Good books to read to help prepare for a job in private equity? (Not recruiting books / guides)

Hello all - any good book recommendations to prepare for a career in PE? For reference, I'm about to finish my first year in banking and have a PE job lined up for summer 2018. Trying to make the most of my next year to help with the transition into the PE role. Any and all help is much appreciated.

 

There are a million books on Amazon. Here's a couple that are easy to digest and give you a strong sense of the industry;

Mergers and Acquisition Playbook by Mark Filippel. Go find his podcast Fully Invested, he covers the whole book, chapter by chapter. Plenty of other podcasts out there.
The Complete Guide to a Successful Leveraged Buyout by Allen Michel and Israel Shaked.
Idiots and Dummies Guides to M&A.
Leveraged Buyouts; a Practical Introductory Guide to LBO’s by David Pilger.
Mergers and Acquisitions from A – Z by Andrew Sherman. The best foundational book on the subject.

Global buyer of highly distressed industrial companies. Pays Finder Fees Criteria = $50 - $500M revenues. Highly distressed industrial. Limited Reps and Warranties. Can close in 1-2 weeks.
 

I'd refer you to the materials referenced below. Moyer's book on distressed is good for a slightly more in depth understanding (albeit somewhat market oriented) than the Cravath summary and is a short read (150 pgs). If you want to get a real understanding of why certain legal concepts are important as a PE investor i'd point to you McGraw Hill's Art of Distressed M&A (500 pgs) -- this outlines distressed valuation, investment methods and most importantly case law (treasure trove of info for dealing with piercing-veil lawsuits and the like for GPs).

Conceptual Overview: http://www.cravath.com/files/Uploads/Documents/Publications/3234772_1.P…

Beginner: Distressed Debt Analysis by Moyer

Advanced: The Art of Distressed M&A: Buying, Selling and Financing Troubled Companies by Nesvold

Vertical Farming Extraordinare
 
houstonbound89:

I'd refer you to the materials referenced below. Moyer's book on distressed is good for a slightly more in depth understanding (albeit somewhat market oriented) than the Cravath summary and is a short read (150 pgs). If you want to get a real understanding of why certain legal concepts are important as a PE investor i'd point to you McGraw Hill's Art of Distressed M&A (500 pgs) -- this outlines distressed valuation, investment methods and most importantly case law (treasure trove of info for dealing with piercing-veil lawsuits and the like for GPs).

Conceptual Overview: http://www.cravath.com/files/Uploads/Documents/Pub...

Beginner: Distressed Debt Analysis by Moyer

Advanced: The Art of Distressed M&A: Buying, Selling and Financing Troubled Companies by Nesvold

This is solid advice.

 

The Intelligent Investor, although seen as outdated when referred to in the context of the public market, still definitely holds weight in the private markets. I asked a partner at a PE firm (family friend) a similar question a few years back, and he told me to go to Benjamin Graham first to get some background on value investing. Just my .02

Fuck Stringer
 

If you want something more sensational and exciting, I recommend "King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone" by David Carey. There is some rational in there for why they pursue certain investments (like the cyclical German chemical company), but mostly it's just awesome and badass. Finished it in a day.

 

One thing I think you could do is ask for their model template, some completed models, and some completed investment memos on their existing portcos. This shows you are being proactive and want to get up to speed on the businesses you will be working with. One caveat: some shops will look favorably upon this whole others may view it as you creating work. You need to feel this out given your interactions with these people.

 

Thanks for the response, Zen

I skimmed through the Rosebaum book and agree that it is basic, and also deals mainly with valuation of public companies. I was hoping to find something more targeted towards private companies, or MM PE in general.

I'm leaning towards "Value-creation in Middle Market Private Equity" by Lanier. After reading some of his short articles posted online, it seems like this may be the most relevant. Would love to hear some other input.

 

I would read some of the private equity books that the Wiley Finance series has (can be found on Amazon). Also, grab a few college books on marketing and try to obtain any industry research reports you can from equity research/consulting groups, etc.

Chance favors only the prepared mind.
 

What did you find was the most useful in your preparation? Did you check out any of the suggestions? I'd be interested to find out what you thought was the best source.

Chance favors only the prepared mind.
 

If you can, have some due diligence experience. It's not required, though (I had a bunch of interviews and an offer without it).

In terms of modeling if you have a consulting background and are interviewing at funds where that's the norm, it's less about being able to execute a modeling test (I didn't have any) but knowing what's important to PE investors in the context of a case interview.

Things to have some sense of, for example: What does a back of the envelope DCF look like? How do you calculate free cash flow and why does it matter? Why is EBITDA important?

Not to say anyone will ask you these questions in the abstract, but questions like these were integrated into many of the cases I saw. However, more of the cases revolved around doing due diligence on a given target, rather than calculating potential returns, which should be more familiar.

Life, liberty and the pursuit of Starwood Points
 

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