"The Most Helpful and Inexpensive Assistance you Could Possibly Get."
“I really enjoy it,” he says, folding his arms and lying back in his chair with a contented grin. “I’m in [private equity] because I like to be excellent and to win.”
-Steve Schwarzman, Fortune Magazine Interview (March 5, 2007)
Yes, private equity firms are hiring. If you are considering a career in private equity--at a LBO fund, venture capital or perhaps a fund of funds, but are not sure where to begin, this post provides the answers you need.
Getting a job in venture capital and private is not easy. It is very hard. If you can get a VC or PE job, you can get any job in the world.
“The first few rounds of interviews were grueling. I had never built an LBO model from
soup to nuts, but I believed that I understood how.”
"I took courses on restructuring and investing, but many firms could not get around the fact that I had no PE experience."
“PE funds compete each year for the top pre-MBA talent. If you’re one of these elite
Analysts you usually know it—you’re probably in a top group at a top firm; you’ve been
invited to work on live deals with extensive modeling, have traveled for the firm and
received a positive mid-year review.”
If there is a particular company or product that interests you as you go about your daily life, see if that company has had any private funding and find out who the investors are. You will be more successful if you are investing in an area of personal interest and passion.
Once you've identified a few firms with companies that you admire and have researched, be proactive. Try to find an angle. Undergraduate and business school alumni networks are always a great entry point.
Cold call a partner to set up a meeting. Leave a voicemail in addition to mailing (physically) your resume. Emails can get lost or blocked in spam filters. Make sure in your first contact that you are very specific with regards to your intentions. General 'get to know' you messages are always discarded.
"On the private equity side, my strategy was to identify connections (either a Tuck connection or a personal connection) to specific funds and evaluate whether I would be interested in joining these funds. If I was interested, I tried to leverage my connection into an informational interview. There were two or three funds where that connection was pretty strong; Broadview Capital was one of them (a couple of Tuck guys were at Broadview at that time). There were a couple of other funds where some of the older partners were Tuck alums. But mainly what I did during the spring of 2000 was sit tight. Most of my peers at that point had jobs; I was one of the 5 percent of Tuck MBAs that didn't graduate with a job. Not because I didn't want one, but because I found that the private equity cycle was one where the candidate had to demonstrate an ability to tolerate a level of risk decidedly above what would be the norm for those pursuing a banking or consulting job.
During that spring, I'd fly out to Silicon Valley every other week and sleep on friends' couches. I would call up the connections I'd identified and say, "I'm Ed Diffendal, I'm a second-year MBA student, and I'm looking for a job in private equity. Can I come talk to you?" And I found that almost everyone took that meeting. Not necessarily because they wanted to offer me a job, but because it was an active time in the industry and everyone was looking to meet talented people."
Come prepared to discuss the firm's portfolio in detail, and be well versed on that firm's competitors. How do they differ? Try to make the investing partner start selling you as opposed to the other way around. This information is easily available on the web, and it's amazing how few candidates seek it out.
Write a stunning resume.
Private Equity Resume Structure
About half your resume should be comprised of your current investment banking job. Minimize your pre-banking experience. Yes, they will cover this during interviews, but the purpose of a resume is to get your foot in the door.
Education should be at the bottom of your resume now (unlike with investment banking analyst resumes), and the top of your resume should start with your contact information and then immediately jump into your Work Experience, starting with your investment banking job.
Writing About Your Investment Banking Job
Start this section with one or two brief sentences about your overall responsibilities and the types of deals you’ve worked on thus far. You could also include information on any special projects that were not deal-related but nevertheless contributed to the firm in some way.
There should be three key pieces of information you relay in this introductory sentence:
1. Number of deals worked on
2. Types of deals worked on - M&A (sellside and buyside), IPOs, Follow-Ons, Convertibles, Debt
3. Skills gained - LBO modeling, accretion/dilution modeling, DCF skills, valuation
I hesitate to give a sample sentence here because I don’t want every single investment banker out there to have an identical resume. :)
Once you’ve picked this as your summary, you need to decide on deals to write about and then go into detail on your transaction experience - this is the heart of your private equity resume.
Choosing Your Deals
An experienced banker once told me that it would be “difficult to get a private equity job without closed deals on your resume.”
Nothing could be farther from the truth. When private equity firms recruit in between the middle of your first year and beginning of your second year, they don’t expect that everyone will have closed deals by then. Some analysts never even close deals at all!
When picking deals to write about, what you personally contributed to the deal is more important than the size or “prestige” of the deal. Yes, it’s nice to have $50 billion M&A deals under your name, but if all you did was a simple valuation or basic research for the other team members, don’t make it a focal point of your resume.
Always lean toward picking the deals where you learned the most and were the most unusual vs. choosing larger deals that were pretty standard and didn’t give you much unique experience.
For private equity jobs, also try to write about M&A deals rather than capital markets transactions - what you do on a daily basis is MUCH closer to M&A than anything else. Debt might be ok to write about as well, but avoid IPOs and FOs if at all possible.
Writing About Your Deals
This will be very M&A-biased because that is what private equity firms look for. I’ll start by giving an example of how NOT to write about a deal, much like I did with investment banking resumes and internship experience.
How NOT To Write About A Deal
* $5B Sale Of Company Y To Company X
o Drafted Offering Memorandum and Management Presentation and tracked status of deal with potential buyers
o Managed due diligence process between Company Y and different buyers and responded to all inquiries
So what’s the problem with this? It’s too generic. The two items listed here would be expected of any investment banking analyst working on a sellside M&A deal. That’s what you as an Investment Banking Analyst do - you write the sales documents, maintain buyer logs, and send documents to interested parties.
There’s nothing here that makes me think, “This deal looks like a great experience!” And it commits the cardinal sin of not being results-oriented and specific.
The Right Way To Write About A Deal
You need to focus on what was unique about the deal. Did you influence the negotiation process somehow? Did an analysis you created result in a lower/higher price or get new buyers interested? Did you analyze the market in a way that led to more interest or a better price?
If you can’t think of anything unique to write about, pick a different deal. Sometimes it just isn’t possible, and there are many generic deals that are not good material to talk or write about.
Here’s how I would re-write my example above:
* $5B Sale Of Company Y To Company X
o Worked directly with CFO to build complex operating model of company involving 40 different properties across multiple states
o Created market analysis showing favorable trends in casino construction despite subprime-related problems; led to 2 private equity buyers remaining in the auction process until the final round
It is still the same length as the previous attempt, but this one is about 500 times better. It shows what you did that was specific to the deal, and what some of the results of your work were. And it skips all the generic stuff that is part of any sellside M&A process.
I would actually try to expand on what I’ve written above and go into even more detail, assuming that’s possible.
Writing About Unannounced Or Dead Deals
This is fine. Just don’t mention any names or anything that could be tied directly to the specific deal. You’ll more than likely have to do this anyway when applying for private equity jobs.
Sometimes this can be tricky if it’s a very large or well-known deal that everyone has speculated on but has not been announced yet (e.g. Yahoo / Microsoft before the bid became official). In these cases I would avoid mentioning specific numbers or dollar amounts and instead use percentages and be a bit more general (without being generic) to make sure you’re not disclosing anything confidential.
Ask insightful questions. In particular, questions about the business model of a portfolio company are a great way to show you that know your stuff. What's the revenue model? Why are [insert portfolio company X] gross margins so high? Why does the nearest public company trade at such a high EBITDA multiple?
Be persistent and follow up. Private equity investors are busy, and they get paid to invest money (so interviewing is often a distraction from that goal). Develop and share your own proprietary investment ideas with the firm. Ideas are easy - execution is the hard part.
