Breaking into Private Equity in London

rawdoge's picture
Rank: Senior Monkey | 92

Hi Guys,

I am looking to do my MBA in the fall of 2019. My top choice by far is London Business School (then Booth and Tuck). To me, all of the schools are good enough, but being in London gives me that life experience that I probably wouldn't be able to find in Chicago or New Hampshire. I was wondering how challenging it is to break into PE/HF in London with an LBS MBA. I have heard mixed things about LBS, but their list of recruiting firms is pretty strong.

I have several years of Asset Management experience and I am sitting for Level III of the CFA this June. Is it just like the United States where you need prior IB or HF/PE experience? Or are European firms/offices more flexible in that regard? Also, how flexible are transitions from doing IB post-mba and to PE/HF in London and Europe as a whole? I know in the US, it is very very tough to transition from post-mba IB, so I just wanted to know what you guys think. I don't want to enroll at LBS to pursue one of the more competitive fields just to come back to the US unemployed lol.

Thanks!

Comments (14)

Dec 27, 2018

rawdoge, bummer your thread hasn't had a response yet. Sometimes bots are smarter than humans anyways:

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If those topics were completely useless, don't blame me, blame my programmers...

Most Helpful
Dec 30, 2018

PE recruitment in Europe is much more competitive than in the US. As a matter of fact, there are less opportunities, with a similar number of bankers and consultants and a much lower number or alternatives (i.e. corporate jobs do not pay as much as in the US and the market is overall less flexible). Also, the European market is structurally less attractive for MBAs as corporates do not generally have structured programs for MBAs (e.g. JPMorgan don't even take MBAs in Europe).
On top of that, European languages are an asset that a lot of PE look for as investing in any European country requires fluency in that language to a certain degree (private company filings are generally in local language).

In terms of MBA background, all the MBAs people I know that work in London PE are from consulting (MBB). LBS placed a couple of people into BC Partners recently and they were both from McK.
There is at least one girl in VC / Family Office with Google + HBS (so no banking / consulting background) but would not make a case out of it.

I can't comment on HF, but PE from AM + LBS in Europe seems a bit stretched without previous relevant experience.

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Jan 2, 2019

Truth. also the below comment by @mtnmmnn is truth.
So much good advice. I can only say well done guys.
I have nothing to add

Jan 2, 2019

I should add - this two comments should be given out to any kids coming into an MBA.

Jan 24, 2019

Very accurate - PE recruiting is extremely competitive in London and very unstructured, even MFs only hire 1-2 people a year and some processes take up to 5 months

Jan 24, 2019

May be true that super small companies in Europe don't file in English, but I work at a fund that invests heavily in Europe (especially eastern Europe). Have seen 20+ processes in non-English speaking countries and have yet to encounter a language barrier, i.e. a deal we could not pursue due to language issues w/ management or w/ reporting.

Overall, I disagree with this post having become familiar with the Cinven's / Helios' of the world. Just a quick look at London based PE firm's associate bio's will quickly show you that they are more open minded to non-IBD background hires / IB associate hires. On the other hand, it is close to impossible to break into US PE without pre-MBA PE experience, or at the very least IB experience. OP has neither, thus I think he is being led in the wrong direction. Sure, it will be tough, but I think it is incorrect to say he has a better chance in the US. Frankly, I would say he has almost no chance in the US immediately after a non H/S/W MBA.

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Jan 2, 2019

The reality is that breaking into PE post-MBA is much more about your pre-MBA experience that the school you attend. As mentioned before, PE recruiting is very competitive and as a result, firms can afford to be extremely picky. Also note that continental Europeans tend to finish undergrad at a later age (due to combined masters and year-long internship) and European PE tend to recruit more experienced bankers (ie. third year analyst and first year associate) and as a result, less people leave to get MBAs so there's even less post-MBA recruiting compare to the US.

With regards to PE, firms are more flexible to to hire banking associates, but keep in mind that you would join PE say 2 years out of your MBA at the same level as a 24 year old in the US with no guarantee that you'll be promoted when your associate contract runs out.

I would assume you would have more luck on the HF front though. Living in London is also awesome.

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Jan 23, 2019

You're saying I would have much more luck with HF because PE is that hard or because HF post MBA is actually doable?

Jan 23, 2019

As I said earlier, buy side post MBA recruitment is really based on pre MBA experience so even though I'm sure you have acquired some really great experience doing asset management, the lack of transaction experience really makes it hard for you to be competitive relative to the market for PE firms. On the other hand, plenty of hedge funds recruit people with asset management background so without knowing the specifics of your investing experience, I assume it would be a much easier sell to HF and you'd probably have more luck on that front. Ultimately, you have to keep in mind that getting an MBA is not a great leveler, your options and what's doable or not will depend on the experience you've acquired so far and the industry is more than ever focused on specialization so it's extremely hard to get on the PE boat if you haven't jumped at the first available opportunity (ie. As an analyst / associate pre MBA).

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Jan 24, 2019

An option is to do MBA, then 1.5 years of banking and then PE. I had former colleagues who did that in North America with AM background pre-mba.

Jan 24, 2019

Please don't take this the wrong way, but fude you're going to get an MBA from LBS only to want to end up in PE? You have to have bigger ambitions than that. Is the best ROI on your MBA to end up in a shop, at a junior level, woth a bunch of random Europeans looking to do at most 2 deals a year? What is appealing about that? Is it the compensation?

If it's the compensation, then PE comp is a poor ROI on an LBS MBA. You can do much better if you really put your mind to it. Plus AM comp will be higher in the long run anyway than PE.

If it's the stability of the PE career, then I'm not sure why you're doubling down on studying business. Business is not a career for those seeking stability - it's about taking a shot at large upsides, which also means there is risk and volatility.

If it's the nature of PE work you love, you can replicate the experience by finding a small business willing to sell, then using your AM contacts to buy the company and change the management team. Essentially run your own mini PE except in this case you get to own the carry rather than the senior guys at whatever shop you otherwise would join.

The above may sound brash but it's another lens through which you can look at things.

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Jan 24, 2019

This is so misguided. You really would go as far as to say that asset management comp on average is higher than MM / UMM private equity compensation? I think you fundamentally lack familiarity with private equity. There is also nothing wrong with doing two or three deals per year. This is probably the average and keeps you very busy. Anyways, active investing is becoming extremely unattractive at large. PhD's at RenTech and AQR are generating better returns than former Dartmouth lacrosse players (shocking). The days of generating alpha through undifferentiated fundamental "deep value" research are over. On the other hand, returns are still above market on the private side. Just my two cents.

Jan 24, 2019
angrybanana:

Please don't take this the wrong way, but fude you're going to get an MBA from LBS only to want to end up in PE? You have to have bigger ambitions than that. Is the best ROI on your MBA to end up in a shop, at a junior level, woth a bunch of random Europeans looking to do at most 2 deals a year? What is appealing about that? Is it the compensation?

If it's the compensation, then PE comp is a poor ROI on an LBS MBA. You can do much better if you really put your mind to it. Plus AM comp will be higher in the long run anyway than PE.

If it's the stability of the PE career, then I'm not sure why you're doubling down on studying business. Business is not a career for those seeking stability - it's about taking a shot at large upsides, which also means there is risk and volatility.

If it's the nature of PE work you love, you can replicate the experience by finding a small business willing to sell, then using your AM contacts to buy the company and change the management team. Essentially run your own mini PE except in this case you get to own the carry rather than the senior guys at whatever shop you otherwise would join.

The above may sound brash but it's another lens through which you can look at things.

This is shocking.

1) Original poster didn't say he wants to be in PE for his / her entire life; just that he would like to break into PE after business school. That said, if you exclude entrepreneurship; PE (with HF) is probably the highest paying job you can get after MBA. Also, unless you make a c-level position into a S&P500 company, no corporate job would likely pay you as much as PE, HF or even banking in the long term

2) There are 'random European' firms / European offices which are making better / on par returns with american firm / American offices; on top of that, the original poster didn't stay where he is from so he may be an international person for which it makes no difference on a cultural perspective to be surrounded by Europeans or Americans. On top of that, as someone as already said, 2 deals per year in PE is a lot (but you probably are in banking in North America and given you do 5-8 deals per year, you think you are worth more than your peer in Europe who only does 2-3 deals per year, but works as hard as you do

3) What is appealing? Well, living in London for someone who has never lived there may sound as amazing as it can sound 'Living in New York' for you. This is personal and you cannot judge it (and I hate London and love NY but I would see his / her point)

4) We already discussed the compensation point. If you are asking wrt PE in NY vs. PE in London, of course NY pays better, but go back to point 3 given it is not just about comp when you are at the beginning of your career or in life in general

5) Can't opine on AM. Probably you include Citadel, Pershing Square Capital and Point72 into AM

6) An MBA probably is one of the best tool to get a good / decent pay job, so I don't see the downside of studying, even if it was for the sake of learning

7) How can you advise someone with no prior private investment, private company advisory, acquisitions experience to start his own fund and do acquisitions NOW (i.e. with probably 2-5 years of working experience). If he is not coming for a wealthy family, which money is he going to invest? Is he going to buy a coffee stand with the 100-200K he may have plus leverage (assuming he doesn't have a college mortgage still). Do you think that after 2-4 years in AM (which is not Private Banking), he already has contacts of wealthy people looking to give a pile of cash to someone to do something he has never done before? Do these people exist? If yes, please introduce me to them, I also have PE experience.

This is the issue with social media and internet...

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Jan 25, 2019
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