[Experience] Road to PE - Investment Analyst in a MegaFund

Hi all,

WSO has been helpful to me to somehow break into PE, that is why I thought it might be fair to give back a bit by telling how I managed to get in a MegaFund straight out of studies. Just hope it will be helpful for some.

Disclaimer:
This post will probably be useless for people from the US but might give some interesting inputs to European monkeys.
The thread entirely relies on my experience, I am very happy to discuss some of my views

- CONTEXT -

• Nationality: French
• Studied in France, in a Target School
• Come from a middle class family with no bond to finance whatsoever
• Started working less than 1 year ago as an investment analyst within the European investment group of a MegaFund (among those names: KKR, Carlyle, Oaktree, Blackstone, CVC or TPG - sorry but I do not want to be too specific here).

- ROAD TO PE -

Let’s start off with some PE recruiting considerations as it is the core of the matter. As some of you may have recently noticed, more and more PE firms have been opening analysts positions based on the idea that:
- There is so much capital to be invested that having more capacity at a fairly cheap cost is interesting
- Recruiting IB guys as associate is nice but (i) it takes some time for them to catch up (banking is no PE, I know it might seem obvious to many, but not for all according to my experience) and (ii) it is expensive to get them (wage + head-hunter fees).
- There are some other reasons but very specific to every fund.
Having said that, it is fair to say it is - very difficult - to get in with very limited spots available within top PE firms. The best ways to have a shot is (i) to get an internship or (ii) to have a very good network (daddy's one...). Since I did not have any relevant contact, I choose to be pragmatic and to take the internship road.

Three years ago, I had the idea of breaking into PE but I knew it was a long shot and I most probably could get in after 2/3 years of IB in London in a BB banks. In the context of my studies, I had to complete 3 internships which is a fantastic way (i) to get relevant experiences in prestigious shops quite easily and (ii) to be exploited at a ludicrous wage.

For my first internship, I considered that the most important thing was to secure a FT IB position. Even though PE was the final goal, with an IB internship I was killing two birds with one stone. (i) I potentially had the opportunity to get a FT offer, and (ii) it was a relevant experience to help me land a PE internship. Generally speaking, I would not advise anybody to only intern in PE shops because conversion rate is terribly low versus IB. If you are a student, secure an IB (or consulting) FT position first, and then go for PE. I ended up landing a 6-month off-cycle internship at a BB bank within a Generalist M&A team. It definitely was not the best bank but still very decent team with smart people and great exposure. After 6 months, I got a FT offer (like one and a half year ahead of the starting date). Key takeaway of this experience: getting an IB experience is a great way to be properly trained and shaped.

Then, I landed an internship in a good European PE fund within their French team (last fundraising +/- € 1bn). First interview, they told me “Do not expect to get any FT offer here”. Hence, the goal was to see if PE really was the Promised Land. It turned out that it was. I enjoyed this experience a lot, mixing finance with corporate strategy and legal was very challenging but the learning curve was incredibly steep and the exposure was great. I was not updating stupid books for pitches or aligning boxes at 4am anymore. Instead, I was feeding financial models with market strategy analysis gathered from expert calls; I was helping associates to deliver investment memos while whipping advisors. Not everything was perfect, but after 6 months of M&A, enjoying 80% of my work was great.

At this point, I had two strong internships on my resume and a FT IB offer. The last internship was not mandatory, I could either spend a few months on beaches in Thailand or I could try to get a shot in a PE fund to land a job. To be honest, I did not want to do a PE internship if I felt like the conversion rate was low… In addition, I kind of liked the Thailand thing… Hence, I decided to go for an internship only if I found something with a fairly high conversion rate.
I networked a lot, especially the Paris area. Talked to c. 30/40 interns / analysts / associates. Got two serious leads in (i) a good MM PE fund and (ii) the fund I am currently working in. “Serious leads” mean three things: (i) ongoing fundraising, (ii) lack of resources at the junior level and (iii) fund with enough resources to easily hire an analyst. I managed to get interviews in both with little networking and a bit a luck I guess.
During the last round, I clearly describe my situation to the interviewers: “I am willing to do an internship but I do not really need to do one. I already have a very good offer on the table, however I want to do PE, I want to work for you but I need to know whether a FT spot might be available for me in the coming months… If not, or if the probability is very low, do not bother, I am sure you will find a good fit to help you out for 6 months”.
The first fund gently rejected me. The SVP from the second one told me: “Ok, you have a good profile, we like you. However, we cannot guarantee a position, but our sole analyst will become Associate in the coming months, so we believe one spot might open soon. If you show that you are good enough, it should be ok but again, no guarantee”. From there, story is simple. I accepted the internship. It went well. Worked hard. Got an offer.

I guess I was lucky to have found this spot, however I knew there was an opening because I spent hours on the phone with tons of people to know where to look. I do not believe in the “Sending my resume to 50+ funds and hoping for something good to come up”. If you want to get a spot straight out of school, you need to do your homework: you shall be prepared to interviews / case studies and network as often as possible (LinkedIn is your friend).

Key takeaways:
- Work hard -> This is the foundation of everything.
- Be pragmatic, self-disciplined and ambitious -> This is what makes you stand out. Be different, be actor of your own life.
- Network, Network and Network -> This is what makes pretty much everything possible.
- Enjoy yourself when you have a chance to -> Well deserved, do not overthink.
- Be nice to everyone (assistants and cleaning staff included).
- Be humble.
- Do not lie, ever.
- Relax; life is not just about work.

- Q&A -

• Why is it becoming more and more important to get in PE quickly?

As previously stated, more and more PE analyst positions have been created. It means two things:
- If PE funds recruit at Analyst level, automatically less Associates spots will be available to people external to the organization.
- PE funds start to poach analysts / associates from PE competitors’ instead of looking for IB / Consulting guys straightaway. One of my former teacher who is a MD at Eurazeo told me “Why bother training someone when you can get another one fully trained at the same wage?”.
That being said, (i) PE analysts might leave their fund to get in a more prestigious one but it is not a common move, (ii) there will always be spots for IB or consulting folks but, be aware that there might be less and less.

• What to prepare for PE interviews?

Several ideas:
- Have a 1-minute presentation and a 3 to 4-minute one: it needs to be structured, do not hesitate to make it a bit “fun” (talk about fun activities such as beer-crafting etc.) and be friendly. You need to be smart, but it is not enough. You need to have social intelligence. If you might work for me for 10+ years, I want to be sure I will enjoy being around while stuck in an airport in Morocco or drunk at an offsite in Greece.
- Classic IB questions, nothing surprising, work your books and you will be fine
- Know how a M&A process works
- Have a grasp about cost of capital considerations (“why would an institutional bid higher than a PE fund?”)
- LBO papers (check out Youtube, you have some very good videos)
- Strategy case studies (can be tricky)
- Market sizing (do not freak out, just think, there is no “wrong” answer as long as you demonstrate your thinking and you know how to compute)
- Talking about deals you worked on (know your industry + multiples etc.)
- Opinion on news / companies (take a stand and stick with it, PE requires professionals to have an opinion)

• What is the lifestyle?

It varies a lot from one fund to another. According to my experience within a US MegaFund, lifestyle is better than IB but not great either. Working late (from 9.30am to 11pm / 2am) during the week. Most weekends are off with limited workload (some refining of models / presentation etc.). I usually travel across Europe with my laptop just in case. Being able to manage my time is great. Nobody bothers me as long as I do the job properly, even if it is from the beach in the south of Spain.

• What to do after PE?

I sometimes heard it was a weird / stupid question… Why would you leave PE? Why thinking about leaving whereas you just got there? Well, if you do not think about what comes next, you are a fool. You might get bored, you might end up hating your boss, you might get fired, you might want to manage people in a corporate, you might be prevented from being promoted because of internal political reasons, you might have an incredible opportunity elsewhere etc. Be sure to have thought this through before it even happens.

Some interesting leads:
- Portfolio company at management level: I know a former associate from my firm who left the company to lead the “Acquisition Division” of one of our companies. I heard he kept the same wage + a nice MIP. He works from home and travel most of the time.
- PE ecosystem: joining a smaller fund with access to carried or to gain lifestyle, joining a bigger fund for money and fame (lol), joining a family office, etc.
- Consulting at McK, BCG, Bain or within Strat team in PE funds (trendy).
- CFO / CEO for companies under LBOs.
- If you are planning on staying a long time: Senior Advisor sounds like a good plan.

I might add some content depending on questions, if any.
Feel free to ask anything.

(Apologize for any silly grammatical or spelling errors. All the best to you all.)