WSO comments of the week 11/04-11/10

Rufiolove discusses the gatekeeper role that headhunters play in Can you do this?:

The issue you are overlooking is that the company doesn't want to have to do additional work in order to determine if it is worth their time to interview you. They have no idea whether you are competent or not (not that the headhunters really do either but they provide the initial screen). Headhunters are gatekeepers... They can be bi-passed but typically the associates at the firms will not want to take additional time to review your candidacy and if they wouldn't want to you can be assured that the higher ups would have even less desire to review. They may still give you some thought but it's tougher than going through a headhunter who manages the relationship between the two of you.

Also, it gets next to impossible to get the best jobs without going through the headhunter... Unless you know a partner, you aren't likely to get a job at BX, KKR, Carlyle, TPG, Warburg etc without going through the standard channels.

When firms hire ~3 kids for their entire class, they can be as scrupulous as they wish in their review process. Their view is likely that if you aren't competent enough / willing enough to jump through the hoops of the headhunter / recruiting dance, that you don't want to work there badly enough. This is of course a guideline and not a hard-and-fast rule, but it's a pretty solid guideline.

Grosse takes part of a lively discussion on the role of luck in hiring. In the thread What role did luck play in getting your job, some argue that luck really did matter. Others argue that successful applicants do many things to position themselves in luck's path.

Luck - my first hedge fund job. I got a call from a headhunter who found my resume on Monster of all places. He had a position in "industry research" blah blah blah. I told him I didn't think it was a match but he kept saying buzz words from the job description he had. Kinda sorta sounded like an investment research job, so I said I'd come in. Had to meet with headhunter first and it turns out he ran a general staffing agency for temp secretaries.. He had me fill out one of those pages where you put down your last 3 jobs, your education including high school, and what your hourly wages were... I nearly walked out.

Long story short, he was the neighbor of my future HF PM. The PM had asked him for help in finding an analyst but I guess the recruiter had no idea what he was talking about.

My latest HF job - I got news that I had been rejected from what would've been an amazing opportunity. I was talking to a friend who had good success in getting interviews, so I had him send me his resume. I changed my format to match his and found an online job posting (job board) that day. Submitted, got picked out of the stack, and eventually got the job.

Outside of luck, the other intangible I'd highlight is personal interaction. I feel like hiring decisions are based on 1) were you referred to me by someone I know 2) do i like you, then 3) are you smart/talented, etc.

As I've been on the other side of the table, I hate to admit it, but Ivy league school, great GPA type people get dismissed if you can't hold a conversation. If you create personal rapport with the person interviewing, you'll be able to overcome a lot of shortcomings on your resume. If you can't, there's no connection and no reason to hire you over the other 100 applicants that are similarly talented.

Prudentinvestor discusses in The operating side of PE his experience with working in private equity operations:

During the summer I worked at a MM PE firm and due to small headcount I got to work on all sides of the deal including a little bit of operations.

Here is my modicum of experience. From an analyst perspective PE firms try to deduce methods to increase the efficiency, scope or scale of a firm. For example would firm X be more efficient if we moved production plant x to location y or should we change how the contract/licensing structure of the products are. It is vastly different every time depending on the company, industry and deal. This only occurs if a PE firm acquires a controlling share of a company or if a company is willing to acquiese operational decisions or inputs.

Usually most firms have a select group of operating directors, that may or may not directly work for the PE firm. The operating directors, especially if controlling shares are acquired, are placed on the BOD of the acquisition. The operating directors then implement the necessary changes that they feel are appropiate. This can be anything from changing management, to changing production methods, to attractive new clients depending on depths of connections.

An interesting scenerio is when a PE firm owns multiple firms in the same industry. My firm did. Here the PE firm might attempt to find cross synergies between the companies by either combining ops or implementing each others comparative advantages but keeping the firms seperate entities. The firms might be kept seperate entitites if the core market segments are just vastly different.

TheKing offers a bit of a different view in the the same thread and argues that there isn't really any operations in PE.

The old "operations" myth. Operations in PE will consist of:

--Add-On acquisitions
--Occasionally helping with budgeting and analyzing big capex projects (especially if financing is needed)
--Sitting on calls / going to board meetings

You won't be doing really "operational" things. People have this idea in their head that you'll be some sort of business demi-god who does the deal and then runs the company. That's not the case. Not for the Associates, not for the VPs, not for the Partners. The job of running the company goes to the company. You provide help with things that are in your wheel-house, not in theirs.

This is not to say that you won't learn a ton of stuff, but it's almost always going to be around financials.

As a side note, I think deep-down, we all want to be doing things, creating things as opposed to buying things and looking at them as abstract spreadsheets. Hence the constant bubbling up interest in PE for "operational experience."