Getting a job in Private Equity is not easy. You may have done your time in Investment Banking however unlike some other careers you cannot just walk into a Private Equity role. It is a competitive field to get into but there are things you can do to improve you chances.
This post is all about improving your chances of getting into Private Equity by understanding what Private Equity firms actually look for. I never worked in Private Equity however I managed to get an interview with James. James (not his real name) was an Investment Banker for 3 years before making the switch to Private Equity where he has been for almost 4 years.
In this interview James has agreed to reveal what Private Equity firms look for in prospective employees and how they go about hiring them. He also gave me a couple of interview questions that are almost sure to come up so keep reading!
Gary: What sort of people do Private Equity firms look for?
Honestly it varies between different Private Equity firms. Most firms look for the same 75% of characteristics and then the rest will be firm specific. The exact qualities that firms look for will really be dependent on what role and level they are hiring for.
At the junior level the reality is that the skill set and background that you need to hit the ground running and do the job unsupervised from Day 1 is that of an Investment Banker. What ends up happening therefore is Private Equity firms end up hiring a bunch of junior bankers.
The majority of the time they end up hiring junior bankers because they can come in and do the financial modelling from Day 1 and put together coherent a quality pieces of analysis
However once in a while they will decide that they have too many Investment Bankers and that they need to diversify. They will then go out and hire someone that has a corporate background or a consulting background to fill out the expertise gap that they are missing. However even if you come from one of these backgrounds you still need to understand the business and finance world and have a basic grasp of financial modelling.
If you can demonstrate (as a non-banking candidate) that you have these skills then this is viewed as very positive. However if you are seriously lacking in these areas then you get screened out pretty quickly.
There are two things which Private Equity firms tend to be after which narrows down the pool of Investment Banking candidates:
- They are looking for someone that has a good understanding of business and a commercial mind – someone who can look at the big picture. They do not want a number cruncher who does not actually think about the business that is being invested in.
- In banking you can get away for a lot longer being the technical guy but you really can’t in Private Equity
- Although it is different from fund to fund, if you are applying for a job in a Private Equity fund that controls their investments and that has an ongoing presence on the board they want someone that can get along with management teams and with boards
- A lot of people are not mature enough when they leave banking and are socially a little awkward
- You really need to be able to get along with CEOs and CFOs and the ability to have meaningful discussions about business is important
- Just as important is the ability to know when to talk and when not to talk. Some people just don’t get when they are meant to sit quietly and observe and when they are meant to contribute and put forward ideas
Gary: That’s some great information. So where can you actually find Private Equity jobs?
You will find most Private Equity jobs through recruiters. When an Private Equity fund decides it needs to hire additional people they tend to go through only one or two recruiters and so it is important to get on the right recruiters’ books.
However your best strategy is actually to get an introduction to someone already at a Private Equity firm and meet them for a coffee and learn more about the firm and the job and to express an interest in joining the firm. You’re not going to get a job this way but they will keep you in mind when the recruiter presents them with potential candidates. Note that if you’re too keen or pushy this can work against you. They don’t want aggressive personalities – they want people that can get along with the management teams and CEOs that they have to deal with every day.
Note that there is no separate ‘back door’ way into a job in Private Equity. You still need to go to the process but most people are happy to meet for a coffee and if your name is at the front of their mind then you make it that much easier on yourself to get a job when a position comes up.
Gary: Wow…that process seems so much less formal than the Investment Banking process. So what is the application process actually like?
Because firms are much smaller you typically just submit your resume and your cover letter. Note that you should never do more than a 1 page resume. You basically want to be telling the person assessing your resume “this is what I have worked on and this is where I did it”. You don’t really need anything extra.
A lot of the people that work in Private Equity came from your background (especially if you work in Investment Banking). They can get a sense pretty quickly from your resume whether your background will produce the skills that they need at that time and whether you are generally suitable for the role.
Gary: Ok that makes sense…and the interviews themselves? What are they like?
The interview formula is fairly standard across Private Equity firms. Questions that will ALWAYS be asked (so prepare for these) include:
- Give me an investment idea or an LBO idea
- You will be expected to talk through a company or investments idea – it can be private markets or an LBO
- The purpose of this is to see how you think about investments or companies
- You will ALWAYS be asked about the portfolio of the fund you are interviewing with
- The reason they like to ask you this is to see how well you can think things through and also how you deal with limited information and knowledge (as most often these companies are privately held)
- You need to be able to talk through basic things like when the business was acquired, what stage of the investment life it was acquired in and why the private equity firm would want to own it
- It also shows an interest in the Private Equity Fund you are interviewing with
- On this topic other questions you need to answer are:
- What is your favorite company we own?
- What is your least favorite company we own?
The junior staff will tend to ask you the more technical and business related questions while the senior people tend to look more at fit and the behavioral aspect of the interview.
The questions you will be asked will also depend on your background
- If you’re a wealthy private school kid who then went to a prestigious university and then to Goldman Sachs and are now applying for private equity you are going to get questions like “give me a time when you have faced a challenge and overcome adversity”
- When someone has had a more interesting background you will not get these sorts of questions. Instead you will get questions related to teamwork and your interactions with CEOs
Again this will all depend on the firm you are interviewing for and the types of people that work at those funds. It is a much less homogeneous process than the Investment Banking process but doing your research on the fund you are applying for is critical.
Are you looking to get a job in Private Equity? Post any questions you may have below and I’ll try and follow up with some answers for you.