Private Equity Recruiting Walkthrough – My Experience

I’m 6 weeks removed from receiving an offer at a UMM/MF – it was truly a thrilling experience. Now that I’m back into the swing of things at work, I thought I’d give back to the WSO community by providing a detailed walkthrough of my recruiting experience.

Quick background about myself:

I’m currently a 2nd year BA/A/AC at MBB at a mid-sized office, and graduated from a non-target college.

I’ve seen a few PE recruiting walkthroughs on WSO, but wanted to share my experience for three reasons:

1. I will be sharing my story from a consultant’s perspective (tried to keep this post relevant to all, however)
2. Many walkthroughs provide a ton of insight but lack the more tactical tips /tangible pieces of information
3. This post will be more recent than previous walkthroughs (actual dates, best HH firms, etc).

When going through the recruitment process, I was definitely not as structured as I may seem by this post. There were many times where I considered giving up, but I was able to pull everything together in the end with help from my friends/mentors, and a lot of luck. The people who say that landing a job in PE is easy are either 1) brilliant finance minds or 2) too cocky to say their success is due to luck/help from others.

I will present this walkthrough in 7 discrete steps to show my timeline of "milestones", and to make the material more digestible:

1. Initial Research
2. Networking Part 1
3. Prep Part 1
4. Headhunter meetings
5. Prep Part 2
6. Networking Part 2
7. On-cycle process

Apologies in advance for the long memo, I’m happy to provide more color on any follow-up questions!

1) Initial Research – T-4 months

This section may seem unimportant, but I advise you to take the time to read it and be introspective. I find that most people in IB/consulting rush through PE/HF recruitment, and are not sure why they’re even pursuing this career path. Assuming you want to stay in finance, there are a number of interesting possibilities: VC, corporate development, HF, PE, etc. I won’t spend much time elaborating on the merits of other options, but I advise you to do your research and be 100% confident that PE is the right choice for you. Assuming you've selected PE, you will then have to decide what type of PE you want.

There are a few dimensions to this:

• City: Choose a city where you can see yourself for at least a few years. Personally, I don’t think it’s worth moving to a new city where you know zero people for a job, but to each their own!
• Firm size: The work will largely be the same across firms, but smaller funds with naturally have leaner deal teams (not always the case).
• Investment style: Understand whether the firm does traditional buyouts, a combination of buyout and growth equity (like Warburg), and also understand how they source deals (Ex: associate experience at TA and Summit is more unique due to their sourcing model)
• Prestige: Rule of thumb is that larger firms are more prestigious, but there are definitely exceptions. Look at your firm’s B-School placements or read up on WSO to see how these firms rank
• Compensation: Once again, the rule of thumb is that larger funds pay more. There's huge variance, but you're probably getting ~$250K at MM shops, $300K at UMM shops, and $350K at MF.
• Industry Focus: Some firms have associates that are generalists (Ex: Berkshire Partners), some firms specialize (Ex: Sycamore), and the larger funds have groups for each industry (Ex: Carlyle)
• Fit: Most people disregard this since it’s hard enough to land a PE job (rightfully so). Based on my conversations, I found that most PE firms have similar cultures, but definitely take it into consideration if you have multiple offers.
• Banker/Consultant ratio: Look at the company websites of the funds you’re potentially interested in, and see their current associate class mix. Make sure you’re comfortable with this ratio before talking to headhunters or interviewing with the fund.

After evaluating the long list of potential PE firms (using the aforementioned criteria), I made a list with tiers of funds I wanted. Tier 1 meant I would sign an offer on the spot and I’ll invest more in learning about that firm prior to interviews (portfolio companies, investment style, unique office activities). Tier 2 meant that I would be happy with landing one of these firms, but they were lacking on one/two of the dimensions (It was usually in a city I didn’t want). Tier 3 offered that I’d sign, but the company lacked the prestige or size that I was going after. Given I was relatively happy with my time at MBB, I wouldn’t force myself to sign an offer at a fund I wasn’t excited about. After my research, I had ~4-6 firms in each tier.

2) Networking Part 1 – T-3 months

After doing my initial research, I starting networking. I had two main goals of this phase of networking: make an initial contact at each PE firm (to help facilitate step 4), and start to learn the language they use when talking about PE (to help with step 4 and 7). To do this, I simply cold emailed associates at ~10 firms (my tier 1 and 2 firms) with the email title “MBB (my firm and hopefully their previous firm) Coffee Chat” and asked to speak about their experience in PE, why they chose their firm, and to walk me through their process. Most people that I emailed were kind enough to chat with me (70%+ hit rate), and some went out of their way to provide me with prep materials and raw opinions of their companies. I was able to pick up the lingo they used and tried to emulate this in all future calls/interviews. This phase was definitely the most fun - almost everyone I spoke with was super interesting, smart, and had a unique perspective.

3) Prep Part 1 – T-3 months

While I was doing my networking, I simultaneously started to prep for my headhunter meetings. I was probably ~60% ready for on-cycle interviews by the time I did my HH meetings and felt that this was the right amount of preparedness. I de-emphasized studying for technicals and placed emphasis on my story/behaviorals. I made sure I was crisp in showing my knowledge of PE, and knew exactly what opportunity I wanted. Make sure you know how to do a paper LBO very well, as you might get asked to do a simple one during your meeting (interview). I would also make sure you know which firms are covered by which headhunters prior to your meetings – GoBuyside is an excellent resource for this.

4) Headhunter Meetings – T-2 months

Some people on WSO will say that these meetings are a joke. However, I would not take these meetings lightly – HHs are equivalent to first round interviews. You shouldn’t be deceived by the headhunters’ friendliness and head nodding - they are always evaluating you. They’re evaluating how you dress, your presentation skills, personality, understanding of PE, etc.

Here is a list of questions you will normally get:

• What’s your story
• Why do you want PE
• What type of PE do you want
• What city are you interested in
• Can you walk me through any projects/deals you’ve been on (Make sure you know details from your projects, as you will have to do a walkthrough of the overall deal, what your role on the team was, and whether it would be a good buyout opportunity)
• Are any particular funds that are of interest to you
• What is your rating at your current position
• Might be asked to do a paper LBO if you are a banking candidate, so be prepared for this.

I would be laser focused when doing these HH meetings. If you say “I want any PE opportunity for any fund size in any city”, you will not do well in your interviews and they will think you're not prepared. If you also say “I will only work for Advent’s retail group in NYC”, then they will probably tell you to screw off. I think the right amount of depth is “I have a strong preference for UMM/MF buyout shops in NY for X,Y,Z reasons”.

The HH usually follows up with “are there any specific funds you had in mind?”. This is when you name drop the people you’ve spoken with at your top funds: “I spoke with Joe Smith at TPG who’s a fellow GS alum and he really sold me on their focus on X” or “I had a great coffee chat with Jane Smith at Sycamore who emphasized the company’s unique retail focus, which is something I’m really interested in”. Showing the HHs that you have done your research will make them feel much more comfortable passing along your resume to these firms. If one of the smaller HHs cover only 1-2 good funds (SG does BX, Crestview and not much else), you can be a little more direct with how you approach it.

In terms of rankings, this is how I perceived the number and prestige of opportunities by HH:

Tier 1:

• CPI
• HSP

Tier 2:

• Amity
• DSP
• SG
• Ratio

Tier 3:

• Oxbridge
• Bellcast
• Gobuyside
• SearchOne
• Glocap

I only spoke to the Tier 1-2 HHs, as they covered all of my Tier 1/2/3 funds. CPI is definitely the king of HHs, so I would save them as your last HH meeting to ensure you are in top shape. Also, this list might vary slightly if you are a banker, so take it with a grain of salt! Also, always take these HH meetings in person. If they don't come to your city, don't do it via phone/skype. Show your commitment and fly to NY to meet them since it's much easier to show off your personality in person. They take around ~30 minutes, so you can schedule most of them in a single day if you're taking a personal day for this.

5) Prep Part 2 – T-2 months

I believe there are four main dimensions to interview prep, all being of equal importance:

First, the resources I used included: WSO prep pack, models and technicals that my colleagues sent me, Google (duh), WSO forums.

Behaviorals:

For this, I did a few google searches, used the vault guide, and WSO prep pack to compile a list of ~50 behavioral questions that a firm might ask. These questions ranged from my hobbies, to why I love investing, to reasons why I wanted to move to NY/BOS/SF, etc. People might say that this prep is pointless. For some, maybe it is. However, I’m naturally not the best speaker and would rather have my answers prepared in a structured way. I found this prep surprisingly helpful (I was skeptical at first) as many PE firms place a strong emphasis on behavioral, especially at the smaller funds.

Deal/case experience:

This is another must. You will 100% be asked about your deal experience. Being able to convey the highlights of your deals and your role on the team is critical. You should also invest time to explain why the company would/would not be a good buyout target, all relevant deal metrics, porters five forces, etc.

Technicals:

This is the same as banking prep (other than the possibility they ask you PE-related technicals), so I won’t elaborate on it too much. Personally, I didn’t get too many technicals during my interview process. However, don’t let this be the reason why you don’t get a job. Pick up the vault guide, WSO pack, etc. and make sure you know this stuff cold. I would like to mention, however, that the firms will ask you informal technicals such as "tell me about a good LBO candidate" or "what's an industry that you currently find attractive". Prepare answers to these, and know all of the numbers. It will convey that you can speak intelligently about investing and understand what PE firms do (don't say you're buying a company with huge CAPEX and NWC requirements)

Modeling:

Spend time perfecting the 3 types of modeling tests: paper LBO, 1-hour test, and 3-hour test. Make sure to ask all of your mentors and friends who have gone through the process for material – they probably have a handful of these to give you. This also depends on where you want to interview. For a MF, you should be a master at building out a big model very quickly. For a LMM/MM shop that mostly hires consultants, knowing a paper LBO should suffice.

Another thing to learn is the table of IRR vs investment period vs MOIC. Ex: If you have a 25% IRR for 5 years, you should know that’s a 3x MOIC. Build out 3 separate sensitivity tables with IRR/Investment Period/MOIC as your variables, and just memorize them.

6) Networking Part 2 – T-1 month

Now that you’ve gotten phase 1 of networking out of the way, this phase will be much easier. You won’t have to be proactive for this phase – you’ll be reached out to. There are 2 types of networking in this phase: firm events and associates reaching out to you.

Firm events: These are done shortly before on-cycle kicks off, with many firms having to cancel their events since recruiting kicked off early this year (well it kicks off early every year...) Almost all firms have these events, and I went to 2-3 of these (was hard to attend most of them since I was not in NYC). These aren't too high value, but can still be a good opportunity to meet some folks at the various firms. Warburg does a breakfast, Bain Cap held it at a 3 Michelin star restaurant, etc. Some firms have huge events, while others are more intimate (and more valuable)

Associates reaching out to you: I had ~3 of these calls prior to on-cycle kicking off. If the HHs think you're a solid candidate, they'll send your resume early to certain PE firms, and then you'll have associates reach out to you asking to chat. These calls with go very similarly to the 1st bucket, but try to impress the associates by having great knowledge of their firm. For example, knowing that a firm has evergreen capital, or if a firm allows their associates to attend all investment committees will show your interest in the firm. Note that these calls don't guarantee you'll get an interview, but I would hypothesize it helps.

7) On-cycle process

No one ever knows when on-cycle will kick off. It’s shitty, but everyone goes through the same thing so it’s an even playing field. My best advice would be to always be alert. Talk to your friends and see if there is chatter at their banks, look on WSO, etc. This past year it kicked off during Halloween weekend, which was brutal. That being said, it started on a Sunday so at least you didn’t have to miss too much work for it.

Late on Saturday night, I started getting calls from headhunters. I ended up getting ~5 interviews set up over the course of 3 days (basically, 1 interview per HH). Because I knew my firm rankings, I was ready to make a snap call while on the phone with HHs in terms of scheduling interviews. Depending on your risk tolerance, you can schedule interviews with Tier 2 firms later in the process in hopes of a Tier 1 firm wanting to meet you on Day 1. Luckily, one of my Tier 1 choices wanted to interview me early.

One of the PE associates I met compared on-cycle with the hunger games. Essentially, a bunch of interviewees show up, throughout the day they slowly get cut (When they tell you “we’ll be in touch” it means you’re done), and then there are a few left at the end that get offers. It was implied that if I left the firm’s office at any point, I couldn’t come back.

This is a fairly accurate depiction of how my day went. I showed up early on Sunday morning, did 10+ interviews, and then accepted my offer on the spot. All of my hard work finally paid off – receiving an offer was truly an amazing feeling, and I couldn’t be happier with the firm that I will be joining. Now it's finally time to relax.

Hope this walkthrough was helpful, and once again apologies for the length. Didn't want this to turn into a novel, so happy to answer any additional questions if I missed anything!