If you want to get out of banking and into private equity, you’ll know that it’s not easy. Private equity funds typically have a choice of 200-300 young investment bankers for each of their roles. They only want the best.
After two years at a major international bank, I moved into a private equity fund in May 2015. This is my advice for anyone who wants to do the same.
1. Don’t go too soon
In their rush to secure people, some funds are making offers to analysts who are just six months into the programme in an investment bank for a start 18 months later. My advice would be to wait. Don’t jump too early, don’t go too soon. You need to spend enough time in banking to ensure that you have some meaningful deal experience before you leave. That’s going to take at least three years.
2. Don’t spray your CV
If you want to work in private equity, you’re probably not going to get a job by sending your CV to any old private equity recruitment firm. The top funds run networking events for the analysts or associates they’re targeting. You need to get invited to one of these. Getting a job in PE is all about socializing and building a network with the people who might employ you.
3. Don’t bank on one firm
While you don’t want to spray your CV around the market, you shouldn’t depend upon one firm hiring you either. Make sure you involved in several simultaneous processes with different PE firms.
4. Do some due diligence your potential employer
Compared to investment banks, private equity firms are small places. You need to make sure that you choose one where you’ll enjoy working. You also need to go for one that’s got a good track record – you’re likely to work there for a while as you wait to get paid carried interest.
Remember: you’re the interviewer as well. Make sure you understand the firm’s culture and the kinds of people who work there. Connect with friends who can introduce you to someone in the company, so that you know what you’re getting into.
5. Think as an investor
Unlike investment banks, private equity funds don’t want to hire advisers – they want to hire investors. Before you go anywhere near the PE application process, I’d suggest you develop two investment ideas in detail. You should also spend some time building leveraged buyout models at home so that you’re super sharp.
Photo credit: Chris Jones
Pascal Royale is the pseudonym of a former banker at Morgan Stanley who now works for a European private equity fund.
Related articles:
Blackstone just reminded you why you want to work in private equityGoldman Sachs pays a lot, but Blackstone pays a lot more.
The new reality of switching from investment banking to private equityIf you’re a junior investment banker pondering a move across to private equity, there’s some good news – private equity firms, faced with a shortage of talent in investment banks
How carried interest works in private equityWhat is carried interest? And how does it contribute to private equity professionals' enormous pay?