PE Recruiting Guide
Ultimate recruiting guide (slight consultant spin) –
Hey guys – with the quarantine going on I’ve had a pretty light work and social schedule. So I decided to write out a guide on PE recruiting. For background, I’m an MBB consultant from a 2nd tier city (think Denver, Dallas, or Nashville). I got an offer during off cycle for an UMM fund (latest fund size $10bn+).
I’ll break down the whole recruiting process into a couple of buckets:
• Background to get in
• Study/Prep
• Interview process
• How to pick an offer
Background to get in
Funds are generally looking for a very specific background. For consultants – you need to have an MBB pedigrees to get looks at upper tier places (Fund size 3bn+). Tier 2 consulting firms can break into some middle market funds and, on occasion, some of the larger funds.
Even if you’re at an MBB firm – you should aim to work on private equity or corporate M&A deals. Frankly, there are a lot of BS cases out there. Things like “change management” or cases that focus on workshops aren’t going to get you many looks. It’s important to advocate for case experience that’s modeling / due diligence heavy especially if you’re at one of those tier 2 shops.
Study/Prep
There are a couple different steps in PE prep. To kick things off – I would suggest investing in some study guides. WSO’s PE study guide is your best bet and definitely worth it. The vault guide is also an OK source though has some errors scattered throughout. Beyond that googling different topics as needed is helpful. I would break down studying in a few portions:
- Figuring out what PE is and basic technicals – I highly recommend everyone take some time to understand PE. This involves chatting with folks currently in the industry and understanding what their day-to-day looks like and how it compares to consulting/banking. E.g. if you hate modeling then you’re gonna hate PE. I would also recommend reading books like Kings of Capital or Barbarians at the Gate – those are as exciting as the industry gets and if they don’t peak your interest, then the job likely won’t. I would also use this time to understand some basic financial technical – 3 statements, valuation, etc. That applies more so to consultants.
- Learn to model – Essentially, this is a matter of practice. Start by doing 10 or so paper lbo models. Then do 10 or so 1hr lbo models. Then 10 or 3 statement models. As a consultant, you can get away with just learning up to the 1hr model. Honestly – everyone freaks out about this part but it’s really just a matter of practice
- Prepping for case studies – In my opinion this is what will really f*ck you. This is where you’ll get tested on your ability to think like an investor. I would suggest grabbing a copy of Case-in-point and understanding the framework for tackling cases. Beyond that I would create a framework for how to answer- “What would you need to know to make X a good investment”. You can basically boil it down to cash flow, industry, and deal economics (e.g. purchase prices). I would just build out the details below each of those.
- Random questions you’ll get asked – PE funds will ask you a ton of random business-related question. E.g. Would you rather invest in copper or a copper mining company if you know the price of copper will 3x in 5 years OR Would you rather invest in a steel mfg company, airplane mfg, airplane leasing business, airline business, or travel booking agency. Folks will say there isn’t a right answer, but there almost definitely is a form of thinking that the fund if looking for. For this – I would recommend just asking people for advice on tricky questions and how they answered them.
Interview process
All interviews hinge on the headhunters. Usually they’ll reach out to you ahead of time and you can set an appointment with them. When you meet you need to have a very clear idea of what you want (e.g. MFs based in NY and ideally focused on Healthcare). If you’re not super clear on what you want, then the HH likely won’t take you seriously. Beyond that – you should understand how your experiences relates to PE and a general understanding of what PE does. Essentially don’t do HH calls until you’ve mastered step 1 in the above. The actual interviews fall into either an on-cycle or off-cycle process
On-cycle
Essentially, on a random date you’ll hear that “on-cycle” has kicked off. Historically, it’s occurred a month before last year – the past year it happened in September. So, I would be ready once you hit the desk. MFs and UMM firms typically go on the off-cycle process, but more and more are reserving spots for offcycle.
Basically, funds will call you into their office for 12+ hr long interviews. A lot of that time is spent waiting around to see if you’ll make it to the next round of interviews or not. At the same, you’ll have multiple funds conducting interviews at the same time. So, you’ll need to pick which funds to prioritize. You may even need to leave in the middle of an interview cause a fund you preferred is kicking off a process
Off-cycle
Any interview outside of the standard process is considered off-cycle. It was traditional just the domain of smaller MM funds. But a good number of MF and UMM spots are holding spots just for offycle. The interview process is broken up into a few days stretching from weeks to months. A lot of funds aren’t that serious about hiring during off cycle so you may see some place drag their feet on giving you the next round of interviews or an offer
How to pick an offer
Usually you end up taking whatever offer you get, so I would only do interviews with places you’re willing to take an offer from. I personally was only willing to take offers in a tier 1 city with a latest fund size of $3+bn or greater. I also had a strong preference for a place with a track record of associate to VP promotes. I probably would’ve gotten an offer much quicker if I loosened my standards up a bit.
Let me know in the comments if you have any questions.
thanks for this! I completed the wso PE guide and will be going to a Lower tier bb (hopefully) come graduation. how important is gpa/sat scores? is there anyway to make up for low stats?
How low are the scores? Anything above a 2100 or 31 should be fine to put on your resume. If it's significantly lower than I would take the GMAT and use that as the test score you mention. Otherwise, I've seen people just not include their SAT/ACT scores on their resumes.
what about head hunters? should I leave it off when submitting forms?
I got a 2120 on the SAT, 34 ACT, and 740 on GMAT, should I put the SAT/ACT or the GMAT on my resume?
You consider $10bn+ UMM? You're at a MF!
did you exclusively work with headhunters that reached out to you first, or did you also take initiative with a few? if you did, how?
Took initiative on occasion. Just asked my friends for an HH's email contact and they were always willing to set up an intro chat
good to know – thank you and congrats!
Thanks for the insight. I just have a few questions:
How did you navigate recruiting in cities that you didn’t work in?
How did you go about networking with people in PE and learning about the funds? Was it mostly cold emailing or warm connections?
Did you find any UMM or MF’s that were especially receptive to off-cycle recruiting? Any that exclusively did on-cycle?
1 and 2. I networked and took initiative to attend coffee chats (when I heard about them). I did a lot of research on my own from the fund's website and googling (e.g. X fund IRR - you should get some State investment fund reports about the fund). I cold emailed people who worked at my MBB firm in the past. Cold emailing is tough (most people don't have time to talk to you), so would recommend getting a warm lead.
3 . I know Advent does almost entirely offcycle. H&F has a big offcycle presense too. Most of the cliche MF's (KKR, Apollo etc.) exclusively do oncycle.
How many funds did you end up interviewing with? And is there a limit on the number of interviews a single HH will give you? Thanks a lot.
I think I interviewed with 8 funds and did 5 final round interviews. There's not a limit to interviews. These HHs are a lot more disorganized than you might think, so I didn't ran into issues from having done too many interviews
Did you go to an Ivy / top target? How much does that matter in recruiting?
Went to an Ivy+ that's top 10 on US News. Schools don't really matter. The firm you work at and your group are the most important thing
Thank you!
Any chance you're a fellow Wildcat --> Consulting --> PE? If so we are a rare breed...
Thanks for the insight and for taking the time to do this. Two questions:
1) Since recruiting has moved up so much, what does the interview process look like now? Do they even check the modeling tests? Without much deal experience / consulting project work, what do PE firms use to judge candidate quality now? What would the interviews content breakdown look like?
2) How much time were you given to accept an offer?
1) Based on your interview performance more than anything else. Yes, they check the model test but only for then answer (e.g. did you get to IRR of ~2.5x). Not every place does a modeling test though. Honestly, I'm not totally sure how they pick candidates ahead of time. The place I got an offcycle offer from didn't even give me an interview during on-cycle. Not sure how other people got put ahead of me on the list. You may wanna ask someone in industry for that POV. My guess is it's a bit random.
2) Off cycle gives you time. I just asked for a week and they gave it to me. I likely could've asked for more.
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Great thread, thanks for posting. Also curious about this, particularly with regards to justifying the fund size you're targeting. Are they going to look for an in-depth justification?
You'll need to have some sort of explanation, but it doesn't need to be particularly in-depth
1) Honestly - it just took doing enough interviews until I developed a really good intuition for them. I have yet to see a study guide that adequately covers all the business knowledge questions you may get asked. WallStreetOasis.com I would suggest adding a section of business concepts to the interview guide! E.g. operating leverage, valuations by industry etc.
2) There are a lot of guides out there for this and google searches. I would just make a super comprehensive list of all the factors that might make a good investment. Then I would literally just think of a company e.g Costco. Then fill in your thoughts on why this would or wouldn't be a good investment, then do research on the company and see if you hypothesis matched up with reality. I would also read some online investment thesis from hedge funds with a value investing focus.
3) For MFs just say you want to work on more complex deals of a larger size and work less on the portfolio side of things. UMM you say that you want to work with established companies that still have room around the margin to be taken to the next level. MM you say you want to work with businesses where your business intuition and skills can really make a dispraportionate impact on the companies you work with. For the city - I would say that I have friends/family in either LA, NYC, or SF. Any sort of connection will do
How do you define MF, UMM and MM? Since funds are getting bigger these days
Very helpful, thanks. Would +SB but I'm broke
Could you elaborate a bit more on your interview answer for why MF? Given that it is often banking 2.0 and you were coming from a consulting background, I would be very curious on how you pitched it convincingly. Thanks!
deletedeletedelete
It's gonna be tough. The firms you listed aren't all equal either. I've seen OW folks get funds like Charlesbank and 3i. I've heard of LEK folks placing at some very MM places. I've never head of AT Kearney placing anywhere tbh.
I'd suggest hitting the ground hard with networking and making your experiences seem as stellar as possible. And since PE folks can be a**holes, I would have a good answer to why aren't you at "MBB"?
test only
Does anyone have any experience / recommendations recruiting from a buy-side analyst role? Analyst on the investment team of a buy-side firm based out of NY focused on senior, mezz, and equity investments across the cap structure in both healthy companies as well as special situations investments. Looking to do MM buyouts or MM special sits buyouts.
Did you consider portfolio operations roles at all? I know that a lot of MBB folks go both routes (deal team and portco team) so how did you make that decision / how have you seen others make that decision? What are your thoughts on portfolio roles generally?
Context: I'm at LEK/EYP going through recruiting and seeing / pursuing opportunities in both areas as I think both can be genuinely great opportunities from what I know, but have had more luck (deeper processes, "better" firms, etc.) in portfolio role processes thus far.
Frankly - I'm not a fan of the consulting role. It often feels like you're bullshitting a way into an answer and/or getting treated like a tool for someone else. I would've rather worked on the deal side at a $500mm fund than in KKR's consulting arm. That being said - I think it's much easier for Tier 2 consultants to break into portfolio co roles at some great places than it is for them to get into deal roles.
helpful - did many of your colleagues at your firm end up pursuing portfolio roles? if so, what do you think was the draw?
great guide
Can you further elaborate on the off cycle process a bit? Did you reach out to HHs and initiate the process or did you wait until they reached out with a role that you wanted?
You should let HH's know your interested in recruiting and what you want. Based on your interests, they'll send over opportunities which you may or may not get interviews for
Huge congrats on the offer! I'm also heading to an UMM firm from MBB - would love to hear more about your experience. PM me!
with PE recruiting timeline so early nowadays , and many analysts do not have deal experience by the time recruiting begins, do firms just give case studies instead? are you asked to pitch an LBO or walk through one you read about in the news?
Deal experience is always going to be a factor in interviews. You need to be able to BS through whatever deals you've seen in your short time on the desk.
You don't really pitch LBO's or walk through past LBO's. You might pitch a company you think is particularly successful or think is a good investment, but that's in a broad business sense.
Curious on your thoughts here: I'm at a MM M&A group in my third year and PE recruiting has completely stalled given the environment. Not exactly a question about the macro situation, but do funds still consider candidates that are closing in on that first year associate level or even with the title? I'm beginning to think that is going to more likely, so I'm putting a 1-2 year plan together.
Which HHs were the most helpful? How did you prepare for their meetings / calls with them?
Thanks for doing this. Is there any way you could PM me? Would really appreciate it.
Thought I could be helpful as well, as I am also a consultant who landed an UMM/MF offer in a T1 city during on-cycle recruiting. First time posting but this site has been an extremely valuable resource to my own recruiting process. This is a great guide, I would echo everything that was stated above!
From a consulting background, a few things I would reiterate on:
Seriously school does not matter. If you get to this level it's assumed you were a top performer at a top school. Your schooling pedigree goes out the window when you are in those interviews. What matters is what you have worked on at your respective job, and how much you have read about the industry, prepared in your reading, and your ability to think like an investor. I went to a non-target school, think in the 20s or 30s of school ranking. Of the 10+ people I knew that got offers, only a handful went to super-targets.
Coming from an MBB firm, in general your experience matters a ton. I was fortunate to have worked on several DDs in my respective private equity group, and was regularly exposed to the thinking/theses of these top funds. It was invaluable to my preparation process, and framing my thinking when I was reading the above books mentioned: Barbs. at the Gate, King of Capital etc. (absolutely killer books btw). If you bullshit on your staffing while working in consulting, odds are you are not going to have enough to talk about in these interviews. These interviews are a marathon, and they learn over time whether you are faking it, or actually have real experience. If you are thinking about recruiting seriously, you should take your staffing seriously IMO. Modeling for strategy decisions or DD/market sizing cases are great.
Given how early recruiting was this year, modeling seemed to be slightly downplayed compared to prior years, but you should still absolutely know how to model. The WSO guide is super super helpful, and I would start there. If you don't have it, buy it. The ROI on that guide is second-to-none if it helps you land a job.
On-cycle is insanity, but generally occurs in the fall. If you are ready by end of summer, you should be fine and ready to go whenever they call. You will likely only have 1 or 2 shots at the biggest places given the timing difficulties with on-cycle (you can't be in multiple places at once), and offers are generally all given out in a few days. Recruiting kicked off on a Thursday this year, and most people I knew were interviewing past midnight on Thursday. However, there is still a ton of off-cycle opportunity if things don't work out because recruiting is so early nowadays. Have a very short list of funds you would be willing to work for if offered on the spot.
Hopefully this is helpful, I realize the universe of consultants heading to these type of funds is quite small. FYI - I work in a major T1 city for MBB. Didn't want to hijack this thread, but wanted to add some additional perspective for the folks out there.
Great points!
Given how early on-cycle PE recruiting is, how important is your undergrad major and knowing technicals compared to just learning on the job? Do Stern/Ross finance graduates often do better than Georgetown/Duke Poli Sci majors in on-cycle PE interviews because they were part of an IB club and know the technicals in and out rather than just learning how to walk through a DCF and $10 depreciation on the financial statements?
I went to an Ivy+ and majored in economics - personally I think a business degree is a waste of a 4 year education (give me all the monkey shits you want). It really isn't hard to learn what you need to know for an interview with enough time spent on it. Being able to think outside of the box which you'll find in many non business/finance majors is way more valuable.
To answer you original questions, there's no difference in performance between the 2 groups
what made you pursue consulting over ibanking out of college, and when did you realize a PE role could be of interest to you?
Did an internship in Goldman's Financing group. Realized that capital markets is absolute BS and everyone had pretty terrible exit ops. Tried to switch over into banking for FT, but was seen as the cap markets guy and didn't get the looks I wanted. I realized that I wantred to be in a spot with good exit opps, so I went ahead and did MBB recruiting.
I became interested in PE my senior year after getting my MBB offer. Honestly - I became interested after reading leveraged sell out Then did more research and did a school year internship.
Has anyone received a take home 3 statement model case study? I have one upcoming and wanted to ask if anyone has example studies that I can study from. Mainly trying to prepare where I might have to make my own assumptions, what to base them on, investment criteria, risks, etc.
Any help would be greatly appreciated!!
Hey, first year consultant here at 2nd tier MBB planning to do on cycle at beginning of my second year. Right now is a great time to prep. Couple questions:
Thank you so much for your help! Stay healthy both physically and mentally in this quarantine.
Unrelated but what is a 2nd tier MBB? Do you mean 2nd tier city? If so, what are the cities that are considered 2nd tier?
Wdym by 2nd tier MBB
WSO guide. You're probably gonna need to buy a guide if you want answers and a bunch of tests.
I was on a year long op model case that was BS. And had a month on a strategy case before oncycle. I was able to spin the year long case into 3 "strategy projects." HH's say your DD experience doesn't matter, but I think you're less likely to get looks without it. I ended up working on a valuation focused case (doing DCF's, multiple analysis, M&A analysis, debt analysis etc.) that helped me to land my final offer. And I had also just started my first DD deal. Down arrow is that I would get on a deal/PE rotation/financial diligence ASAP. Additionally, spin your experience as much as possible.
I got asked some market size questions. Like how many special ed teachers are there. Should be standard market siz stuff you did in consulting recruiting
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