29yr Unpaid Year in PE?
In short, I am 29 years old and trying to transition from a concentrated equity fund (think like 15 stocks, research-intensive) to a private equity role. Tough sledding thus far after distributing a few cover letters explaining my background and motivation for wanting to make the switch. Nothing. So, I began kicking around the idea of suggesting a one-year unpaid position to firms. I know it sounds crazy but it seems like a better option than playing for an MBA just to get a shot at a transition. I put away good money since graduating undergrad (no MBA, but a CFA for what it is worth). Thoughts anyone? Other ideas?
I'm curious to hear what people say as well. I've mused that people should try and do that to get their foot into certain doors. Not sure how effective, but maybe people have experience doing something similar.
tough gamble - the biggest problem is that this is potentially illegal (tough to justify a 29 yr old doing an unpaid 'internship,' if you want to call it that). No self-respecting PE firm will want free labor. But who knows? It might be useful to try and lateral, but the space is incredibly competitive and you forfeit a massive amount in lost wages
Just one person's opinion: while I think it's admirable you are willing to take a one-year unpaid internship to get in the door, I think most, if not all PE firms will tell you it's really not about the money. It's just that you may be too "far out of the norm" for their comfort.
If you are willing to put in the legwork just to get a one-year unpaid internship, why not try and start your own business? If that doesn't work out, at least you'll have a great story for MBA instead.
Too "far out of the norm" in terms of age or background (i.e., primarily public equities) or both? Thanks for replying!
I'm not in PE but - most people in MBA programs who transition to PE end up interning in PE during school. These are not your summer internships, people get them when they can and for as long as they can; there is an expectation that the roles probably won't convert to full time offers but they offer resume experience. They're paid but essentially minimum wage. These are the people you'd be competing against. Is there a strong reason that a PE fund would take you on as an intern over someone at an MBA business schools ">M7 MBA with a similar background?
If you offer to work for free then you will look desperate and you will discount yourself. Try to network your way into any PE fund, if they offer to work for free then accept it but do not be the first to bring it up. Anyway, I think a good MBA would be the best choice.
I recon it's worth a shot to get your foot in the door (then once you're in you work your ass off, be likeable, add as much value as possible etc.) - nothing is committing you to staying the full year...
there is a reason buyside firms recruit MBA grads...its not about the salary, its partly about the education...but its mostly about the network, prestige, and cache of having Harvard, Wharton, MIT, etc..on the firms roster. This really is a club, and the entry process is very exclusive.
Unless you are an investing superstar, then your analyst role doesn't matter. If you are a superstar, then you should be networking, making friends in the industry, and your friends will try to poach you. If you are just an average performer, then why would another firm want you?
I think it will just look pathetic and ineffective. Offering to work for free looks great as a college freshman, not so good when you're an adult. Assuming you are coming from anywhere half-legitimate (and not some $20MM fund in Wyoming), you will be cheapening yourself.
Not to derail the topic, but why do you want to switch?
"Assuming you are coming from anywhere half-legitimate (and not some $20MM fund in Wyoming)"
shots fired. why no love for Wyoming?
Kinda have the same question as above - why do you want to switch? And that desperately? 95% of cases I've seen the switch happen the other way around (myself included) and I can't imagine what's the appeal is to make the reverse switch. Would love to hear your thoughts.
Hard to answer to your question as I found myself in a similar situation. Without giving any details about my personal circumstances I will tell you what I think of it.
When you go to an MBA most kids who are doing it to transition into PE will not be successful, as a matter of fact almost none will manage the transition (notice the ALMOST). A seal team 6 went to Blackstone in their internship program, but that's an exception to the rule. Plenty of PE shops will send their associates back to do an MBA and won't hire them afterwards - as an MBA student you are essentially competing with people that have done PE and have an MBA looking for the same roles as you. This is coming from what I have seen at a top 3 MBA.
Somebody mentioned it before: PE is not about how competent you are, but how plugged in you are. Also did you go do your banking days in M&A, DCM or ECM? Can you do the models without being taught how? It's very standard the way to get into PE they don't need diversity. You will find the odd consultant that goes into PE, but they will be hired mainly to go on the operational side. The spots are few and far between, they don't care that you are cheap - they only have 6 people total in a team managing $5BN, they don't need an extra person.
You can offer to intern for them, that won't cost you anything - you don't have to tell them you'll do it for free as that won't change a thing. What I am trying to say is that it does not matter whether you want to work for free or not - that's not the issue. The issue is that you do not have the background. Some tiny shop in which you are able to network your way in could work, but forget about the big guys. The point of working for free should not even be an issue, an MBA cost you money and you don't get paid for 2 years, if you manage to work for free in a fund with almost certainty of getting a job I wouldn't worry about the free bit.
Also - the CFA is useless for PE
Agreed on most parts, but would disagree on the CFA part. In Asia, certification can be a good way to stand out from competition. And I am seeing more and more of private wealth manager (private banker) turning into actively advising clients on what to do with their clients' companies. Maybe not as big as private equity funds but you will start seeing investment banking and private banking departments are working far closer. Most high net worth individuals who are the private banking clients are also 90% of times owes companies that investment banking department would like to pitch their services to. So I wouldn't rule out certifications like CPA, CFA and CAIA. I can be wrong. Just my personal opinion. Asian banking environment is a bit different from US especially Southeast Asia.
Agree - but that's banking. In PE I maintain that the CFA won't help you. Very few people in PE have their CFA and that pretty much rules it out. (Disclaimer: I have the CFA)
I did equity research and transitioned into family office (did both principal investing and portfolio operations roles - now doing more of portfolio operations - secondment as an executive into an investment bank that the family office has a majority share in/ run day to day operations). So I can provide feedback on this process. There are a few things to consider and a few pointers.
The easiest way is perhaps to move into corporate strategy role within the companies that you covered. Let's assume that most of your companies in Softline Retail (clothing companies) sector. Once you move into corporate strategy role, you will be assisting the firm (even if not directly involved in) in various corporate exercises (i.e. fundraising, restructuring, spin-off, M&A). Even as from the client side, you will be exposed to these activities that you can spin off into the private equity role. Assuming that you are trying to apply for more Softline Retail focused private equity funds (like L Cartterton, http://www.lcatterton.com/AboutUs.html). You might not get to be the investment professional role but you can still get more of an operating partner role (if prestige is all you care, from not so finance side, no one would really care).
The reason for doing this is so that you don't need to take this unpaid internship route, which I think it is a real bad idea
The MBA is another US$250,000 hole in the wallet. I won't do this unless I need a 2 years of expensive vacation.
What you lacked is the execution skill and also the chance to demonstrate what you can really do based on what you know. I think most investment banker don't like research people because to them you keep telling what is bad about a stock but if you really had to run the company to turn it around, can you?
But most PE funds wont want to test drive you. The only way you can spin off your so called expertise is to work at the companies that you cover or the industry that you cover. It will be an easy point of entry.
And once you get in, there will be tons of investment bankers there to pitch your firm to get services (like fundraising and advisory works). By working with them from the client side, more of less you will be able to learn how transactions would work out. This would give you the confidence and also the understanding on how these deal transactions take place.
Once a few deal transactions are done + sector specific company experience (turnaround experience) > you can pitch yourself to be an operating partner at a fund that cover your sector.
I don't think that would work. You're devaluing yourself and no respectable shop will have you work for no pay.
You ain't trying hard enough. A 'few' cover letters doesn't cut it. Network more actively, focus on small PE shops and you should be good. As the mantra goes, "All you need is one." And don't undersell yourself, there's always some shop that will take someone with your kind of experience. Nobody would entertain a 29-yr old non-pre-MBA intern, but they'll consider you for FT roles.
Haven't read the responses from fellow WSO members, but generally it's not a good idea - you look desperate and if anything you'd be selling yourself short. A concentrated public equities background is a rather decent background when it comes to transitioning, put some craving for activist style investing sauce on top and you're not a complete long shot for the PE fund. Best thing would be to network / look for funds that have more "obscure" background hires (i.e. stay away from the 2 years top M&A shop + MBA type number cruncher places).
Net-net, by offering 1 year's worth of free labor you'd probably provide an extra turn off for the PE guys as opposed to the other way round.
Most answers have focused it not being possible, with a lot of good insight/suggestions, but without explaining the why.
PE is very process orientated. You manage your internal team/consultants/attorneys/bankers/lenders. Lots of ducks in a row. The underwriting is merely one component. Doing public equities/credit, you in theory master the underwriting but have no process management skills. You don't know what do look for in the deal docs. You don't know the subtle nuances of various intricacies that occur. You don't manage a team. This is why the transition is hard, especially at larger shops. It is not that you lack finance skill or the ability to identify good investments. They are just completely different jobs.
Having spent time at both the HF and PE sides, I can attest this is very much true. PE is VERY process oriented. IC Memo's, extensive DD reports, heavy operating models sensitized across pretty much every factor you could think of, complex cap structures etc. Then there's negotiating mgmt. compensation, potential minority shareholders etc. funding memo's, small add-on acquisitions etc. It's a lot of paper pushing.
Not that I have anything to add, but buying a stock is pretty simple: you make a decision and you place an order. There's a lot of shit that goes into buying a company beyond just deciding the purchase price. What assets/liabilities do you want? What assets/liabilities don't you want? Through what structure are you buying it? How are you financing it? Where are you going to get that financing? What kind of approvals -- gov't / tax / legal -- are needed? What happens if the deal breaks down? etc...
If you're at a good HF it will probably be possible if you network appropriately/signifancy, are patient, and don't have a Blackstone or bust mentality.
Don't disagree with what those are saying about them being different jobs, but lets be real, there are lots of similarities too. Many people have spent time at both in their careers, or know people who have. Make sure you have a good story.
Voluptas ducimus ullam deserunt eos dicta porro. Facere ea adipisci facere laborum. Error est quia ut et illo.
Modi quos repellat quis dolorem itaque dolorem dignissimos. Asperiores aut aliquid beatae sunt ullam molestiae maiores. Voluptas velit cum maiores voluptate et quia sit. Reprehenderit ducimus fugiat illo neque tempore sit eveniet.
Non ipsam ut et illum repellendus rerum. Consequatur molestiae quidem exercitationem commodi voluptas doloremque voluptatem. Eius quia laboriosam quaerat occaecati veritatis deleniti consequatur natus. Est nulla suscipit ducimus veniam aut et est. Repudiandae architecto autem tenetur nihil possimus quia.
Perferendis deserunt ab ut. Sunt ut error esse maiores. Qui ea ducimus rem inventore. Ipsam non porro necessitatibus hic et laudantium ad. Voluptatum sequi incidunt incidunt eveniet minima qui sed. Culpa et delectus earum molestiae ratione blanditiis. Ratione itaque est vel hic tenetur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Qui ut magni qui quam consequuntur. Est qui dolorum voluptatum qui. Eum autem ea fugit dolore. Saepe qui consequatur sunt molestiae veniam voluptatem dolore et. Ullam veniam sed cupiditate magni repellendus ducimus esse.
Aut consequatur recusandae dolores animi. Et voluptas deleniti et. Fuga possimus officia maiores ipsam.
Facilis recusandae numquam consequatur aspernatur. Eum sit aperiam et aut molestiae. Aut quidem ut eum sit. Repellendus facilis dolor sed qui. Sit odit quasi sint adipisci voluptate voluptatem ullam minus. Facere qui quam reprehenderit tenetur voluptatibus sit.