How to Spend the Next Year in IB to Prepare for PE
Hello all - for those of us who have accepted PE offers for summer 2018, what would you recommend us do in our next year in banking to help prepare for the job? My understanding is to: 1) take every opportunity to think like an investor, 2) step up and try to take on more and more responsibility (since, to my understanding, PE associates are given significant responsibility), 3) sharpen modeling skills. It would be helpful if anyone could elaborate on these or provide some additional advice. Any and all help is much appreciated.
Start looking at firms, what type do you want to work at. Do you want to specialize or be a generalist. Who are the HH for that firm, what's the recruiting cycle like? Do you have alumni at the firm that you should contact before hand? Look into WSO PE guide.
Lol he already accepted the offer.
I'm talking PE firms. MF vs MM.
Long lunches, hitting the gym and leaving early. Try to come in after 10am as well.
Not joking. You might be able to learn on your own about 1% of what the firm will teach you in your first 6 months once you start at the new PE firm. The analysis, actual responsibilities and "investor mentality" is usually very firm specific, and the modeling skills that you think you need will be developed over time. You will be spinning your wheels trying anything crazy as the vast majority of models you end up building are not much more complex than the quick and dirty models you build - ts more about defending assumptions in this case anyway and you really only build more detailed models once you actually decide a deal could be interesting and get into diligence.
I would try to enjoy your second year as much as possible - you will improve with technical skills no matter what - its like a senior year of college. Relax.
"Investor mentality" paroting whatever my principal likes to hear
"sticky cash flows" "excellent management team" "value creation opportunities"
God, it's so true. I'll share one:
Me: [pitches outstanding opportunity at IC meeting] MD: ...good, good. But what's our edge? Why are we preferentially positioned to grow this firm? Me, to self: IT CHURNS OUT CASH AND IT'S OUTSIDE OF A PROCESS, WE DON'T NEED A GODDAMN EDGE Me, to team: Our relationships with [x, y, and z] are perfect for [clearly undifferentiated growth initiative] MD: Ah yes, yes. That is a strength of ours. (pats self on back) Me: [goes blind from overly aggressive eye-rolling]
This is great. The question becomes then, how do you figure out what investment characteristics your principal likes? Or in the case you are staffed with a different team (say at a larger fund) every time, what's the strategy to figure that out?
"high-quality, durable, simple, predictable, free cash flow generating businesses"
All fair points. I guess in terms of mentality, what would you all advise? Obviously a huge difference in how a banking analyst thinks / is conditioned to think vs. a private equity associate. Looking for some specific advice from someone who may have gone through that transition. Just trying to make my own transition easier / hit the ground running once I start. Thanks again for all the help.
If the bank you work at is a service provider to the PE shop you are joining, it's not a bad idea to develop new or maintain existing relationships with the bankers.
You won't be expected to source deals (unless you are joining a sourcing model...) in most PE shops so getting a piece of "insider knowledge" from a VP you know really well is value-add to your PE shop and it can make the difference on whether you are being kicked out after 2 years or promoted to Sr. Associate, all else equal.
Work HARD on the projects you are staffed. Take your staffer out to lunch 1 on 1 to thank him/her for supporting you but make it "known" to your staffer that you are not going to grind through a bull shit pitchbook just for the sake of pitching for a non-deal generating MD, obviously in a PC way. Or if you have a cool staffer like I did, we took him out to Circle (he likes asian chicks) and got him super stoned afterwards he promised he would never staff me and the other guy on BS projects. I did a favor for him a few times but he kept his word.
its all about politics man
I'll take heed on that one. Now thats how its done. +SB on that one
This is interesting - appreciate the tip. How do you start building a network of bankers to show you deals? Most of the senior investment professionals have strong relationships with all the top banks that show the best deals. How do you weasel your way in if it's already well established?
SB for being kind with the kind.
Lift so that you can hook up with hotter chicks in the downtime that you'll have when you're in PE.
Downtime in PE? Tell me more about this "downtime" in PE.
the MM PE firm I used to intern at was 9-6:30pm w/ no weekends.
How can IBD experience help the work in PE (Originally Posted: 09/22/2012)
I suppose the most typical path to PE is BB-MBA-PE. The BB name can surely be a signal of one's ability, but what other skills can I get there to help me do well in PE if I am lucky enough to get into one?
Thank you!!
Generally it's IB->PE (Pre-MBA Associate)->MBA-> PE (Post-MBA Associate)
Thank you for your comment. And what can I get from each step, or why is this career path so popular?
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