How to Prep Before Starting PE Gig

palpe's picture
Rank: Senior Orangutan | 427

WSO,

I will be starting as a Pre-MBA PE Associate at a North America-Focused MM Buyout Fund this summer. How can I best prepare for the job?

Some people have told me to read books (basically narratives), but how can I best prepare for the technical aspect of the business, i.e. analyzing businesses throughly, not just the financial modeling aspect? I know there are some case study prep books for management consultants that I can read.. anything else?

Much appreciated! Xoxo

Comments (15)

May 16, 2018

In the same situation and also interested

JM28

May 16, 2018

Joined PE about a year ago and can share a few things that either were helpful or I wish I would have done more of:

  • Read as much as you can about the industry to look for recent trends in the types of businesses firms are investing in (PEHUB is a great source and definitely sign up for their daily newsletter)
  • Learn about as many kinds of business models as you can (take a 10-K from companies in a few different industries and figure out how the company makes money, what its costs are, whether it's primarily debt or equity funded, what questions would you ask management, etc.)
  • If you did not get a lot of modeling experience in banking, take a 10-K and build a full 3-statement model for the company

Really you will learn how your firm approaches investing (i.e. how their Investment Committee letters are structured) on the job so don't worry too much about it.

Good luck

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May 16, 2018

@Excelling what is the quickest way to learn to model for a beginner? Do you have any recommendations for videos or podcasts?

Big bodacious goals will get us to another galaxy.

May 17, 2018

https://www.asimplemodel.com/
http://macabacus.com/learn
http://www.streetofwalls.com/
Also, shameless plug for WSO PE course, which is a huge help as well.

May 17, 2018

otherwise, I like the suggestions below about familiarizing yourself with different business models, etc. Also sounds like you know the firm you're going to - for success internally, it will be important to familiarize yourself with existing portcos and historical deals - this will a) make it seem like you give a shit and b) help you develop that spidey sense for what types of assets are a good fit for your firm.

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Most Helpful
May 17, 2018

I'm going to advocate the opposite here. You have a few months before you start. Take that time and enjoy your life. Travel, see family, friends, go into your new job with a clear mind.

First of all, the learning curve will be steep regardless of how much you prep. You will find that the models you built in banking are inadequate for your new job. You will find that the industry knowledge you thought you had is actually quite superficial. You will find that all the prep you could possibly do will be made redundant in the first few months on the job. Assuming roughly equal levels of competency, the associates who outperform are not the ones who spend every free moment prepping for a job that they won't even fully understand until they actually do it. It's the associates who keep their composure, manage their stress and understand that it's a marathon - even over two years. 1st year comp tends to be the same across the class, or very tightly bounded, and I've seen very little correlation between this type of overly ambitious prep work and long-term success. The thing that not enough people talk about is that success in PE comes more from EQ, and ability to manage stress/burnout, rather than sheer IQ or level of knowledge.

Enjoy the time off, and be ready to run when you start.

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May 21, 2018

I 100% concur with the above. Great words of advice.

Enjoy life for now while you can.

May 28, 2018

Fully agree with this. When I look back to when I had 5 months off before working full time, I'm so glad I look back on my motorcycle trip in northern Thailand, cruising angkor wat with my wife, etc. rather than sitting at a desk building a model or whatever, which is what I've been doing ever since.

Keep your mind sharp and live it up

May 28, 2018

@palpe @Excelling Mind elaborating on the specific recommended literature?

May 29, 2018

Congrats on the offer / new gig. My general advice to you would be the following:

  • Diligently track the industry your firm / group focuses on. You're a big boy now as a new associate and your manager(s) will be looking to you to be sharp on what's going on; who's capital constrained, M&A rumors, announced deals, trading multiples, who the major players are in said industry (CEO's, deal makers, portco founders with strong track records of successfully exiting, etc.). You don't want to be the guy who only knows how to model and put slides together
  • Stay in touch with your new team. If you're in the same town as your firm, think it would be smart to casually stay in touch with one or more of the deal team members you connected more strongly with and or the hiring manager who ultimately made the case for hiring you. They're busy, so obviously you don't want to annoy them, but maybe sometime over the next month or two shoot over a note asking to meet for a coffee or after work drinks. This would go a long way in starting to build strong rapport
  • If you're coming from a coverage / non sponsors / M&A group; I'd maybe carve out some spare time to dig through some buy-side models on your share drive and get familiar with different pay-out waterfalls. You'll be doing a lot of that once you get going at your new fund and when I started in PE I wasn't and it was tough learning experience on the fly
  • Don't kill yourself getting ready for the new gig. You're going to have to navigate a pretty sizable learning curve once you get to PE, no matter what you do on the front end to prepare. So enjoy your garden leave period, do some traveling, get moved into a new apartment, etc. You'll want to be a fresh as possible on day one
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May 30, 2018

Following

Aug 1, 2018

Bump @APAE could you please share your take on this whenever you get a few minutes? I take your word as gospel and would really appreciate it.

JM28

Aug 1, 2018

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Aug 1, 2018
Comment
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