Q&A: Associate at MM Private Equity fund

Hit 115 & 96 the last 2 weeks and don't want to do it again. Any advice on pe recruiting?

You will still have these in PE

Advice on doing well in IB: I found a combination of working smarter and not harder and also knowing when to sprint. Working smarter for me meant making sure I was on the same page as my mid-level when working on decks or models. Take the time to make sure you've laid out the decks and know exactly which analyses you need (and the questions you're trying to answer w.r.t. your analysis). On knowing when to sprint, personally, I knew that I could only do a 9 - 2 am stint 3-4 days in a row before I was falling asleep standing up. Any more than that and I was useless. Communicating this to my mid-level was key and allowed me to catch up on sleep and still hit our deliverables. People are much more reasonable and understanding if you communicate and spend time building rapport. Long hours are definitely the norm in PE, marginally better yes, but it's not a huge difference. The trade-off for me was that I feel more ownership, not to mention financial alignment to my deals in PE.

Advice on PE recruiting: (1) Find a good group of friends that you can study with. This industry is still very much an apprenticeship-based business and so much information is passed along from person-to-person. (2) Practice, practice, practice. Practice walking through interview questions on corporate finance and LBOs. I would answer questions and explain them to my mom (non-finance) and make sure that she could understand the concepts. Practice your modeling and time yourself. You should be able to put together a quick form LBO in 45 minutes or less. Take practice tests and time yourself (there are always old case studies circling the Street). Practice in full business attire (you'd be surprised how much pressure a crisp tie adds when you're building a model under test-like conditions). (3) HHs. Be nice to them. They can be a little arrogant and mean but it's par for the course. Just keep smiling and be polite for they hold the keys to the kingdom (for now). Work to establish a relationship with them early and do your best to come across as confident and competent but humble enough to be coachable. (4) Network. There seem to always be spots for analysts at PE firms based on alma mater or banking group. Reach out to your respective networks (i.e. the associate at the firm) to see if you can align yourself appropriately.

How to know if I'd like PE: I didn't! There's always a risk trying something new. You can theorize and postulate until the cows come home but you're never going to know until you do it. I spent time in asset management and moved to IB. I spent countless hours chatting with professionals in the industry and formed my hypothesis that PE would be my next step over a few years. Eventually, you just have to do it Hope that helps! 

I've always managed to connect well with older folks (I'm a bit of an old soul myself). My mentors have been people that I've worked for or are friends/friends of friends. I think I also naturally connect with older individuals and have more or less made them my mentors because I value their opinion and experience. In this way, they have become my own little board of directors that I consult whenever I need advice about potential moves or situations where I need their advice, etc. I didn't grow up with well-connected parents on account of being a military family and living in a "flyover state" so it was crucial that I build my network quickly but in an authentic way. For me, this was going through my alumni network and working from there.

While I personally try to respond to every Linkedin message to offer advice and guidance, I've never used it to reach out to people as I prefer a warm introduction or something face to face. If you really want to reach out to someone, you have to realize it's a game of numbers. Some quick tips on cold emails are to briefly introduce yourself (brief bio, what you do, and where you want to go) and be flexible when you suggest times to connect. When people make it easy for me to talk to them, I'm much quicker to respond. Hope that helps!

First rounds are a mix of behavioral and technical, not unlike IB interviews. On the behavioral, think about why PE and how aspects of IB will transfer over to being an investor. For instance, now that you're on the buyside, how will you pivot from making CIMs to now picking them apart for relevant information needed to make an investment decision? I've found that there are a lot of bankers who can model well and put together decks but they are less prepared to think about being an investor, managing risk, and asking the right kinds of questions as they diligence an opportunity. On the technicals, you should be prepared to do a paper LBO cold and answer questions about it (how would the IRR. or MOIC change if you do a dividend recap, explain the advantage of a company with operating leverage, walk me through how you can have a successful investment in a cyclical company with no multiple expansion (i.e. expand EBITDA and paydown debt)), etc.. If you can do all of these, you're in good shape. You don't have to know everything but if you can get 85% of the way there and show that you can be coached and learn quickly, I would think that matters most in an interviewer's eyes. Good luck! 

Correct. I honestly wasn't ready to recruit for PE at that time. Coming from a LAC and from AM prior to banking was a steep learning curve. I needed more reps to feel confident in my abilities. I was also aware that coming from a non-traditional background meant that I would need to spend the time to make sure I was solid and knew my technicals and modeling etc. backward and forwards. Once I got over the FOMO and the 2+2+2 mindset, I felt much better about my path and being a bit older than typical associates in PE. When I moved over to PE, I had to start out at the bottom so any gains in title/rank that I had made before were wiped out. This was well-understood prior to me accepting my role so it wasn't a surprise. I've had a few buddies who went A2A and then moved over to PE and all of them had to start out as first-year associates as well - gotta earn your stripes.

I found my current role through a HH. Even if I've made connections with folks at different firms, you still have to go through the HHs. I will note that originally this HH was a bit rude to me in the past. As aforementioned in my response above, it always pays to be nice and polite because you never know when they might come around with your next opportunity.

Strategy-wise I wasn't impressed or caught up with the perceived prestige or size of the fund. I was focused on finding either (1) a generalist opportunity, thinking it would help me later narrow down which sub-sector I wanted to focus on or (2) industry focused-funds (i.e. technology or healthcare) that had plenty of room for me to carve out a niche. Most importantly, I was focused on the team. I wanted a small team where I would get plenty of reps and feel that I was getting a strong experience.

The short of it was I studied my ass off, made as many connections I could via my college network and cold calls, and convinced someone on the other side that I was worth giving a shot. The preparation was an arduous process. Again, coming from a LAC background and studying primarily AM concepts meant that I had to teach myself accounting and corporate finance. #notanad but I used the Wall Street Prep material to give myself a crash course on all of these subjects. I also utilized the IBankingFAQ website and compiled a study guide of ~70 or so technical and behavioral questions that I thought would come up in an interview. I probably spent 4-5 months prepping in the hopes of landing an interview. If I could do it all over again, I would study a little bit often as opposed to spending Friday night/weekends studying because you'll retain the information better. There are plenty of people from non-traditional backgrounds or schools that can break into banking - that extends to S&T folks. It all depends on how much you want it and that perfect moment where preparation and skill meet luck. Good luck!

Piggy backing here if I may, As someone who made this jump as well and is now at a BB, completely concur w/ OP. I started out in S&T and quickly realized it wasn't for me, spent around 5 months studying the BIWS 400 and practicing. Stick to your tried and true learning techniques from college - for me, that's flashcards. I had a stack of 2-300 that I would shuffle through for an hour or so everyday until I knew everything cold. Once you get comfortable enough around your story and knowing the technicals, time to pound the pavement and talk to absolutely everyone that you can. Informational calls with family friends and older alums, even at firms that weren't hiring, were the most useful for me. I asked some good questions about why THEY went into IB, and if they pivoted from something else like I was trying to, I asked how they did it, and how they told their story. I took rigorous notes on their thoughts, and cherrypicked ideas, phrases, stories I liked the most and molded them into my own story. It's a terrible, shitty process (didn't help that i had a 3.2 GPA) -  I applied to hundreds of jobs and got dinged at places that I look back and laugh at now. It's a true numbers game, you just have to keep with it. Another thing that is less often talked about in the S&T->IBD switch is taking a cap markets roll in between. ECM is a hybrid between S&T and IBD, I ultimately took this route and after 1.5yrs had an easy switch into IBD. Keep with it, and good luck! 

See my response above. I'd say that if you want to go into Corp Dev it's much easier to do so if you have previous investment banking experience. A few folks I know who worked on a strategy/dev team had trouble getting reps on the dev deals. For FP&A I don't think you need banking experience to do that. It helps, sure, but I would think your skill set would be more valuable (read lucrative) elsewhere.

Disclaimer: Not OP

So sorry to hear about the injury, but this is a great story. I think you would have a shot getting into an entry level role if you’re able to network and really flesh out why you want to do finance now post-baseball. There was an analyst in my group at a top BB that had pursued sports professionally before joining as an analyst - in a lot of ways the experience and slightly older age were net positives in being able to do the job. Best of luck!

Would love to be in the bullpen (pun intended) with a guy like you. The courses on here will certainly help, and there is so much on youtube and other free sites. Would think about how to set up your resume the best you can as well.

I don't have much in specific recommendations, but I remember reading the deal of the week a few years ago and found it quick and to the point on why specific, relevant M&A transactions occurred.

https://pillarsofwallstreet.com/resources/deal-of-the-week/

OP here: Thank you for sharing your story. Really sorry to hear about the injury but really happy that you pursued your dream and gave it your all. 

(1) Language: I've found that more than half of this is about immersing yourself in the language of finance. Read as much as you can and take the time to research and understand concepts. I read Pro Rata, Term Sheet, and Dealbook every morning. I also subscribe to Multiple Expansion and periodically review the blog posts that they post.

(2) Network: Try to reach out to alums, friends / family, etc. that work in an area of interest. They should be able to provide color on what to focus on and can hopefully provide insight on new opportunities and help you make connections. The more I spoke with people the more I understand the expectations of the role and to point #1, the more I understood the language.

(3) Practice: I found the Wall Street Prep courses a helpful introduction to modeling. From there I found Multiple Expansion very helpful because they provide step by step instruction. You'll find plenty of old models out there - try to understand as many different types of models as you can to build your familiarity with commons analyses and best practices. Start with understanding a DCF and comps, and then move to LBOs. I haven't done this personally but I've heard Martin Shkreli, Ackman, Palihapitiya have some good videos on Youtube - ultimately you're just trying to get as many perspectives as possible here.

(4) Age: Age is nothing but a number... until it isn't. Unfortunately, this is on a case-by-case basis. I'm a little older than the associates on my team and it was definitely something raised when I interviewed. There were some places that definitely dinged me for being older. What I tried to impart with the team was that I was humble and hardworking and just wanted a shot. Titles didn't matter to me as long as I could break into the industry. Given your story, I think people would be willing to take a shot on you. As a fellow athlete (Div 3 so not quite your level haha), people seem to value and appreciate our dedication so I would think that would only help you out here.  

I think you're doing the right things. Given your experience, it might help you more if you did an MBA and tried to land a spot at a firm that way. FP&A / project management etc. don't really lend themselves to doing deal-related work so that will always be a flag for interviewers. Networking is a hard thing to teach, you have to be shown so unfortunately, I can't offer much help there (I've tried several times unsuccessfully to teach others). Or, you can try a game of numbers and learn by doing. When you cold email work on being concise with your emails (a short bio, why you want to chat, be flexible suggesting times, etc.). When you are successful in getting someone on the phone, ask the right questions that further the conversation and push for insight and make sure to learn the language of the industry. Also, as best as you can, drop the chip on your shoulder as it relates to being "non-target". People want to feel comfortable that you can do the work and be put in front of management teams. Fake it 'til it feels natural and no one will bat an eye at where you came from. Hope that helps!

$260k all in. It's higher than some places but lower than others so I imagine it's in the middle 50% (waiting on liensofnewyork to post his report). Overall a huge bump from where I was previously so I'll take the dub. Hard to tell about trajectory because numbers are hard to come by at the Principal / MD level but I feel pretty confident that I've at least 2x my previous trajectory.

BB. I don't get too caught up in the non-traditional or BB/boutique nonsense. If you have skills they will come through. I only worked at a BB because they were the folks that gave me a shot - I'm sure I would have been happy at another shop too.

It really depends on the firm. People in PE are usually pretty risk-averse and tend to stick to what they know. Anecdotally, I have a buddy that was in credit trying to move to the equity side and they were met with roadblocks even though they had had prior experience doing equity as well. Personally, I think the credit guys do more extensive and thoughtful modeling and due diligence (e.g. Oaktree) but ultimately it's up to the powers that be at the fund.  Dual track your approach and reach out to HHs and associates at funds. Make sure your story is solid as to why you want to be on the other side of the house and make sure your modeling is solid. I would imagine that it would be helpful to incorporate how thinking about upside and growing a business is where you want to be vs. downside protection/structuring. Good luck!  

I came from a credit background - definitely harder to get looks up front and you will need to spin the credit experience in a bit of a different way. Additionally, be careful not to focus too much on downside risks in the interview process and also opine on growth opportunities and upside potential (this is a trap credit guys can fall into). I’d say from my leveraged finance banking group, exits were ~80-90% to private credit and remaining to private equity - part of the whole hiring process is luck so just have to convert on the limited number of equity interviews you do get

Become good at golf / caddy at the local club and hope a PE partner is playing.

You're in high school - relax. You should be more focused on doing well to get into the best school you can. From there, spend your college years figuring out a hypothesis for what you want to do over the long term. Spend the time now to do some soul searching vs. realizing at 40 yo that you hate your life and what you do. Don't just chase the money. While money is obviously an important factor, you start to feel less and less joy from each bonus so make sure what you do is part of where you find joy. Good luck!

1. Between each round was probably ~2 days. If firms want you they'll show their interest with their response time just as they do with hot assets. Always send follow-up notes thanking people for their time. After a while you'll get a good sense of whether you'll hear back about the next round. I found that I often had more intel than the HHs about how well I did based on the interviews. 

2. I interviewed with a handful of firms as I cast a wide net + the madness of the recruiting process that is pushed up earlier each year.

3. COVID messed up my timeline quite significantly by several months. I was close to a few offers in late February / early March. No way to tell for sure if I would have secured those offers ex-COVID. For my particular process, it was ~4 weeks from the first-round interview to signing.    

4. Most firms that I interviewed with seemed to have a first-round (behavioral) followed by second rounds with VP / Principals and then final rounds with MDs. 

Not an expert, but IB in Chicago should be doable from ND