Have a few weeks before starting my post-MBA PE role so figured I'd try to give back. I've been a long-term lurker and infrequent contributor, and would love to help with any questions you guys might have.
Quick background on me:
1) Undergrad at a semi-target
2) Investment banking at a BB 3) Private equity at a MM firm
4) Business school at H/S/W
5) Starting post-MBA role at a megafund
Happy to answer any questions about decision-making, recruiting, my experience in each of these roles and any advice you might want. I've been fortunate to walk down this path and WSO has definitely been a huge help.
Of course, some answers:
1) I was at a $5B fund investing across a few industries, though I was an industry specialist. I considered lateraling and the direct-promote path was open, but ultimately decided on b-school because of the network, the downtime and the relatively weak lateral market (e.g. I would have needed to downsize funds). This was especially true given I went to a semi-target where I didn't have a lot of friends go into finance. The firm was very supportive of b-school.
2) Generally you will need to have pre-MBA PE experience to recruit for post-MBA PE, and even then those with "better" pre-MBA experience (larger fund, more deals) do better. Vast majority of people ended up with a post-MBA position but many people had to downsize on funds or compromise on geography. I'd divide it into the summer internship process (20% of offers) and the FT process (80%+ of offers).
Summer: Handful of PE internships, many aimed at diversity candidates, some of which can lead to FT offers. The process really centers on networking and hustle throughout the first year to prove you really want the job and have what it takes. The people I know who went through this talked to dozens of firms, had multiple conversations & visits, and became fully enmeshed in PE news, deals and language. I didn't go through this so can't speak to the tactical steps but sounded like relatively standards technical + fit interviews at the end. This is also the main path through which candidates without pre-MBA experience break through.
Full-time: Open only to people with pre-MBA PE experience or at least a summer internship. Similar to the pre-MBA process, you meet with recruiters August/September, the MFs kick it off in September, then the MMs come in October or so, and everyone else trickles in after. This is a bit more formal than the summer process so less emphasis on networking, but definitely helps to know. Lots of fit, technical and case study interviews, with some take-homes as well.
Broadly, the less impressive your pre-MBA experience (smaller fund, fewer/no platform deals), the more networking matters. Often firms & recruiters will email people directly instead of posting a position on career services, so you need to do some legwork to get on their lists.
3) I'd say this is an ongoing process. My initial thought is to start experimenting with repeatable ways to source deals and build/maintain relationships (industry conferences, coffee chats, etc.), and start building some industry expertise to have investable POVs. These are long-term plays and I fully expect nothing to come out of it for a few years, but important to have that pipeline.
Anecdotally, I have heard post-MBA PE professionals often underweight the importance of execution--at the end of the day you are still a deal quarterback and need to be able to diligence a business and get to signing without any hiccups and minimal supervision. This is a skill as well--project management, team leadership, delegation, prioritization, etc. So I wouldn't "drop the ball" on execution so to speak--for the first few years that will be your moneymaker.
Hey man, thanks for doing this!
I had a few questions -
1) This site often mentions that "trading up" in PE does not happen. Clearly, you are an example that it does. Would you say it is rare to trade up and, if so, how did you go about standing out during recruiting?
2) What made you decide to go to a MF vs. staying in MM? I am in headed to MM PE and would love to know your rationale
3) Plenty of advice given to PE associates here but not a lot about keeping doors to other PE funds open. Would you be willing to share how you decided about approaching other PE funds? What were the tactical steps and what was your answer on specifically why you did not want to return to your previous fund, which (I assume?) you were asked.
Thank you so much!
EDIT: Apologies in advance if my questions overlap with chicagoPE - looks like he/she slotted in right before me
1) It is rare to trade-up, though a bit easier as PE firms have recently broadened the candidate pool for a lot of processes.
Differentiation really comes before the process, including (a) having good closed deals, (b) having strong references from your prior PE gig, (c) interning at a PE firm for the summer, (d) getting a post-MBA offer from your prior PE gig, (e) having an investable thesis you can bring to the interview, (f) networking. Obviously you need to prep for the interviews and crush them, but a lot comes from just getting your foot in the door.
2) Three reasons: (a) In a peaky market, I'd rather be at a platform that has a ton of capital, a great track record and will be able to invest through the cycle. By and large these are the megafunds.
(b) Like it or not, it will always be easier to downsize than upsize when you lateral. Most post-MBA PE guys last less than 4 years with their immediate post-MBA firm so I want to maximize optionality if I do need to move.
(c) Finally, I think the headwinds against PE generally (lots of capital, LPs going direct, long-dated funds, family offices) are weaker as you go up the stack. There are just few investors able to write megafund-size checks, and megafunds continue to have competitive advantages (brand name, access to capital, talent) that MM generally does not.
3) You should figure out before recruiting starts if you want to return to your pre-MBA firm. Oftentimes that's your highest yield opportunity. If you decide not to, let them know quickly, firmly but with good positive reasons. Generally the reasons that work best are geographical, whatever the real reason may be: e.g. "I want to be with my partner in NYC" or "I want to be closer to family in SF".
1) There are a couple of interview guides that all the business school PE clubs have which are very helpful. I also had a small group of students where we traded interview questions and gave each other case study prep which helped. For me, I had a good resume, good closed deals and great recs from my former PE firm which helped. Preparing early and often helped me differentiate early when a few people were caught flat-footed when recruiting hit. I also prepared two PE investment ideas I could pitch, but that didn't come up frequently.
2) It's a fair question. I think L/S is the fastest path to money if you're good; liquidity is easy, there continue to be pockets of mispricing, and if you have a good process things seem to work out. Growth equity is getting squeezed on both ends from what I can tell (small firms getting bigger, larger firms going smaller). Obviously has not been a great environment for distressed recently but that should change. And everyone is getting hit by the same forces of lots of capital, LPs going direct, etc, with L/S arguably also getting hit by the shift to passive.
For me, I like the control part of control investing. There's less day to day stress vs public investing, and I feel I develop a broader set of skills (team management, project management, selling, etc) that's applicable outside of work too. Returns are pretty good as an asset class still.
Longer-term I think there's a path to transfer buyout skills to family offices, direct LPs, etc that's easier than say going from L/S.
3) It varies much more fund to fund and manager to manager than MM vs MF. Even at my old firm different deal teams had vastly different approaches to how much they care about associates' opinions... Some teams would not even let the associates join for management dinners, as an example. You’d have to diligence that yourself by talking to former associates and friends.
Thanks!
Every associate is expected to crush financial modeling, business analysis, and work hard. What partners want to know is always, "if I hire this person as a post-MBA, could I see them here as a partner?" Via that prism, I think what differentiated me was (a) the infamous "investor mindset", (b) communications, and (c) visible growth towards the partner skillset.
Investor Mindset: Everyone talks about this, but post-MBAs are the first line of defense against bad deals. This means you must be able to identify what the investment thesis will be, the key drivers, diligence those drivers and support conclusions with data. A lot of the associate job will force you into the minute detail and so being able to abstract all of that data into what truly matters for a business is differentiating.
Communication: As a post-MBA you'll be the funnel through which diligence data goes in and investment recommendations come out. You must be able to do this in a succinct, clear and logical way while remaining data driven and correct. This means being able to simplify, summarize, connect disparate analyses together into a narrative, etc. This is true both in written and verbal communication so it's important to be comfortable speaking up, thinking on your feet and doing so in a way that creates credibility (the infamous "presence")
Visible Growth: The post-MBA role is really about potential... no one is a sourcing engine and deal execution master right out of the associate program, so the chief hiring criteria is "does this person have the potential to become a partner at this firm". You want to give them a data-driven "YES" to that question. On the sourcing front that means starting to develop new investment ideas, creative approaches to deals you're already on, ways you might be able to add value to your portcos, attending conferences and beginning to build industry relationships, etc. Your first few will probably not be great but this is a muscle that you're going to exercise and get better at. On the deal execution front that means asking to take on more of the process, becoming the go-to point for more advisors, etc. Again, you're going to lean pretty hard on your process partners initially but this is another muscle you need to exercise.
Lastly... be likeable and liked at your firm, hopefully by everyone but especially by powerful people. No associate or post-MBA is good enough to be an asshole.
Thanks again for doing this. Always good to see professionals give back to the forum.
2 questions on my end, as a lot of the questions on my mind has been asked already. Will be sure to drop in a few more questions if I think of any other ones if you're still answering by then.
1) The standard IB->PE->B-school path is well trodden. For H/S/W (through arguably more so for H/S), what are your thoughts on standing out as a PE associate applying for b-school. I get that a lot of the applicants end up looking the same from this pool, and there's only so many PE associates H/W can take on in one class. And also if you have any thoughts on semi-target getting to H/S/W as well.
2) For a post-PE role, what are your thoughts on family offices based on your interactions or experiences in b-school? More specifically the larger end of family offices that have more structure and certainty in risk-taking that would require and welcome PE talent. Is this something you would consider down the line as a "longer-term" path than the current post-MBA megafund PE role you've taken?
And lastly, congrats on the post-MBA PE role. There seems to be more spots for these than in previous years, but still not an easy feat by any stretch of imagination. Best of luck with it!
1) Time Spent: 60-40 new deals vs. portco work, and even then most of the portco work was around add-on deals. Very little time spent on LP requests, most PE firms of a certain size will have IR functions. Little time spent on sourcing given how junior I was.
2) Travel Time Probably 3-4 times a month between management meetings and portco board meetings.
3) Late Work I'd say 80%+ of my nights ended after 8pm and I worked more than half a day on 30% of weekends. It was worst my first year and got better. Weekend work is almost always due to a deal we were excited about, many of the late nights were just trying to catch up on work after a day full of meetings and calls. Generally I had much more flexibility as to when I did my work, but the work was all still there.
4) Working Relationship I do the grunt work (model, data analysis, expert calls, slides), VP makes sure I and all the other deal partners (accountants, lawyers, consultants, bankers, etc.) are doing what they need to do, as well as thinks about how to differentiate us, how to better diligence things, and manage portcos, Principals / Partners focus on sourcing, deal tactics, and selling both internally & externally. From what I saw there was not a clear cut in role between Principal & Partner but an evolution over time as people became more senior.
5) Advice for Day 1 You'll hear lots about being humble, hard-working, etc.... but most important is to intentionally become thoughtful about why you're doing what you do. Why are you doing this analysis? How do the results impact the story and thesis you're trying to build? What other analyses might make sense?
The other thing is to be more communicative, including speaking up, connecting with people for feedback frequently, etc. In IBD analysts are best seen and not heard... that changes in PE.
6) Hardest skills to learn / Differentiators I think it's the above two skills on thoughtfulness and communication. Sounds easy in theory but hard when you've got dozens of things on your to-do list and it's already 11pm.