Off The Beaten Path: Commercial Banking to Private Equity (The Non-Traditional Route)

Hey everyone. The ink has just barely dried on my accepted offer to join a boutique private equity firm as an analyst, but I think now is a better time than any to tell you how I made the jump to private equity from a VERY non-target background.

My Bio:

A little bit about me: I graduated from a Canadian university with a finance degree from a relatively unknown business program (I was in the third class of graduates ever), had ho-hum grades and no relevant internships. I was pretty keen on becoming an analyst at an investment bank, but with almost no alumni network and an extremely rigid hiring process, I took the advice of my dean and began targeting commercial banks as he thought it was "a good place to start".

After interviewing with a few banks, I accepted an offer to start an 18-month training program, which upon completion, would result in a promotion to the position of account manager, commercial banking which entailed managing a portfolio, prospecting for new business, and underwriting new deals for my own deals as well as for senior bankers. I've been in that role for 18 months, and have passed all three levels of the CFA program and will be eligible for the charter with another year of work experience.

What I learned:

1) Non Traditional Backgrounds.

If you're coming from a non-traditional background, you're going to have to do something exceptional to get noticed.  The truth of the matter is that for every great opportunity, there are a ton of good applicants vying for it along with you who probably fit the traditional requirements better than you do. You can either use this as an excuse and give up, or you can sack up and do something that shows an employer that you're willing to go above and beyond for you and the company you work for. For me, passing all three levels of the CFA program was huge here. Passing every level on my first attempt was icing on the cake.

2) Be honest about your weaknesses.

If you're coming from a non-traditional background, there's a good chance that your on-the-job skills aren't going to be enough to get you the job you want. Case in point, my current role requires absolutely no modeling to succeed, but the bare minimum skill for any analyst/associate role at a private equity firm is good modeling skills. To offset my weakness, I took a financial modeling course (more accurately, re-took it after going through it during my senior year) and got comfortable with all the main models. I then went a step further and started modeling companies of interest.

I've probably done close to 20 models on my own now and this really came in handy as the application process for the analyst role involved building an lbo model and writing a deal summary. Supposedly there were over 100 applicants for the role so the fact that my self-taught modelling got me through was a huge boost to my technical confidence! Also, WSO's PE interview course, it offers great insight for someone looking to break into the field from outside traditional routes and also helps you feel comfortable with tough LBO modeling tests.

3) Network.

I don't know how many times I keep reading this in success stories, but I'll reiterate this point – YOU HAVE TO NETWORK!!! It's hard enough picking a resume out of a pile of good applicants, but it's next to impossible your resume will get picked up with a non-traditional background. Pretty much the only way to get your 'out-of-the-box' resume in the shortlist is for someone at the firm to have met you and vouch for you. Honestly, this can often be the hardest part of the process; just getting yourself to the interview stage. So instead of letting this be the hard part of the process, do the hard work before. Pound the pavement, email people, go for coffee. You'd be surprised at how generous other people are with their time and how willing people can be to help you out. Just don't abuse the basic human kindness that a lot of finance professionals have.

4) Patience.

If you've done the first three and things just aren't clicking, be patient! I don't know how many times I looked at all of the things I was doing, or heard "you're doing all the right things" from someone I had gone for coffee with and thought to myself "are things ever going to change?" To be honest, I think it's probably harder to stay motivated when it seems like you're doing all the right things but you're not getting any success. But you have to persevere! As your network grows, people you've never met will start hearing about you, your network will refer you jobs, you'll hear about unposted opportunities (seriously, some firms just hate going through the formal hiring process because they think it takes too much time), etc. So keep your skills sharp, stay in touch with your existing contacts regularly, and sometimes the opportunity will come to you.

5) Power of prayer.

For me, this was the most important aspect of the process, but I wouldn't be surprised if many of you ignore this part or think it's BS. I'm a Christian, so as much as it's easy to reduce my success to things that I've done, I know for a fact that my relationship with God is the biggest explanation for getting me to where I am. Case in point: for the role that I ultimately got, I was referred by three (!!!) private equity professionals to the same position. I sent an email to the guy hiring, made sure to do some name dropping about the referral, etc. Just as I was thinking that this role wasn't going to work out, I attended a local CFA society networking event.

The night before the event, I prayed and asked God to have me meet someone at the event who would help me find a new role. At the event, I ended up running into one of my contacts I had met for coffee previously. We sat at the same table and he asked me about the position he had referred me to and I told him how it was going. Anyways, this guy mentioned that he knew the person looking to hire an analyst (who I had previously emailed) was coming to the event and got him to sit next to me for the entire evening. I ended up getting the equivalent of a first round interview just by sitting next to the guy! (and he admitted my resume didn't make it through his filtering process) Needless to say, it's impossible for me to think that what happened was just a coincidence (it certainly wasn't the first time this happened either!)

All in all, I'm beyond thrilled to be taking the next step in my career, and I hope my story helps you make a change as well!

Feel free to ask me questions in this thread or via private message.

Region

Comments (54)

 
  • Anonymous Monkey's picture
  • Anonymous Monkey
  • Rank: Chimp
Jan 8, 2015 - 2:37pm

Congratulations!!!!! This is a remarkable story. I loved reading about your willingness to pursue other opportunities -- since banking/PE didn't work out the first time, you went the CB route, dominated, and took it upon yourself to learn as much as you could; you didn't sit around moaning and trying to go down the "traditional" path. Good for you, and best of luck with PE!

 
Jan 11, 2015 - 7:14pm

I'd say my clients were 1/3 operating businesses, 1/3 real estate term debt on commercial properties, and 1/3 construction projects (residential, commercial, and industrial).

I created a few rudimentary models and implemented sensitivity analysis tables in them, but nothing approaching a 3-statement model with projections.

"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
 
Best Response
Jan 10, 2015 - 11:30am

Good story, but it was somewhat dampened for me with the god reference. God didn't get you this job, you did. So, good for you. The corollary to saying god got you the job is that god prevented others from getting the job they want. It just doesn't leave a good taste in the mouth. Congrats though.

  • 38
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Dec 29, 2015 - 12:31am

dick i agree with you bro

try try try.. and someday you will fly!
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Jan 10, 2015 - 9:15pm

Congrats, man!! Shows there's many ways to get where you're trying to go. And, prayer changes things. The elders always say "your gifts will make way for you". +1.

  • 1
 
Jan 14, 2015 - 6:21pm

Congratulations! Coming from a similar background in commercial banking this story really hit home with me. Looking forward to hearing some more of you success stories as I myself try to break into IB. Keep up the good work. Best of luck in the future.

 
Jan 25, 2015 - 8:00pm

Nice, congrats, and a few questions:

1. How different is your work day now vs before; based on the type of tasks/things you are doing, the kind of people you are talking to?
2. How involved are you with portfolio companies?
3. What sort of research resources/training opportunities are available at the new firm?
4. What's the expectation for you to start bringing in new deals?
5. How long before you can get a board seat at one of the companies?
6. Does the firm have a history of placing any of the analysts/associates into management at any of the portfolio companies? What about senior management positions?
7. How are the hours?
8. What's the comp like relative to your previous gig and how long before you are going to get some carried interest?

 
Jan 26, 2015 - 8:25am

Two thumbs up for the hustle and for not shying away from your faith. Some people reach for drugs and alcohol when struggling, others take solace in their faith. As a fellow Canadian Christian with a similar story, congratulations and thanks for sharing.

" A recession is when other people lose their job, a depression is when you lose your job. "
 
Jan 29, 2015 - 1:59pm

Congratulations on your successful jump! I'm looking into going down the path you've been from a similar background. I went to a small Canadian University, graduated with a degree in finance and am working towards the CFA charter. I'm also looking into commercial banking to break into finance. By any chance did you go to Trinity Western University? Feel free to PM me.

 
Jan 29, 2015 - 1:59pm

Congratulations on your successful jump! I'm looking into going down the path you've been from a similar background. I went to a small Canadian University, graduated with a degree in finance and am working towards the CFA charter. I'm also looking into commercial banking to break into finance. By any chance did you go to Trinity Western University? Feel free to PM me.

 
Feb 2, 2015 - 4:50pm

Hey Leveraged Tiger! You have set a remarkable example to every investment banking aspirants. Congratulations!!!
I am planning for CFA Level 1 Jun1 2015. I need some resourceful books for the preparation of the exam. Can you name some? Your help will be appreciated.

 
Feb 23, 2015 - 9:57pm

Schweser. Get the package with the QBank at minimum.

"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
 
Jan 4, 2016 - 12:31am

I've found that this path is more common than one might think, especially for niche MM PE funds that utilize select regional banks as their primary source of debt financing. There are multiple people at my fund with a commercial banking background. While someone in commercial banking may not have developed the appropriate technical skills, they are very familiar with the industry in which the fund operates and have developed extensive relationships in said industry. Also, having a former employee of [insert regional bank here] makes it easier to negotiate with the bank (esp. important in the event of default). These skills are more necessary for someone in a senior position at a fund, but I've seen junior guys make the jump, too.

 
Jan 12, 2017 - 8:28pm

Awesome. Congrats!
I'm also going to end up coming from a non-traditional background so its great to hear these success stories from non-traditionals, plus I always learn something since its more relevant to me personally then the ones from people who have come from traditional target schools and that sort of thing.

 
Apr 11, 2018 - 7:51am

A few years late to the party here, but I respect the god reference. Being agnostic myself, my feeling is that we are all "god," and therefore by reaching our greatest potential, we access higher versions of ourselves, much like Yugi taps into the "pharaoh" within in Yu-Gi-Oh!

Business Development Wealth Management
 
Apr 12, 2018 - 4:24am

I know that a lot of fellow monkeys have posted congratulations to you, so please afford me the opportunity to do the same.

Well done, the CFA designation does wonders. I though am in a quasi PE/CF world and have realised that osmosis (with regards to your modelling reference) is where the goldmine is. I am seriously considering a Masters in Finance/MBA as my next degree to pursue, mainly becoz I have future aspirations of starting a business.

Without lessening your achievement though, well done and congratulations. May God continue to bless you forever more. This is proof that this is possible and anyone who is determined to succeed can and will always have the good Lord by their side.

PE modelling is pretty interesting so I hope all that modeling has paid off. ALL THE BEST !!!!!!!

Corp. Fin. Analyst currently working two finance jobs (and a teaching gig and trying to save my music production solo career). I love avocado's. And yes Cape Town is the most beautiful place in the world. Don't believe me, come thru and find out.
 
Apr 12, 2018 - 4:25am

Commercial Banking to PE/Acquisitions? (Originally Posted: 02/12/2015)

Trying to decide on internships I am a junior at a semi target and have pros and cons for each. Ultimately want to be in acquisitions for a PERE firm but i am afraid if i go into commercial real estate banking it could be hard to exit to PE.

Anyway I am torn between an unpaid internship with no potential full time offer at a top5 pe firm (think Starwood) VS. a CRE Financial analyst program with a big bank like Wells Fargo where i would have a full time offer waiting for me and not have to recruit again senior year. Thoughts/recommendations?

 
Apr 12, 2018 - 4:26am

Do the unpaid internship. The name of the firm would most likely get you full-time interviews at other repe firms. You will stand out among your competition. Plus its a great way to network for the future (maybe you impress them and they'll strongly consider for an opening or something).

As long as it's not administrative work, i say do the unpaid internship.

 
Apr 12, 2018 - 4:29am

Unpaid PE, absolutely. Even if you don't get the full-time offer, other shops will love the association/experience

Fill the unforgiving minute with 60 seconds of run. - Kipling
 
Apr 12, 2018 - 4:30am

I'm not sure what top RE shop does unpaid internships, but if you have a shot at a Starwood, do anything to make it work. A full time offer at a retail bank doesn't mean shit if that's not what you want to do.

Commercial Real Estate Developer

 
Apr 12, 2018 - 4:32am

Commercial Banking --> PE (Originally Posted: 06/09/2012)

I'm currently a commercial banking credit officer (basically a step-up from analyst) at a BB... I've been told that PE firms are open to hiring people with commercial banking experience, and I'm considering making the attempt to switch.. my question to you guys is given my experience in commercial rather than investment banking.. which types of PE firms would my skills (evaluating debt service, collateral, etc. as opposed to equity valuations) be more relevant to? ...

 
Apr 12, 2018 - 4:33am

Look at GloCap. A lot of their jobs tend to be open to commercial bankers.

I wouldnt focus on collateral, but rather the modeling and cashflow skills you have developed. A big part of what they do is model EBITDA and cashflow for two main purposes:

1.) To apply a multiple to EBITDA to approximate an EV.

2.) To test: cash flows to avoid defaults and pay down debt; future cash deficiencies needed for CapEx; and cash to fund dividends to return capital to investors.

You can or should be able to do both of those by now. Or you should at least be able to fill in the minor gaps that you dont have exposure to yet.

Alternatively, look into hedge funds with a focus on credit/distressed/leveraged securities and bank debt. Often these guys will buy bank debt (the stuff you have been originating for 2+ years now) of companies that go into workout. This is probably much more applicable, because they use fundamental credit analysis everyday - straight PE firms generally dont. Some examples: Ares Management, Apollo Global, etc

Array

  • 1
 
Apr 12, 2018 - 4:34am

awesome.. thanks for the input!

could you (or anyone else here) provide some more examples of PE firms that are open to commercial bankers or hedge funds with a "credit" focus (preferably located in california)?

or if anyone can direct me to a source where i can obtain a list of such firms myself, that would be great too... i'm completely fresh to this.

 
Apr 12, 2018 - 4:35am

Nearly all of these funds go through headhunters. Almost none of them are large enough to justify having an internal HR group.

I would just try using google to find some names if you are curious. I dont think Ive ever seen a complete list - I just know a bunch of names from hearsay.

Glocap is definitely commercial bank friendly, though. Check out their jobs, and sign up for alerts.

Array

 
Apr 12, 2018 - 4:37am

you should aim for mezz or senior debt funds that do financing alongside with PE firms. Someone of them do equity coinvestments so you will get some good exposure. silicon valley bank comes to mind and might fit your Interests being in cali. lots of other regional banks that have that vc/pe focus. WF also has a financial sponsors coverage group within corporate banking, they are based in LA.

Your best bet is to transfer to a ib (lev finn/sponsor) group within your current company if it has one.

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