Ask me anything - MM PE Associate, 1 year in

Monkey8888's picture
Rank: Monkey | 64

I haven't really posted on WSO before, but this community was extremely helpful to me during my job search and interview process, so I thought I would make myself available to answer questions about my experience for others out there.

As way of background, I graduated from a target school > management consulting > boutique investment bank > currently PE (larger end of middle market, think >$2.5B fund). I definitely took a less traditional path to where I am, and I also went through HF interviews, so I'm happy to answer any questions (or at least share my personal perspective) about recruiting, picking a career path, interviewing, etc. for PE, investment banking, strategy consulting, or anything else related to those topics

Comments (59)

Jan 12, 2016

At what AUM is a PE fund considered middle market and did you use the WSO PE stuff? Congrats on making it to the holy land! Tossed you a banana.

Jan 12, 2016

Good question. I view the designation of middle market as having more to do with deal size than AUM, although the two are usually correlated pretty well. Middle market is a highly subjective term, and every buyout shop that isn't a megacap fund will call themselves middle market. I would usually consider it to be firms that do deals with enterprise values from about $100m - $1B. Again, if you ask 10 different people, you'll get 11 different answers, and this isn't etched in stone anywhere.
And yes! I used the WSO guides for both PE and HF interviews. I think they were helpful. I also used the practice lbo models on gobuyside over and over again

Jan 12, 2016

What made you change industries from consulting to banking? Did you consider doing a MBA or taking other routes? I would think that move is pretty uncommon. Did you come in as a first year analyst once you moved to ib?

Jan 12, 2016

As a consultant, I was brought in for a specific portion of an M&A transaction to advise the buyer (often a private equity buyer) on whether my firm liked the deal from a market/industry perspective, and I also provided modeling/forecasting and various other number-crunching services. I hated being included in only one part of the M&A process and advising on someone else's deal, because it really made no difference to me whether the deal was consummated or not. Being a consultant very much felt like being on the sidelines of the M&A process, and I joined an investment bank because I wanted to be in the thick of things. Also the compensation trajectory in consulting is vastly inferior to buy-side or sell-side finance, but it is just as difficult of a job. You are right that it is an uncommon move. I got a couple offers from investment banks, and one of them allowed me to come in as a senior analyst, but another offer I got would have had me starting over as a first year. I took the senior analyst offer.

Jan 31, 2016

How did you get these interviews? Also, where you coming from MBB?

Jan 12, 2016

Is there any chance to get a PE/HF internship for a top mba student with some VC exp. (but without IB/MC) and CFA certificate? Which funds to target?

Jan 12, 2016

Yes, I think there is always a chance as long as you can explain your past experiences as a coherent narrative to the interviewer. If you did IB > PE > MBA, then there is little to explain since it is cookie-cutter, so if your background is different, having a narrative to why you have done the things you have and why your experiences make you a unique and superior candidate are key. Don't focus on what you lack (IB). You have to own your background and really sell it.
VC experience would translate well into a growth equity PE fund, but you also have a CFA, which is often viewed as a pedigree for HF. Some PE funds may see your CFA and think that you are better suited for a HF, so I would change the focus of your story depending on who you're talking to. My fund doesn't do MBA internships, so I'm not sure what funds to target, but I would work your undergrad / personal / MBA program network as hard as you can. I would think you may have better luck with growth equity PE firms than buyout shops, given VC background

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Jan 12, 2016

What are your hours like at the PE firm? What are you thinking of doing after 2 years of PE - MBA, another PE shop, or HF? What made you do PE over HF when you were interviewing for buyside roles? Thanks!

Jan 12, 2016

Hours are highly dependent on whether I'm working on a live deal or not. During downtime, hours are 7:45am-6:30/7:30pm, but during an active deal it's more like 7am-11pm. I'm on the west coast, and I think there is a culture here of starting earlier in the morning - most people are in the office by 7:30am anyway. I work about 50% of weekends to some extent. Hours also depend on your specific deal team - just like when you're an analyst in IB, your associate can make your life harder or easier depending on their personality, the specific deal, their ability to manage workflow, etc. Regardless, it's a big improvement over IB, and from what I have read, I have better hours than the megafund kiddos, but it's far from a lifestyle job. It has big ups and downs in terms of workload, but if you're an investment banker you already know all about that.

PE jobs are easier to get than HF in a sense. There is a consistent and predictable recruiting cycle for them, and because of their 2 year nature, most funds need new Associates every year. HFs on the other hand, hire one-off analysts on an ad-hoc basis with (as far as I could tell) no consistent recruiting schedule and fewer number of available positions. I studied extensively for both types of interviews, but I easily racked up 10 PE interviews before I got a single decent HF interview. While I was open to both PE and HF, PE showed up with offers, and HFs didn't. I think lots of analysts do PE over HF for this very reason - simply because it's there and it pursues IB analysts aggressively. If you want to do HF, you will need to be proactive about it and budget a lot of time for the interviewing process to result in an actual offer.

On the last piece - I am going to try to get direct promote at my same firm, since the MBA requirement has loosened a lot. I think people are shifting their views on the necessity of that degree. We will see, but otherwise I would try to lateral to another PE fund or get an MBA (if I must)

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Jan 12, 2016

I am interested in understanding you management consulting experience and how you transitioned to IB and then PE. Were you working at MBB, boutique or Big 4? How did ''sell yourself'' when you interviewed in IB? Were the firms you applied to interested in your MC background?

Thanks a lot !

Jan 12, 2016

I was working at a strange little boutique number-crunchy consulting firm without much of a name brand, although it was actually highly competitive (only recruited math types at ivies and 2-3 other schools). Lots of mgmt. consulting firms such as Bain & Co and my old firm have general case teams (which serve big corporate clients that are struggling) and many also have what is called a "private equity due diligence" practice, which is basically like outsourced business diligence for private equity clients. I spent most of my time on the PE DD team.

To IBs, I sold myself as an operational model jockey with diverse industry exposure and with experience working on lots of different PE deals as a third party advisor. I only interviewed at a couple IBs after MC, and I would say that they were confused by my MC experience. It is important to spoon-feed a narrative about why your untraditional background is awesome and relevant, because if you don't sell it hard, they will just think it is weird or irrelevant. Thinking can be difficult and unpleasant, and most people (including investment bankers) would prefer not to do it whenever possible, so think it through for them, and more often than not they will accept your narrative. I sold myself as someone who was a smart 3rd party advisor who wanted to become an investment banker because I wanted to be at the center of the M&A process

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Jan 12, 2016

What sort of LBO/technical questions did you get in your interviews? When did you kick off your recruiting process and did you prefer to give a brief deal overview and let the interviewer probe you for questions or did you like to foresee the questions and give them a longer answer that conveyed your investment opinion?

Best Response
Jan 13, 2016

In my experience, this is how the process goes after resume selection:
1) First round screening interview: Can be a phone interview and is often only 30-45 minutes. There may be just one, or there may be two or even three. The purpose of this interview is behavioral, and the point of it is to discover if you are weird, if you don't know why you're doing this whole PE recruiting thing, if you're a cocky asshole who thinks he knows everything, or if you're inarticulate.

2) Model test: this can be a take-home test or a test in the firm's offices. This often occurs during the work week and lasts 4-6 hours, depending on the test, so plan ahead with your day job. For me, this was generally the only technical part of the interview, but building an LBO from scratch (and not copy/pasting or using a template or otherwise cheating - they CAN tell) under time constraints is difficult unless you practice them, and then it's a breeze and you can do it in your sleep. They will usually give you an old CIM, and you are supposed to make an LBO, usually with at least one bell or whistle (e.g., returns sensitivity table or OID). Typically there is also some qualitative aspect, such as making a few quick slides highlighting reasons why the company is a good acquisition target (or isn't). If the CIM is from a company that the PE firm acquired and is in their portfolio, I would advise against saying it's a bad investment, haha. They have extremely high standards for this test, and they can cut the vast majority of the remaining applicants with it, so don't just assume you'll do fine just because you're used to jamming on your IB's LBO template. You need to hit this out of the park. It needs to be clean, organized and have no errors. Again, you can't cheat with a template. Yes, really.

3) super day interviews: if you've gotten to this point, the attitude is that you are technically sound. They are focused on rigorous behavioral interviews only.

This is my experience, but others may have different experiences. In contrast to ibanking, I didn't get many verbal technical questions, but the ones I did get were covered in the WSO PE interview guide.

I kicked off recruiting later than some - more like February I think. I was anxious that I was missing the boat, but then resume drops and interviews started raining out of the sky really heavily all of a sudden. Oftentimes they would let me choose which deal(s) on my resume to discuss. I had done some buy-side M&A work in banking, so I tended to talk about those for obvious reasons

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Jan 13, 2016

Got it - thanks for the color. SB'ed. What was the strength of your modeling (specifically, LBOs) prior to interviewing and how much prep did you put into it?

Jan 12, 2016

Are there non-targets at your firm? Even if a non target breaks into BB or EB IBD, do they have a chance at reputable funds?

Jan 13, 2016

Yes there are. Yes, you absolutely do have a chance

Jan 13, 2016

Hey OP, thanks for doing this. I have two questions:
1) How did you managed to get a boutique IB gig after your stint in consulting? Was it completely through networking? Any advice on how someone could lateral to IB from MC?
2) Have you seen people with Big4 TAS/ Valuation experience but no IB experience being able to go directly to PE?

Thanks again.

Jan 13, 2016

1) I did network my way into it, yes. If you want to lateral from MC to IB, i recommend that you do it ASAP. The thing you want to get out of an IB is the analyst program experience imo, so even if that means starting over as a first year analyst, it's worth it. Or you can get an MBA and get hired as a banking associate. TONS of IBD associates are just MBA grads with non-banking backgrounds - but then you are sort of committing to being a career banker, which may be what you want to do (who knows). You will have to network, but I have heard of banks getting analysts through recruiters, especially if some of their first years quit soon after starting and they have off-cycle opportunities. Check out their websites as well, since banks often publicly post job openings (unlike PE/HF)
2) I have not seen that personally, but I would not be surprised if it happens occasionally in lower middle market PE funds and probably happens often in family offices, especially in non-finance focused cities, where there aren't hordes of available investment banking analyst recruits. Maybe others can chime in on this if they know more than I do on this

Jan 13, 2016
Monkey8888:

TONS of IBD associates are just MBA grads with non-banking backgrounds - but then you are sort of committing to being a career banker

Could you please elaborate more on this?

Is buy-side recruitment for MBA IB associates with no banking experience unlikely? I have an undergrad in finance and worked in finance/accounting positions (think FP&A, corp fin of sort). I'm wondering whether it is worth doing IB at all and what my exit opps would be in general - not just PE/HF.

Thanks for your time! +

Jan 13, 2016

For some of these questions about what kinds of backgrounds are possible / probable, I recommend going to the "Team" pages of a variety of PE firms. Usually the Associates each have a little profile and bio, and you can see the kinds of banks, universities, etc. that they went to

Jan 13, 2016

Do you have any insight on consumer focused PE firms?

Jan 13, 2016

Are you looking for fund names or something else? I'm not sure exactly what your question is - sorry

Jan 13, 2016

Basically any insight into how they operate, what kind of recruiting they do/who they look for, maybe even where you think these firms stand in the overall pe industry?

Jan 18, 2016

LGP is a consumer focused PE firm in LA.

Jan 13, 2016

How did your HF interviews typically go? And for context, what kind of HFs were you interviewing with? Thanks

Jan 13, 2016

I interviewed mostly for multi-strategy and credit funds, such as high-yield or convertible arbitrage strategies. I didn't have many HF interviews, so I'm not sure if my experience is representative, but there were a number of questions that HFs asked me that PE never asked me, especially about my own personal trading account and my current trade ideas. I also consistently got asked "what books are you reading right now?" and no PE firm asked me that. There was a technical component, which in my case was not a model, per se, but more of an exercise where I had to dive deep into filings to make a complete summary of all the financial info and then add some qualitative commentary, SWOT analysis, buy/sell rating, etc. I was interviewing mostly at high yield credit funds so there was a credit bent to the questions (i.e., to make sure you understand capital structure dynamics, bond ratings, interest rates, etc.).
My general comment about HF interviews is that they appear to be much less standardized than PE interviews, and different funds will have very different interview experiences / processes

Jan 13, 2016

If someone were to get an MBA with no prior IB/PE experience, would it be possible to do a few years as an IB Associate, and make the transition to MM PE?

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Jan 13, 2016
Sealberg:

If someone were to get an MBA with no prior IB/PE experience, would it be possible to do a few years as an IB Associate, and make the transition to MM PE?

Someone above asked a similar question. I think that this is a difficult path. Is it impossible? No. But I can't say I know someone who has done this. MM PE recruits new pre-MBA Associates almost exclusively from IB analyst pools, and I have heard that it is very difficult to get hired as a post-MBA Associate without buyside experience.

Jan 13, 2016

How do you feel your fund is handling the tight market for competitive deals right now? Appears everyone is chasing the a lot same deals in the MM space and is bidding up entry multiples. Thanks

Jan 14, 2016

Thanks a lot for doing this. How hard is is to go MBB-->MBA (Harvard, Stanford, maybe Wharton)-->PE (medium or large fund)?

Jan 15, 2016
Alex_305:

Thanks a lot for doing this. How hard is is to go MBB-->MBA (Harvard, Stanford, maybe Wharton)-->PE (medium or large fund)?

Good question. I haven't done an MBA so maybe I am not best qualified to answer this

Jan 16, 2016

If you're at an MBB firm right now, you should begin recruiting for pre-MBA PE positions. There are a number of shops that make sure to have a significant portion of their annual associate class come from a consulting background. Bain and Golden Gate are two well-known firms that fit this archetype. Even places like FFL, CVC, and Warburg Pincus have hired one or two consultants as associates in recent years.

If you get pre-MBA PE experience, you have two massive advantages. You'll have a huge leg up during MBA applications as your work experience is very compelling and you'll likely have great recommendations (from notable people, hopefully even alumni of the schools you're targeting). Second, you're now in the running for post-MBA PE positions.

It's a brutal numbers game; compare the percentages of each school's graduating class by their incoming (prior) work experience vs. their outgoing (where they placed). You'll see it's always a ~5% drop for PE, like 17% incoming to 13% outgoing. In short, you need pre-MBA PE experience to be competitive for the few post-MBA positions available.

Jan 16, 2016

Thanks a lot for the insight. I agree with transitioning to PE prior to the MBA, but I think that may be very difficult since I'm not in the analyst program. I wanted to use the MBA for the transition.

Jan 15, 2016

Thanks for this. Very helpful.

For post-mba PE interviews, do you know how one typically discuss prior deal experience? I know the general structure for presenting the deal, but one person with (limited) PE experience suggested I prepare a short powerpoint for the deal. I would have expected to be asked to talk about it without using any materials. My fund just asked people about their experience-I think bringing in materials would have been too much.

Is there a standard way this is done?

Jan 15, 2016
eja456:

Thanks for this. Very helpful.

For post-mba PE interviews, do you know how one typically discuss prior deal experience? I know the general structure for presenting the deal, but one person with (limited) PE experience suggested I prepare a short powerpoint for the deal. I would have expected to be asked to talk about it without using any materials. My fund just asked people about their experience-I think bringing in materials would have been too much.

Is there a standard way this is done?

Don't bring in materials with you to the interview unless they specifically ask you to do something like that. You should know your deals well and be able to discuss them in detail, including transaction structure, valuation, and whether you thought the deal was a good one or not, and why. Some people suggest making a short powerpoint for the deal just for your own benefit (like making study flashcards) - maybe that is what he meant

Jan 17, 2016

Thanks - good to know. How many investment ideas should I be ready to discuss in the interview? In addition to knowing the deals I worked on, I have been working on a pitch for a company that is in a sector relevant to the funds I invest in. Do I need a second idea for breadth?

Jan 15, 2016

When talking to your friends from b-school did people who joined other firms seem to enjoy themselves more and want to stick around longer(i.e. bain or Deloitte).

McKinsey seems a little bit caught up in being intellectual and also overly competitive(their up and out policies seem intense)

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Jan 15, 2016
Lex120:

When talking to your friends from b-school did people who joined other firms seem to enjoy themselves more and want to stick around longer(i.e. bain or Deloitte).

McKinsey seems a little bit caught up in being intellectual and also overly competitive(their up and out policies seem intense)

Again, I have not gone to b-school, and my consulting experience was right out of undergrad, so I'm not sure how to answer this

Jan 16, 2016

I assume your current goal is to make VP either at your current PE firm or another. Do you anticipate you'll be able to do this without an MBA, or at least gotten some level of insight?

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Jan 16, 2016

Thanks for start up this thread-it's been really helpful.

If the stock market gets crushed from oil and the Chinese stock market, where do you see private equity heading? Also, do you think the industry will be dead if PE firms are forced to be double taxed on both their carry?

Jan 19, 2016
semitar93:

Thanks for start up this thread-it's been really helpful.

If the stock market gets crushed from oil and the Chinese stock market, where do you see private equity heading? Also, do you think the industry will be dead if PE firms are forced to be double taxed on both their carry?

You're welcome! Private equity is all about longer term investing, and PE funds tend to assume regular recessionary events into their investment scenarios. PE firms can hold onto their portfolio companies for longer periods of time if M&A multiples are depressed and wait for a better time to exit. Market lulls can actually trigger a lot of M&A activity, and PE firms will look for fundamentally good companies that come available for attractive prices (but that have been overlevered or mismanaged and are forced to seek a sale). Good PE firms have flexible strategies and will seek creative ways to make money in different market conditions. Generally, buying low and selling high is a good investment strategy :)
PE will definitely not be dead if carried interest gets taxed more, although it will make the industry less attractive in a sense than it was previously. These are my opinions, so don't take them as gospel truth - I'm just one PE associate in a sea of others

Jan 16, 2016

What do you enjoy most about your PE job that you didn't get from your banking job? Specifically regarding the work you do, not lifestyle.

Jan 19, 2016
SPBW:

What do you enjoy most about your PE job that you didn't get from your banking job? Specifically regarding the work you do, not lifestyle.

Great question. I think that IB is better for some personalities, especially if you love serving clients and networking. The IB job is totally different at the analyst level (technical and research) vs. the MD level (relationship building). I prefer PE because I knew that making my clients really happy didn't resonate with me or feel important. In PE I am very invested in the deals we do, because they determine whether we make or lose money for our LPs. Banking is a fee-for-service business, not an investing business. For those debating buy-side vs. sell-side, ask yourself if using your expertise to help your clients makes you happy, or if using your expertise to invest makes you happy, because they are very different mindsets.
One thing that I didn't like about banking was that I was constantly doing things just to show our client that we were working really hard, even if it wasn't helpful. For example, I hated the idea of making a 200 page pitch just for the sake of having a huge document and being like, "Boom! Look how much we want this." So far, it seems that PE cares more about whether you are right than whether you tried hard, so the pressure is not less, just different.

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Jan 16, 2016

Hi, for the PE career in the long run, which helps you the most, banking or consulting? If you could do it all over again, what would you choose? Thanks.

Jan 19, 2016
dreamworks:

Hi, for the PE career in the long run, which helps you the most, banking or consulting? If you could do it all over again, what would you choose? Thanks.

Both are helpful, but honestly I think banking is more appropriate. Having done both banking and consulting, the emphasis that PE firms put on their nitty gritty operational expertise seems very exaggerated to me. PE tends to hire CEOs and consultants to do that work, whereas the PE professionals are more focused on putting deals together. I am glad that I did both, but if I had to do it all over again, I would just do banking, since the path from consulting to PE can be difficult and unlikely

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Jan 17, 2016

Thanks for doing this. Very helpful content.

Did you consider going into PE right out of your consulting stint? If so, what led you to follow the IB path instead? If not, any reasons you chose not to?

Jan 19, 2016
Usernotfound101:

Thanks for doing this. Very helpful content.

Did you consider going into PE right out of your consulting stint? If so, what led you to follow the IB path instead? If not, any reasons you chose not to?

I did not see going into PE right out of consulting as a realistic option at the time. I felt that I had to earn my stripes in banking before PE firms would take me seriously as a relevant candidate, and I am glad that I got that experience. My ibanking analyst program gave me the technical background I needed to succeed in PE. Only a handful of PE firms seem to hire consultants instead of bankers, and I think that is for good reason. PE expects associates to join and immediately be able to pull together a flawless LBO and perform other technical analysis, and most pure consultants frankly do not know how to do that

Jan 17, 2016

Can you give an overview of what first round PE interviews were like? And then subsequent rounds. Mix of technicals/fit/case study, etc.?

Would you say 1st rounds are mostly talking about deal experience/fit/some technicals?

Thanks

Jan 19, 2016
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Jan 30, 2016