Summer applications for PE vs IB
I have some experience in applying for IB internships but don't know anything about the application process in private equity firms. Apart from PE summer internships being more competitive than the IB ones, are there any differences in the application process for these two areas? E.g. does networking have more/less importance in PE, are PE interviews more/less technical? In terms of my CV or the answers I give in interviews, are they supposed to focus on different skills/strengths? And just in general, what should I bear in mind when applying to PE after being kind of used to all the things I learned for my IB applications?
I interviewed with a couple of European UMM PE firms (c.10B EUR) and got offers from both (for off-cycles). I also have experience from IB. My experience is that for IB, the most important things are to be able to work a lot of hours, have a great level of attention to detail, and to have a good fit with the team. You never really need to think on your own, you will most often receive very clear instructions on what to do and how to do it. The interviews are rarely very technical for IB, just basic level accounting and valuation. My PE interviews were much deeper in terms of understanding the drivers of value in deals. The firm I ended up picking for my internship had a case where I was supposed to evaluate a business opportunity from looking at c. 20 slides from an IM for 30 mins. The first interview with the same firm was more qualitative, but also focused a lot on what makes a good investment opportunity, how to extract synergies, organic vs inorganic growth etc. None of the interviews I've had was very focused towards why I wanted to join a specific firm. With that said, my experience is that analytical ability and understanding valuation concepts and value drivers are much more important in PE. However, this regards Nordic offices for the PE firms in question, so it might be different in the UK and for summer internships.
This helps a lot, thank you! When it comes to judging an investment opportunity and understanding drivers of value, did you learn this just through your previous experience or are there any particular resources/books that you could recommend to learn about this? If not, do you have any tips for evaluating case studies they give in interviews?
I have been investing privately for some time so I think that might have helped me out. There are plenty of interviews with senior people within private equity available on Youtube as well. However, I think that the most important thing to understand is that a good company does not equal a good investment. A good company is only a good investment if you buy it at an attractive price. Similarly, a bad company can be a great investment if you buy it at the right price. It's also important to note that private equity is very different from buying public stocks. When you buy a public stock, you purchase the shares and then you do not actively do anything. In private equity, the return partly comes from actively improving the company in some way. So during my case study, I actively looked for ways in which the company could be improved, what the probability of success of those improvements might be, and what the risks with the company were. Very broad answer but I hope it can be helpful.
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