Secondaries Advisory Interview

Ah, diving into the world of secondaries advisory, are we? Let's peel this banana step by step, based on the most helpful WSO content and insights from previous threads.

Preparing for the Technical Round

In your upcoming interview with a secondaries advisory firm, it's wise to anticipate a blend of questions. While there's a strong focus on secondaries transactions, the technical round might indeed share similarities with a traditional PE interview. Here's how you can gear up:

• Understand Secondaries Transactions: Make sure you're well-versed in the mechanics of secondaries transactions, including the types (LP interest sales, GP-led restructurings, etc.), the valuation methods for illiquid assets, and the reasons why LPs sell or GPs organize these deals.
• Brush Up on Valuation Techniques: Familiarize yourself with different valuation methodologies, such as DCF, comparables, and precedent transactions. While these are staples in PE interviews, they're also relevant in assessing the value of secondaries deals.
• Know the Market: Be prepared to discuss trends in the secondaries market, including recent deal volumes, pricing trends, and the impact of economic conditions on the liquidity and valuation of secondaries transactions.
• Practice Technical Questions: Don't forget to review technical questions from PE interviews, as they can provide a solid foundation. The guide on WSO, the 400 M&I question guide, and the Rosenbaum & Pearl guide are excellent resources.

Secondaries Advisory as a Career Path

Venturing into secondaries advisory can indeed be a strategic move, especially if you're eyeing a future in hedge funds or PE as a principal. Here's why:

• Broad Exposure: Working in secondaries advisory offers a unique vantage point on the private equity ecosystem, providing insights into various fund strategies, valuation approaches, and market dynamics.
• Skill Development: You'll hone skills in deal structuring, negotiation, and market analysis, which are transferable and highly valued in PE and hedge fund roles.
• Networking Opportunities: This role can expand your network across fund managers, institutional investors, and advisors, paving the way for future opportunities.
• Specialization vs. Flexibility: While secondaries is a specialized field, the expertise gained does not necessarily lock you into a niche. The skills and knowledge acquired can be leveraged to transition into broader PE or hedge fund roles, especially if you focus on building a versatile skill set and maintaining a broad network.

In conclusion, while secondaries advisory is somewhat specialized, it offers a rich learning ground and can serve as a stepping stone to broader roles in PE or hedge funds. Just ensure you're continuously expanding your skill set and network to keep your career trajectory flexible. Good luck with your interview, and remember, every step you take is a step towards your ultimate goal. Keep swinging from vine to vine until you reach your destination!

Sources: https://www.wallstreetoasis.com/forum/private-equity/on-cycle-recruiting-2018-what-to-expect?customgpt=1, Guide for Investment Banking Full-Time Recruiting, https://www.wallstreetoasis.com/forum/investment-banking/non-target-to-bb-ib-sa?customgpt=1, Don't get OfficeHours., Q&A: 2nd Year Analyst at McKinsey in Europe

Based on the most helpful WSO content, preparing for a secondaries advisory interview, especially the technical round, does share similarities with preparing for a traditional PE interview. However, there are nuances specific to secondaries transactions that you should be well-versed in. Here are some tips to guide your preparation:

1. Understand Secondaries Transactions: Make sure you have a solid grasp of the basics of secondaries transactions, including the types (LP interest sales, GP-led restructurings, etc.), the reasons why LPs sell, and the valuation methods specific to secondaries.

2. Valuation Techniques: While traditional PE interviews focus on LBO modeling, secondaries advisory might require you to understand how to value portfolios of investments and apply discounts or premiums based on liquidity, fund age, and underlying assets. Familiarize yourself with these nuances.

3. Market Trends: Be aware of current trends in the secondaries market, including recent deal sizes, major players, and sectors that are seeing increased activity. This knowledge can demonstrate your interest and understanding of the space.

4. Technical Skills: Brush up on your financial modeling skills, particularly around portfolio valuation and analysis. While the core skills are similar to PE, the application can be quite specific to secondaries.

Regarding your career path question, moving into a secondaries advisory role can indeed be a strategic step towards a career in hedge funds or PE, especially if you leverage the skills and network you develop. Here’s why:

• Broad Exposure: Working in secondaries advisory gives you exposure to a wide range of funds and investment strategies, enhancing your understanding of the private equity landscape.

• Networking Opportunities: You'll interact with GPs and LPs, building a network that can be valuable when looking to transition into a direct investment role.

• Skill Development: The analytical and valuation skills you develop in secondaries advisory are transferable to PE and hedge fund roles.

However, it's important to be mindful of the potential for being pigeonholed into a niche. To mitigate this, focus on building a broad skill set and seek opportunities within your role to work on projects or transactions that are relevant to PE or hedge funds.

In summary, a career in secondaries advisory can be a stepping stone to your ultimate goal, provided you are strategic about the skills and networks you develop.

Sources: https://www.wallstreetoasis.com/forum/private-equity/on-cycle-recruiting-2018-what-to-expect?customgpt=1, Guide for Investment Banking Full-Time Recruiting, Don't get OfficeHours., Q&A: 2nd Year Analyst at McKinsey in Europe, https://www.wallstreetoasis.com/forum/investment-banking/non-target-to-bb-ib-sa?customgpt=1