Getting stressed out abt PE recruiting

Hi, I just started PE interviews and have already been rejected by 2 of my top choices. One I just failed the technical test and the other said that even though they liked me, they don't think I have enough deal experience... 
I am a 2nd year analyst in a BB and have never closed a M&A deal yet. I have worked on some buysides and one light sell side, and have done extensive financial modeling but that doesn't seem to be enough. So I am starting to worry whether I will make it. I know recruitment for MF is super competitive so I should expect to get some rejections but still, it always hurts a bit. Sorry for saying this but the worst is I've always been told that as a woman I would be privileged in recruitment processes so I only feel even more stupid / incompetent when failing at this.
Also, I am wondering if I get rejected by all my top choices this year, will it screw my chances of interviewing for them again in a year or two? I don't want to be stuck in IB for lack of planning...
Happy to have your thoughts 

 
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I had a similar experience, here’s what to do:

  • Write down every single question you got asked in your prior interviews - you will get asked them again so there is 0 excuse to not have a perfect answer this time for both technicals and behaviorals 
  • Know how to talk about your deals - give a 1 sentence overview on the biz and mention a few financial metrics. The metrics people care about are the numbers relevant to an LBO - revenue, rev growth, ebitda, ebitda margin, capex. That’s pretty much it. Also know basic facts about the biz like customer concentration, geography, etc. After that, know the multiple being paid for the biz and what that is relative to comps - why is it higher or lower? What is better or worse about the biz? Have an opinion on if you think the biz is good or not and be able to defend it. No one cares if the deal closed or not - what people care about was were you thinking about the biz like an investor? Do you have a view on it? Do you know why the deal failed? The deal is just an opportunity for you to showcase how you think about a business and have an interesting conversation about it. PE guys love learning about business models and want to see if you like doing that too and if you’re paying attention and thinking about the business. 
  • If you don’t have deals talk about an industry area that is interesting to you - eg: veterinary or dental if you’re in healthcare. Know the same financial metrics and have an opinion on if you think the industries are attractive or not. For example I talked about how I love vet care but hate hospitals as a model. My reasons were rooted in the financial models (cash flow profile), industry growth, and multiples of those businesses. Sit down with one of your MDs or VPs for coffee and ask them about their industry coverage area (obv don’t tell them it’s for recruiting) and see what insights you can glean from them about how their clients are thinking about things (particularly good strategy with the sponsor focused MDs)
  • Read the street of walls guide or other PE guides cover to cover. They have all of the possible questions you can be asked. 
  • Do research on the firm and have an extremely solid reason for why you want to join them that is rooted in their industry area / investment style / business size that they touch. Know a few investments they made and have some questions on those deals. This is the most important question, showing you genuinely are really excited about their firm and are curious about their work.
  • Ask real questions about their strategy and careers and show you are listening by asking good follow up questions to each of their responses or rephrasing back to them what they said (“got it - it sounds like x and y”)
  • Know your 1 tab lbo cold - you should be able to do it in 1 hour. Practice hundreds of times whenever you have free time - that’s what I did as a non finance major working in a coverage group with 0 modeling. Literally 0 excuse to ever mess up an LBO test. Understand conceptually every single line and why you are modeling things a certain way. Know how to do a dividend recap and other weird one off things if needed.
  • Look on your shared drive - most people have saved down a LOT of resources for future analysts to use. Study everything you can find during your down time. 
  • Play the numbers game, it’s all about volume of interviews to get these jobs. Every week that goes by, your competition will also be getting more worn down and tired so if you can keep your energy and enthusiasm up you will look much better.

Hope this helps. 

 

Glad to hear it. Keep your head up - it really is just a volume game honestly. Don’t get too attached to any one fund - they’re all pretty much the same and at the end of the day no one outside of finance knows the difference between them. Focus on finding good people who you can work with and where you will learn a lot to help you grow. Most likely PE won’t be your career forever, it’s just a place to learn for 2 years so don’t get too worried about the super long term picture either.

 

Congrats!! Nothing will compare to real life deals but maybe check out the modeling prep in WSO? I’ve tried the LBO one and found some bits really useful in my day-to-day modeling activities :) 

 

In no particular order:

  • Try and get in shape and sleep as much as you can - your life is about to get extremely stressful once you join 
  • Powerpoint / excel skills are tablestakes in PE. Make sure you’re very good at cutting up and working with extremely large and messy data sets - take a class on VBA if you have to (it’s not necessary but damn it’s handy and can save you a lot of time). Become a pivot table master. 
  • Master the LBO - most firms have templates so you won’t be making one from scratch but you do want to be 100% comfortable with how it works mechanically. Do lots of practice one tab LBOs but spend time to understand why you are modeling everything a certain way - the assumption in PE is that you completely understand the LBO theoretically. The harder modeling part of PE is doing granular revenue / expense forecasting - not much you can do to practice that in banking though. 
  • Read “the most important thing” by Howard Marks - this is a fantastic book that explains how to think like an investor. 
  • Subscribe to and read Howard Marks’ memos - I love them and learn a lot from them
  • Talk to your MDs about businesses in your industry - why do sponsors like them? What do they think about them? What is it about the actual economic model that is so attractive? Understanding a variety of business models and understanding risk / reward is the key to being a great investor. Try and learn from senior people as much as possible, if anything they’re hearing how their clients are thinking about things. 
  • Learn your industry from a business model perspective. Go find 10Ks on businesses in your industry and read them cover to cover - look at what metrics they quote in that document and try and understand how they are calculated and what they mean. Look at margin profiles, what companies trade at, etc.
  • Take the GMAT if you want to go to business school 
  • if you don’t want to go to business school, do some informational interviews on public markets / VC / startups / corp dev so you can keep that in the back of your head if you decide PE isn’t right for you (which is the most likely outcome to be honest)
  • Befriend the analysts in your group and in other groups - believe it or not this will be a very valuable network in a few years 
  • Keep a good relationship with your associates / VPs / MDs - I actually have gotten a surprising amount of mentorship from them since leaving IB. When you leave, write a card or nice email to each of them and end on good terms even if you hate them all. 
  • Plan a fun trip between banking and PE - I did Australia and really enjoyed it. Other friends did Asia.
  • See if you can get a VP or someone to walk you through how a generic sellside process works and maybe a basic overview of legal docs (purchase agreement) 
  • Talk to the lev fin guys and ask them about how credit agreements work / how debt financing works 
  • Learn how to use chatgpt really effectively - most firms have no real technology dept stopping you from using it. The more you can automate, the more you can sleep. 
  • Spend a lot of time with your friends, go on lots of dates, and have fun whenever you can. Longevity in finance is all about managing emotional burnout and minimizing all nighters which cumulatively erode your energy and mental health (try to get as consistent of sleep as possible).
  • Go see a therapist and learn some healthy ways of coping with stress so you have a toolkit once the intensity ramps up when you’re in PE
  • Don’t overdo it on anything on this list, you’re going to be drinking from a fire hose no matter what. 
 

In the same position (female, 2nd year, BB, London, just did a PE round last week where there was a model test and got same response regarding experience.. wonder if it was for the same firm as you).

I’m having a hard time trying to get to the final round or converting the final round. But did other interviews (non-MFs) earlier this year and like the poster above, started learning my deals cold and thoroughly learn my technicals inside and out, and making sure any weak areas or questions I didn’t understand were noted down. After this, I started getting further along in other processes at other funds.

It’s very competitive out here and there aren’t many spots around. I get how frustrating it is (especially when the M&A market is very quiet and I’d like to leave IB sooner rather than later), but I think a large part of it is cultural fit and luck which are out of our control, but also ensuring things that are in our control, such as the LBO tests, knowing our project experience, is the best it can be until we get that one final yes.

Best of luck OP!

 

If you’re struggling in the last few rounds, the most important thing you should focus on is really nailing your “why x firm” and “why pe” answer. Demonstrating that you genuinely are interested in their strategy specifically and have a genuine intellectual interest in private equity will make all the difference in getting the offer. If there are two equal candidates, the one who seems the most genuinely interested in the work and excited to be part of the team will likely get the offer. After every round of interviewing, write down notes on the firm and what you’ve learned from your interviewers. You’ll likely hear a lot of the same talking points being repeated by your interviewers, so when you get to the point of interviewing with a partner you should parrot those same points back using the same language. 

 

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