Joining PE with no deal experience

I went through on-cycle in 2024 when I started and accepted an offer at a value-oriented PE firm. My current group, however, has been extremely slow, essentially no deal flow over the past two years, and I haven’t had exposure to live buy-side or sell-side mandates, nor do I expect to before my program ends.

I’m trying to be proactive about closing any gaps ahead of starting. My understanding is that value investing often requires getting deeper into underwriting, downside protection, and operational detail, so I’m conscious that others in my incoming class may have more transaction reps, thus more experience handling deal volume. 

For those who started from a lighter deal background, what did you do in the ~6 months before day one to best prepare or catch up?

11 Comments
 

To prepare for your PE role despite limited deal experience, here’s a targeted plan based on the most helpful WSO content:

1. Master the Technicals

  • Paper LBOs: Practice these extensively. Memorize key numbers like price/volume growth, fixed/variable costs, and IRR tables. These are critical for value-oriented firms.
  • Modeling Tests: Focus on the three main types—paper LBO, 1-hour test, and 3-hour test. Reach out to mentors or colleagues for practice materials and refine your speed and accuracy.
  • Industry Research: Deepen your understanding of industries relevant to your firm. Use Porter's Five Forces to analyze competitive dynamics and identify attractive sectors.

2. Understand Value-Oriented Investing

  • Downside Protection: Study how to assess risks, recession resistance, and operational improvements. Familiarize yourself with ROIC, CAPEX, and working capital requirements.
  • Underwriting: Learn to evaluate strategic initiatives, legal/regulatory risks, and exit strategies (e.g., IPOs or industry consolidation).
  • Case Studies: Prepare investment pitches for at least three companies. Be original, support your assumptions, and focus on value creation.

3. Enhance Deal Knowledge

  • Simulate Deal Experience: Even without live deal exposure, you can study past deals in your industry. Read initiating coverage reports, research sub-industries, and analyze deal metrics.
  • Behavioral Prep: Prepare structured answers for questions like “Why this deal?” or “Why this industry?” Highlight your ability to think critically about investments.

4. Leverage Resources

  • Use the WSO Prep Pack, Vault Guides, and other technical resources to solidify your knowledge.
  • Connect with peers or mentors who’ve gone through similar transitions. They can provide insights and materials to help you prepare.

5. Speak the PE Language

  • Learn how investors evaluate deals and articulate your understanding of value-oriented strategies. Avoid pitfalls like suggesting investments in companies with high CAPEX or NWC requirements.

By focusing on these areas, you’ll close the gap and position yourself as a strong, prepared candidate for your PE role.

Sources: Private Equity Recruiting Walkthrough – My Experience, Q&A: Private Equity Investor at a Large Buyout Firm Focused on Growth and LBO Strategies, Private Equity Recruiting Process (From Banking), Basic Questions About PE Recruiting Answered, Private Equity Interview Questions - 13 Topics to Know

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Unfortunately, yes. Mostly pitches and some passive bookrunner work on debt/equity. I haven’t touched a live LBO or been deeply inside a true M&A process. The modeling I’ve done has mainly been take-private style pitches (really simple templated pitches off of public research), and none have turned into real mandates.

I’m heading to a solid MM value shop (~$3B fund). I was fortunate to land it on-cycle, and I’m realistic that from a reps standpoint I’m probably starting behind many people in my class (most coming from stronger banks / groups with presumably better transaction experience).

I also know the place I am joining has a reputation for being intense and giving juniors a lot of responsibility. I chose it because I’m genuinely excited about the value investing approach, but I’d be lying if I said I wasn’t anxious about how steep the learning curve might be day one.

Upside is my seat now is lighter than most ~50–60 hours normally, maybe 60–70 in a bad week, so I have some time to prepare. Do you have any advice how to approach this situation. 

 
Most Helpful

Tough roll of the dice, obviously dealflow as a junior is just about fully out of your control. I have a few pieces of advice:

1. Try to learn second-hand on what workstreams other analysts in your class are performing and what they are learning on each stage of their own live deals.

2. It's also worthwhile to scan through your bank's drive to familiarize yourself with examples of financial models, diligence requests, data packs, & legal docs. Even if you're not staffed directly on them, you can at least do your best with what you have.

3. Thankfully, you aren't expected to be an expert your first day on the desk in your new shop as a fresh ASO1. Do your best and write down the questions you are unsure of and do research on them at least until you understand them at a surface level better than you did before.

In short... leverage your company's drive, peer junior bankers around you, and AI/google/primers that get sent around.

  10.1.0
 

Makes total sense, really appreciate the thoughtful advice.

Any recommendations for specific outside resources you’ve seen people use well? My team from this office has been pretty light on live activity, so a lot of my analyst class is in a similar spot reps-wise. Access to some of the sensitive live deal materials and data rooms for other deals is limited, which is why I’m trying to be really intentional about using the time I do have to close the gap as much as possible.

 

This is pretty far off from my experience. Is there really no helpful detail at all anywhere within your shared drive? You can of course learn conceptually by reading & speaking to the Associates/VPs above you, but it would be great for you to get your hands on real precedents for what you’re trying to learn. I’d be fairly surprised if your group didn’t have any of them available.

If this is the case, you should ask within your group if they have examples of purchase agreements / VDR cuts for instance. You can frame it as you are trying to improve your understanding of the full deal process etc. Completely understandable. Given confidentiality concerns, you’re not going to be able to access the same level of availability on the internet as you would your firm’s files for what you’re looking for.

  10.1.0
 

Was given the advice to reach out to existing associates and ask them the key things to familiarize yourself with before you join

 

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