Why exactly do PE firms hire ex-consultants at a junior level?
So I understand why ex-bankers get analyst/associate positions in PE: they can build the models. But what exactly do ex-consultants contribute? In senior PE positions, ex-consultants can offer "strategic insight", "operational improvements" etc, but I just don't see what ex-consultants do as Analysts at PE houses. Any ideas?
i'm a former consultant who now works for an lbo fund. my office has 5 other associates and they are all ex-bankers. some PE funds (especially very large ones) use junior staff almost exclusively for financial projections / lbo modeling / etc. in such cases it's hard to justify hiring a consultant over a banker unless that consultant worked for an elite due diligence shop and has a ton of financial modeling experience.
however, many PE funds except their junior staff to do many other things besides crank out financial models such as source deals, talk to management teams, run due diligence projects, build presentations, etc. my skill set is a bit different from the bankers. it has taken me a while to catch up on the the financial modeling (which we all know isn't rocket science), but I'm the go to guy when it comes to doing just about anything else. my fellow associates are very smart guys and can run a model in their sleep - but some of them have done little besides build canned models and write pitch books prior to coming to PE. my firm used to be resistant to hiring ex consultants - but now I think they see the value of broadening the overall skillset of the team.
hope that helps ...
That's a great response! Thanks for sharing!
Structured analytics. A good bank/consulting firm followed a rigious structured process, just like a PE firm does.
The PowerPoint/Excel skills are obviously also helpful.
Rigious? Religious or rigid? I've never heard of rigious.
Financial consultants probably don't know what they're talking about – it's not as if any investment analysts saw the current economic crisis coming. (Well, some did – but they were usually fired for talking about the bust of the then bubble – and the business cycle is something Econ 101 covers.) However, not all investment analysts are bad, and many of them do a great job for clients. They work hard and usually long hours, trying to make sure that their clients' investments are good long term ideas – in fact, finding the right investment analysts can help businesses and private investors alike avoid debt relief with the right investment portfolio.
haha
Dude what the hell are you talking about LeroyV? First, he is talking about management consulting. Second, I'm not even going to comment on the rest of the shit that you just put together not to mention the fact that you dug up a nine month old thread to post something irrelevant. Keep up the good work.
Lol worked!
P/E shops aren't just about closing deals and working models. Fundamentally they're about creating value in portfolio companies. Partners and senior level management aren't the only ones that contribute here. Analysts and associates that have ideas on how this can be accomplished typically get heard at my shop. I would argue that many consultants probably have a better understanding of how to drive value creation operationally than most bankers. This is valuable both pre and post investment.
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