How to break into private equity

One of the more popular topics at the Columbia Business School Private Equity & Venture Capital Conference last week didn’t concern LBOs or Dell’s $24.4 billion take-private.

Employment was the top concern for many MBA candidates attending a morning panel, “The Leveraged Buyout.” Several Columbia B-school students asked PE executives speaking on the panel about how to break into the private equity industry.

“There is no magic thing,” said Kevin Feinblum, an Advent International principal. “Even [within] a firm, there is a difference in what they are looking for.”

Advent hires people with a “whole range” of experiences, Feinblum said. “What is important is how you did it…how you articulate it,” he said.

Mark Anderson, a GTCR managing director, said that private equity is a “great job for people that are passionate about investing.” He noted that many applicants have principal investment experience. To break into the industry, applicants should “know someone” at or try working for a portfolio company, Anderson said.

“Someone with a deep knowledge base is quite interesting,” added Jeff Rowbottom, a KKR MD.

Private equity can be a lucrative business. Partners of a mid-size LBO firm can earn an average of $590,000 a year, including salary and bonus (but not carry), according to the 2012-2013 Holt-Thomson Reuters Private Equity and Venture Capital Compensation Report. A senior analyst at a mid-size firm can make a yearly average of $193,900, including salary and bonus, the Holt-Thomson Reuters report said.

Finding a job can be challenging. There are about a half dozen recruiters that cater to hiring junior talent out of investment banking. They include CPI, BellCast Partners, the Oxbridge Group, Dynamic Associates and Amity Search Partners. Large firms that have internal HR departments often don’t use recruiters to find MBA candidates, but smaller PE firms sometimes do, an Oxbridge Group source said. Often PE firms visit business schools and recruit candidates themselves.

Many PE firms do not hire summer associates and some may hire one. However, that’s on a needs-only basis, the Oxbridge Group recruiter said. The private equity industry, despite all the press attention it gets, doesn’t employ that many people, one PE exec said. “Their portfolio companies do,” the source said.

Danielle Strazzini, a BellCast cofounder, also thinks finding a job out of B-school can be tough. “There are probably about 400 to 500 MBAs graduating [each year] who have prior PE experience and are looking for positions in PE out of business school,” she said. “There just aren’t that many post-MBA positions available.”

The simplest route to getting into private equity? Work two years at an investment bank, or in management consulting, after graduating from college, sources said. Then spend another two years at a private equity firm working as an analyst or senior analyst. At this point, applicants typically attend business school and then queue up for a PE job, as an associate, upon graduation, sources said.

The same PE exec said his firm finds people by direct experience. Either the candidate was employed at the firm before attending B-school or they worked on deals with the firm. Or they worked for people the firm knows well, the source said.

After the Columbia panel, I spoke to GTCR’s Anderson about how he got a job in PE. Anderson joined GTCR in 2000, during the height of the dot.com bust and Y2K hype (when companies feared their computers would crash when the year 2000 hit). Anderson had just left Bowles Hollowell Conner & Co., a middle market investment bank that was acquired by First Union in 1998. “People were flooding out of investment banking and private equity wasn’t as appealing as today,” Anderson said.

Anderson said he faxed his resume to about 20 private equity firms and got four offers. “It was serendipitous timing,” he said. “I doubt that’d work today, as there’s now a whole industry of headhunters that firms like ours hire and serve as a funnel of junior talent from banks.”

Get more great private equity career tips:

The secrets to a successful career in private equity

To MBA or not MBA? That is the question

How to build a career in private equity investor relations

College seniors, take heart! There are jobs to be had at PE portfolio companies

5 tips to make breaking into PE easier

Humor: ‘I have a meeting in Westchester’ and other essential code words for PE newbies

5 career tips from Reid Hoffman’s ‘The Start-up of You’

10 tips to keep your private equity career on track

Degree in humanities is great foundation for PE career — Rubenstein

Photo courtesy of Shutterstock

 

1 Comment

  • Would be interested to know if anyone got into PE without doing a sting in investment banking or management consulting.

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