Private equity is a dream career for anyone in finance. It might not be as challenging as the Olympic games, but getting into private equity is certainly a formidable feat, that too right after under graduation.
So how do you do it?
The Traditional Path
There are rare chances that private equity firms will hire you as an undergraduate. Most undergraduates are hired for investment banking roles, preferably for investment banking analysts. That too when banks are hiring on campus, right after college. If you have a summer investment banking analyst internship, it further increases your chances. So here’s what a usual road map looks like until this point:
- Get into a target college
If you want to work in private equity, ensure that you get into a college where banks flock to hire
- Find investment banking internships
Several global investment banks offer summer investment banking internships. Getting an internship will make you a preferred candidate during campus interviews. It will put you ahead of the students who have not taken any internships.
- Maintain good grades
Grades are important. Don’t believe anyone, unless the recruiter hiring you says so. Grades are an important criterion for screening candidates for interviews. Missing out on that will put you in more competition.
Finally, ace the interview and get yourself an offer for investment banking. Spend the next 2-3 years of your career working at the bank, participating in deals, building models, building your connection with investment banking professionals, equity researchers, hedge fund managers, private equity professionals, and every finance professional you can think of.
After you have spent 2-3 years wholeheartedly, start looking out for people at private equity firms and pitch yourself. If you’re willing to go down the road of a private equity career, a few recruiters will reach out to you.
U.S private equity firms are always on the lookout for ambitious and driven investment professionals who are looking to break into private equity. Naturally, it pays good dividends, but the amount of effort they put in is enormous. Candidates are expected to put in the same amount of effort. The road to making a career in private equity isn’t easy.
After 2-3 years of investment banking experience, recruiters themselves from PE firms will start reaching out to you, to see whether you’re interested in a private equity career. Say yes and proceed.
Typically, the road map after this looks similar as follows:
- In-person meeting with the recruiter: After hearing your willingness to start a private equity career, the recruiter will insist to meet you in person to get to know you better. This meeting is to see your fit for a private equity role and past experiences. Be clear about your ambitions and motivations behind switching to a career in private equity.
- Assignment – If the recruiter likes you, she/ she will recommend you to a private equity firm. Typically, the managing director or senior vice president of the firm will send you an assignment to gauge your modeling and valuation skills, after a small conversation. Now that more work is done online, you will deliver the assignment and wait for feedback.
The managing director may also call you to the firm and ask you to the firm to talk to gauge your modeling skills and assess your deal-making experience. Which, by the way, is a critical component of a private equity role.
- Verdict – Finally, you will hear from the firm upon selection. This entire process can take 2-6 months. This depends on how urgently the firm needs an associate.
The process outlined above is traditional. Most private equity professionals today pretty much followed the same path. However, today finance graduates have the option to skip this long process and get into private equity right after an undergraduate degree. It’s a bumpy ride though.
Here’s how you start.
The Unconventional Path
- Start building connection – The sooner you start building your connection, the faster you will find an opportunity.
Build your LinkedIn profile and start reaching out to investment banking professionals in your network to seek an internship. Reach out to your family and friends in the finance domain and seek referrals. Also, reach out to your alumni network and see if they can refer you for banking internships. If you have a firm on your mind, reach out to their employees and ask for referrals.
- Get an internship (or not )
An investment banking internship reflects well on a CV, especially for a private equity role.
Even if you don’t find an internship, go ahead with a private equity role.
- Use your connections to find a full-time role
Once you graduate, use your connections to find a private equity role. It won’t be easy because it’s a non-conventional route. Undergraduates are generally not hired for private equity roles. So might take 6-12 months to find a role, sooner if you are lucky to find a good connection.
Don’t be afraid to make cold calls and introduce yourself. The majority might not return your call, but a few wills and that might be your doorway to a promising career in private equity.
Best of luck!