles at mid- and later-stage private equity and leveraged buyout (LBO) funds. When we use the traditional term private equity (PE), we are referring to the entire spectrum of early- to later-stage investing. When discussing a specific portion of the market, for example venture capital or buyouts, we will note it by name.
Most candidates target a long-term career in private equity by following what we call the traditional path, which starts early in their career. We also call this the 2-2-2 route because it usually involves spending two years in an analyst training program (usually investment banking or consulting), followed by two years in a private equity firm and then two years in business school before securing a career-track opportunity. As you read this guide, you will learn that it is increasingly difficult to enter the process later in your career to make up for missed experiences. If you didnt land in an investment banking or consulting analyst program after graduating from college, it will be more difficult to secure a pre-MBA position at a PE/LBO fund; and if you wake up one day in business school (or several years later) and have an epiphany that PE investing is your true calling but you lack prior PE experience, the battle is likely to be even more challenging.
We will outline the traditional path and refer to it throughout this guide, but it is not the only way to get into PE. There are those who break in via other ways, and we make certain to give attention to them as well.
REAL-LIFE STORIES
As recruiters who specialize in private equity, we are well-positioned to offer career advice: We know what the hiring firms demand and we are intimately aware of the experiences of candidates who have successfully found positions. Thus, in addition to our own guidance, we believe a great way for you to really get a grasp of the private equity search process is to read insight from those on both sides of the equation who have experienced it firsthand. For the hiring firms, we include insight (Insider Tips) throughout the book from PE professionals, some of whom are in positions where they make hiring decisions.
On the candidate side, we have firsthand accounts (case studies) of 36 individuals who went through the search process, and we have included resumes from 15 of them. The experiences outlined in the case studies run the gamut from those who broke into PE the more traditional way to those who lacked the usual requirements but were still able to secure a position in a less traditional way. We have case studies from pre-MBAs, current MBAs, and professionals up to several years out of graduate school. What the authors of all the case studies have in common is that they were top performers and high achievers both academically and professionally and had a burning desire to succeed.
By reading the case studies you will quickly see that, in most instances, to secure a position in private equity you must be willing to commit early, put in the work, get the best education/training, and do whatever else it takes to exceland thats true whether you eventually break in via the traditional or nontraditional path. Are we saying that many of our readers will find a position without the traditional background? No, but if you follow the advice of those who were the exceptions, and if you, too, have a stellar reputation and are willing to work hard, you can improve your chances of being an exception as well.
We believe the competitiveness, intensity, pace, and even the potential for compensation in the private equity industry parallels the sports world; therefore, at times we use professional sports analogies to describe various aspects of the job market. In fact, sports terms are commonly used by private equity professionals, so you may find being familiar with them a useful asset going forward. For example, funds hiring at the more senior level may tell us they are looking for someone who can quarterback a deal. When targeting junior level staff, the same funds say they want people who can block and tackle for their deal teams. Mid-market funds often want utility fielders who can take on many roles, given that they are smaller, less structured organizations.
We view the process of finding a position in private equity as similar to that of reaching the pinnacle of professional sports; thus, as someone striving to make it, we think you should tackle your search in a similar way as someone training to be a pro athlete. Think of working in private equity as the major leagues. To succeed in either athletics or private equity you need to have a high level of natural ability and work overtime to make up for areas in which you are deficient. In baseball, if a pitcher cant throw a 90-mile-per-hour fastball he will have a tough time making it to the majors. And even if he
