Hello Monkeys - I've been active on the site for around 8 years but decided that the time has finally come to give back! Making a new username to preserve anonymity...
My background
My dad worked in a small business when I was growing up so I was always interested in "business" in a vague sense. I was the nerdy kid growing up and was planning to get a PhD in math or economics. I went to a semi-target undergrad and heard about banking as a way to learn a lot about business at a young age with no experience. Did my summer internship and then 2 years as an Analyst at an EB. Made the transition to a middle market PE fund (think $1B - $5B fund size) and spent a few years there as an Associate. Loved PE but decided for personal reasons (i.e., my girlfriend) to go to B school (HSW). Will be graduating shortly and joining a different MM fund ( $1B - $5B fund size) as a VP. Hope that helps provide context on where I'm coming from.
Anyways, I guess you can say that the combination of Zoom B school courses and social distancing have me yearning for human interaction so I've finally decided to answer some WSO questions...
Q&A
Happy to share my opinion on topics such as PE recruiting, how to stand out as an Associate, B school, post MBA recruiting, making the jump to VP, how to stay intellectually curious / intellectually honest in the industry, etc. I'm not qualified on most other topics but can weigh in nonetheless. I'll do my best to respond to everything.
Cheers!
Thanks a lot for doing this. As you know, I'm sure, threads like these are instrumental for those of who try to be thoughtful about our careers, but have no peers or industry mentors to learn from. Threads like these fill that role, thread by thread, so thank you.
I am about to enter a fund similar to yours or slightly larger. My goal is also to attend HSW if I am so lucky as to gain admission.
How do I stand out as an Associate? What do you wish you knew when you started that you know now?
What do you attribute your bschool application success to? Like you I went to a semi-target, and so worry about pedigree.
What do you wish you knew about bschool before starting? Specifically with regards to PE recruiting, and maximizing your overall experience (e.g., fun areas, intellectual curiosity areas, etc.)
Can you please describe MBA VP recruiting in detail? If you have to prioritize one question, this is it. This forum lacks sorely on this topic.
I am not sure if I will love PE, but I have a hunch that I will. Therefore I want to go in with as much knowledge of important factors as possible relating to succeeding as an associate, gaining admission to a top bschool, and securing a VP spot from there, so as to set myself up for future success if it proves that I do like working in PE.
Thank you very much.
First of all, congrats on the new job! I hope the transition goes well for you.
It's important to acknowledge what the table stakes are as a PE Associate: producing flawless work (no exceptions, including late at night, on multiple deals at a time, etc.), cranking out models and churning through data rooms quickly and accurately, being able to think critically about investment theses / risks. There's probably more that others would reference, but I think most would agree that these are expected of any Associate as a baseline.
In terms of standing out, I would say there are several ways to do this and I'll try to order these from easiest / Senior Associate level to hardest / Partner level.
Processing CIMs quickly: Be able to read through a CIM in 20-30 minutes and figure out if it's a good business, if there's an angle for your fund, if it's worth spending more time on / running up the flagpole. This will largely come with reps but I think some will pick it up more quickly than others.
Taking on more VP-level workstreams: This includes directing commercial diligence, reading the QoE to provide comments to the accountants, handling a diligence call with lenders, speaking more in diligence meetings / IC. You will need to prove yourself with the basics and then you can gradually start asking for more responsibility. One way to do this is on add-on acquisitions -- more senior folks won't care as much so you can try to get some reps that way.
Understanding what is important and having an opinion: At my fund, partners liked to ask Associates what they think (usually when I was least expecting it...) and you can really separate yourself here. You should be able to link all of the detailed diligence schedules in the deal that you've been spending hours on to the investment thesis and why they truly matter. In 30-60 seconds, summarize what you've learned so far. Don't be afraid to disagree with things you've said before or the team's "view" to date, if that's what the data is telling you. My best advice on this one is to remain "engaged" when you're doing your work -- you are not just processing information / cranking out models anymore like in banking. You need to be thinking constantly about what the data means.
Interacting with people: Try to form relationships with folks at your firm, lenders, mgmt teams. This is a people-centric business (particularly in more senior roles) and your firm wants to see that you can be a partner some day. From the beginning, I tried to separate my interactions with portco mgmt from being too "transactional" (i.e., don't just call them when you need something). We would speak every few days just to see what was going on, if I could be helpful on anything, what was happening in their personal life, etc. You'll be surprised how often mgmt teams will provide positive feedback to the partner on your deals if you just treat them like a human being.
There's a lot of resumes that looked like mine in the B school stack, so there's a few things I tried to do to stand out.
Don't give them a reason not to pick you compared to the other PE candidates. In my mind, this means you need a 750+ GMAT if you want a good chance of getting in. They have a lot of options, so you may as well boost their average GMAT.
Developed a "narrative" -- human beings respond to stories, so I tried to establish myself as something more than just another PE candidate. Imagine if the Dean of Admissions read your admissions package. How do you want them to think of you? For me, I told the story of growing up and seeing my dad in the neighborhood small business and how I'm inspired to work to grow and build small businesses. It sounds corny but I think it works, particularly if you can be specific.
Have a concrete plan for what you want to get out of B school and how you will contribute while you're there. If you want to pivot industry focus / investment style, work on your mgmt / soft skills, or brush up on your accounting / finance skills, have a concrete view of what you're going to do. I knew the type of summer internship I wanted, the classes I wanted to take, and the clubs I wanted to join. It makes you look interested and prepared.
If you want to go back into PE, you essentially get a free pass for your summer internship. The most common uses are trying another investing style (VC, hedge fund), doing something operational (chief of staff), or doing something entrepreneurial (big tech company, working on a friend's start-up). Choose something based on your intellectual interests, not based on what you think it will do to your resume. I took the operational route and learned a lot.
In terms of intellectual curiosity, there's a lot you can do. Your grades don't matter, so you can take classes in all sorts of esoteric topics (many schools let you take classes outside of the business school as well). Make sure you cover your bases on things that will help your career, but I tried to take at least one class per semester just based on what sounded interesting.
Definitely take advantage of all of the fun stuff that comes with being a student again (but this time hopefully with some $$ saved) - traveling, exercising, reading books, trying a new hobby. Your fellow classmates will also be a really interesting bunch - basically think about the most random thing you can imagine and at least one person in your class will be an expert in this. Take advantage of it while you can! You will make lifelong friends.
I could talk about this for hours but will start with just some high-level things here. Happy to expand on anything so please feel free to ask follow-up questions. Also, this is all based on my experience (and was Pre-COVID) so take it all with a grain of salt.
This is extremely helpful. Thanks so much. I want to ask a few follow up questions while I still have you.
Succeeding as an associate:
What do you look for in a CIM? I do not have an investment banking background so it is hard for me to identify what's meaty and what's marketing crap.
What does "providing comments to the accountants" look like? What about handling a diligence call with lenders?
This will sound silly, but re: treating management like humans and asking about their personal life, how do you go about developing that type of relationship? I have always been coached to get straight to business, nothing more than "Hey Tom how are you?".
Further on the point of developing relationships, how do you develop external relationships that aren't directly tangential to project work? For example, I know down the road it will be helpful to know X Y Z Business Brokers, but I don't currently work with them. My firm might. I don't know. Should I reach out to the Associate/VP on their team and take them out to lunch? It makes sense to nurture a banker / lender relationship if they're on my deal, as I have an institutional intro, but I am curious beyond that (or if I should not bark up the tree as I am describing).
Recruiting for VP:
Thanks again!
Happy to help!
In the most basic terms, I would look to answer questions such as:
On the QoE, you aren't going to school anyone on arcane accounting topics. But you can still contribute in important ways. For instance, maybe the CFO mentioned something in a diligence meeting that you want them to dig into. Maybe you know a lender is especially sensitive to something and can massage the language in the report that goes to the lenders.
Re: calls with lenders, each lender will be conducting their own due diligence on the target company to decide if they want to participate in the deal alongside you. Many of their diligence questions will already be covered by your own firm's diligence (but focused more on defensibility and less focused on upside), so you should have many of the answers already.
This depends on your own personal style as well as the style of the mgmt team. Some folks will be the "down to business" type like you describe. Overall, it will develop over time but you need to nurture it. Once you work together for a while, you'll meet in person at least a few times for board meetings, lunches / dinners, maybe a diligence session for an add-on, a lender meeting, etc. Try to talk to them during down time, during car rides to meetings, show an interest in their life, ask where they worked before, etc. Make them comfortable that they can contact you if something comes up (make sure the partner / VP are OK with this first). I've sometimes been alerted to important developments (e.g., an employee thinking about resigning) in advance because of these kinds of relationships.
What you're describing sounds a bit forced to me. I'd say it's more about leveraging existing firm relationships during the job. For instance, if you're inviting a bunch of lenders to an MP or diligence session, just chat with them a bit. You'll develop a relationship over time if your firms work together a lot.
It happens but is in the minority. This is most common for people that are transitioning into PE from another industry pre-MBA. For people with pre-MBA PE experience, it's more common to intern in something different (VC, hedge fund, ops role, start-up).
Great questions from @ccvv intern" above. Will add a few that only apply if you're keyed into consulting: 1. Did your Pre-MBA firm also hire consultants? If so, were they any better/worse at the job than bankers? 2. For VP recruiting in B School coming from HSW, does IB vs. Consulting background matter? For example, if someone does 2 years MBB then 2 years MM PE (~$1B - $5B fund size), then HSW are they competitive for a VP role at the funds that only hire banking Associates? Or would they have to recruit for a VP role only at consultant-friendly shops?
Thanks in advance!
My Pre-MBA firm did not hire any consultants as far as I'm aware. That being said, I don't think they were negatively predisposed against consultants, it just wasn't their MO. There are certainly some firms that do like consultants (Bain, Charlesbank, Golden Gate, probably others) and probably others that don't. I didn't notice any appreciable difference at B school between people who worked in IB vs. consulting (before PE). Ceteris paribus, I'd say they were equally qualified and did equally well during recruiting. I don't think you would be restricted during recruiting for VP jobs at "consultant-friendly" shops. In some respects, the consultant training around strategic analysis would be helpful for VP recruiting - I had a bunch of interviews that were just dissecting a business for an hour (Porter's five forces, competitive moat, etc.).
No problem, happy to help!
My girlfriend and I met when I was a 1st year PE Associate.
I'd say she had an influence in a couple of ways. First, I started valuing time away from work more and I realized that I didn't want to be a 35 year old partner grinding it out in the office 6-7 days a week until late at night. I wanted a more normal life. Some of this happens with seniority but it still is quite firm dependent in my experience. I'd like to make it home a few times a week for dinner with my family. I don't want to be in the office on the weekend.
Second, she had a preference for changing geographies (I was geography agnostic) so that was the more tactical reason to go to B school - it helped us change geographies easily (and she wasn't able to move for 2 years anyways).
I think it would have been quite difficult to have a functional relationship as a banking Analyst (mainly due to hours and unpredictability of the job) unless you have a VERY understanding significant other.
To that end, I think the most important thing is communication. Your SO will need to understand that your job can be quite busy sometimes (need to be more flexible during an intense live deal). You will need to communicate frequently how busy you expect to be and make sure you make good use of the slower times. Remind them that they are important to you and you'd rather be spending time with them. You should also communicate with those you're working most closely with at your firm to let them know if you want certain boundaries (e.g., a night out for dinner, Saturday plans). Obviously this gets a lot easier with seniority as well and you can't exploit it willy nilly, but I think most firms will understand that you have other priorities as long as you get your work done.
Best of luck!