Questions on Private Equity Careers

We often get very specific questions about what it takes to start a career in private equity. Here are some of those questions from professionals looking to break into private equity and answers from private equity insiders.

Q: How can a person with management consulting background move into the VC/PE industry?

A: There are a lot of skills you develop in management consulting which are very marketable during a private equity job search, including: the ability to critically analyze companies and industries, work with and present to management teams, collaborate with team members under time pressure, as well as modeling skills. However it is important to carefully target your firms – some firms seek to drive their returns through financial engineering while some focus on operational improvements and growth.

As a consultant, you should only target the firms that take a hands-on, operational approach to investing, as they will be a better fit for your skill-set; in addition, the firms that rely heavily on financial engineering tend to primarily hire bankers. It will take some research (which mentors at Blue Chip Career can help with) to identify the private equity firms with an operational approach. A good couple of firms to start with that hire consultants are: AEA Investors,THL Partners, Bain Capital, Monitor Clipper Partners, and Golden Gate Capital.

Q: For PE/M&A attorney’s breaking into PE Funds – at what level should one apply? The process?

A: You should apply to the position that is commensurate with your experience – that is, don’t feel the need to discount your current experience because you don’t have a background in consulting or finance. The typical scale:

  • Associate = 2-4 years of work experience
  • Senior Associate/Vice President = 4-6 years
  • Vice President/Director = 6-10+ years

The fact that you have a JD and are currently working in law does indeed make it more challenging to break-in but you can identify firms that will value your law experience. Restructuring firms like American Capital, Gores Group, Bayside Capital, and Sun Capital may be a good place to start your search.

Q: How to break into the portfolio companies of a PE firm, not just the firm itself?

A: The process of landing a job at a portfolio company is not much different than a PE job search. Identify the target portfolio companies that you’d like to approach, and then build a networked job search. Use LinkedIn, your alumni network, and other networks to find relevant contacts you may have at these firms. Sometimes larger private equity and venture capital firms will list the jobs that are available at their portfolio companies, so you should also check the firm’s website for job leads.

Q: Do entrepreneurs have an advantage to get into Private Equity?

A: No, but you have developed a lot of tangible skills as an entrepreneur that you can use to market yourself to private equity firms, including: maturity, ability to analyze markets and develop strategy, interpersonal skills coupled with a demonstrated passion for entrepreneurship. Start by targeting growth equity and VC firms, as they may be the most receptive to your entrepreneurial experience. In addition, if you built a company in a “hot” sector, target firms that invest in that sector and highlight the industry expertise that you developed.

Q: Does it make sense for MBAs to pursue pre-MBA VC/PE positions?

A: No, MBAs should not pursue these positions. When a firm lists a pre-MBA position, they are typically looking for a 23-25 year old professional with 2-3 years of investment banking or consulting experience to work at their firm for 2 years prior to attending business school. They will not consider MBAs for these positions and by applying as an MBA, you will significantly reduce your chances (if not eliminate) of being considered for future open positions at the firm that are appropriate for your level experience.

Q: I am a biotech/pharmaceutical executive who recently left a position as CEO of a NASDAQ company. I am interested in making the move into private equity or venture capital. Any suggestions?

A: A couple of steps you can take (this strategy can be applied to anyone with industry expertise seeking to transition to PE or VC):

  1. Build a target list of firms – use online resources like Job Search Digest, Preqin, peHUB, and CapitalIQ to identify all the leading PE and VC firms that invest in biotech and/or pharma.
  2. Build a list of contacts connected to your target firms – identify connections in your network at your target firms by using LinkedIn, your alumni network, industry association, and any other networks available to you to find contacts. Don’t forget to look to firms’ portfolio companies for connections
  3. Research your target firms – before asking for an intro, do a little homework on each firm. Evaluate their portfolios and investment strategies. Use this information to create a personalized approach to each contact on why you’d be a good fit for the target firm.
  4. Reach out to your contacts – ask your contacts for introductions to senior leaders (Managing Directors or Partners) at your target firms. Make sure to leverage the research you did in step 3 for your quick pitch.

The best shot you will have breaking in is as an Operating Partner at a biotech/pharma PE or VC fund, so to reiterate some of the advice above, carefully research the portfolio companies of the firms. If you can’t break-in right away as an operating partner, another approach is to find an executive position at a portfolio company. Private equity firms are oftentimes seeking to replace or add management right after a buyout, so monitor the private equity deal news for relevant opportunities.

Q: I am looking for ways to leverage my experience as an investment management sales executive for long only investment management firms to raise capital for VC/PE/HF funds looking to raise money in the US institutional marketplace. What advice can you provide?

A: You are facing unfavorable headwinds considering the state of alternative investment fundraising. While fundraising is starting to pick back up, it is still down significantly from ’06 & ’07 levels. Therefore, it’s going to be important for you to identify sectors that are “hot” and try to focus on pitching investment firms in these spaces. From a macro perspective, it is not a good time to be breaking into this industry, and it may not be very lucrative until fundraising returns to strong levels.

Q: I have an MA in Management & Finance and a BSc in Accounting from a non-target school with 3 years retail & consumer banking experience. I run a small business consulting firm. No IB, PE, VC or HF experience. Is there hope for me?

A: Yes – of course there is hope. You are going to need to build up your work experience if you would like to break into private equity or venture capital. Keep an eye for opportunities to secure a job at an investment bank or top consulting firm, or alternative a management position to build up your industry expertise.

Q: How can a specific industry expert break into private equity? Would he need specific PE modeling expertise or could deep sector knowledge suffice?

A: Possessing deep industry expertise can be very valuable if you effectively target your search on firms that fit in your “sweet spot”. However industry expertise will not replace the need for strong technical skills – specifically financial modeling skills. There are a number of online and in-person training programs you can participate to develop these skills outside of your professional work. A top program that we recommend is Breaking Into Wall Street.

Take the time to complete an online or in-person training program to strengthen your skills as no amount of industry expertise can make-up for deficiencies in your technical skills.

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