New MBB BA/A/AC here, considering eventually recruiting for PE. I read on some sites that you need to have extensive finance/accounting knowledge for PE interviews, but my coworkers in consulting say that since you aren't in banking, they won't expect you to know as much about modeling/finance as a banker would.
So my question is- what technical skills should I focus on as a consultant trying to recruit for PE?
I took a few finance classes in college so I can do a DCF and can probably teach myself how to do an LBO, but how in-depth will they expect me to know this stuff given my background?
You won’t get into PE without understanding the LBO in depth, regardless of background.
The level you need to know from what your co-workers say vs what is looked for is different. You should know your financials and LBO modeling cold. The difference is this: They'll expect that you are a bit behind compared to bankers, in the same way that they would assume that bankers can't make as high-quality slides as you can, but that doesn't mean that you get a pass if you can't do it. You need to be able to walk through an income statement, statement of cash flow, and balance sheet. You need to understand what happens if you use more or less equity in a transaction, or how increased interest rates will impact returns. You'll need to know how to sit down and model these things out, so that after you go through ~5 of them with the help of the other Associates or VP, you'll be able to do it yourself with minimal guidance.
Your co-workers in Consulting are just that--consultants. They're not making hiring decisions for PE, and even if they're in Bain's PEG group and deal with PE clients everyday, -they still don't understand what's going on financially under the hood--we only did market and target diligence, not the financial modeling itself.
If you want to be sure that you're in a good spot, drill technicals like a banker until you're confident you could take any question they throw at you, then drill LBOs starting form simple until complex until you're known as the top excel dog/Macabacus wizard in your MBB, then you'll be ready. But don't under prepare because your EM, who has only ever worked on healthcare org and op model work, thinks that PE funds don't interview for the fundamental skills they are hiring for.
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