Comments (51)

May 21, 2006

are PE hours better worse or the same as banking

May 21, 2006

Hey, I know that PE hours are usually MUCH better. You can still get a tough PE shop that will be understaffed and work you hard, but rarely the type of hours an analyst at an investment bank will see. I've heard guys in PE working 50hrs a weeks, and I've heard 80hrs a week. The ones working 80hrs a week it usually only last for 1-2 weeks at a time when a deal heats up and it is still less bitch work so that makes a difference in quality of life too...

May 22, 2006

Beware - the mega-fund PE shops will work you just as hard as the i-bankers

Jul 7, 2016

Thanks for sharing!!!!

Johan - Investor @ https://moneybanker.com/

Jul 2, 2006

I was initially attracted to PE because of the opportunity to get involved in the operations of companies, work with them, turn them around, identify efficiencies, etc., but I'm finding out that you only get very limited exposure and you remain glued to your excel spreadsheets.

How have your experiences lived up to your PE expectations? Especially at the larger PE funds, the experience seems much more like i-banking (granted with more responsibility and follow-through).

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Jul 20, 2006

Basically, I feel that PE is like Investment Banking graduate school. You cut alot of the crap like last minute pitches and PIBS, but it's still mostly financial modeling and the like. You model a deal, do diligence that generally involves crunching numbers, and then get operational guys to turn-it around. It's still better than banking because the work is more interesting, but we're investors, not operators.

Jul 7, 2016

We buy companies and help them grow. Then we sell them for a profit (hopefully).

Jul 7, 2016

This usually works for me: "I work in finance."

Jul 7, 2016

"I work in finance" is usually a good go-to answer.

To explain PE, use a house as an example: "You know how some people buy houses, fix them up a little, and sell them for more? We do that, but with companies."

Should get the basic point across.

Jul 7, 2016

I would say you're a PE intern (don't say PE, say private equity). then briefly explain what it is. @"Hugh Myron" gave a great example, I'd just steal that.

I personally wouldn't say "I work in finance" if you're talking to people you care to continue talking to. reason being: tellers and insurance salesman say they work in finance...

Jul 7, 2016

Firstly... keep it modest. Arrogance is a terrible trait and one that a lot of young finance types develop -- if only due to the temporary high of breaking into a competitive field, and the enthusiasm that comes with moving up a steep learning curve. Even if you aren't truly, intrinsically arrogant, you are particularly at risk for appearing so whilst working in this industry, so act accordingly.

On that note, you don't yet "do" anything. You're an intern, which means you're not even on the totem pole. So if you're talking to your dad's buddy who is a CEO or some other high level professional, say, "I just finished an internship at a private equity firm." Maybe he is interested and asks you some questions -- which you should again endeavor to answer concisely and modestly, so as not to appear a cock.

If you're on a date with a girl/guy majoring in polisci, say, "I just finished an internship at an investment firm." If they dig in, you can explain that the firm buys whole businesses with other peoples' money in order to generate a return. Or just say it's similar to investment banking. At your age, you really want chicks to date you for your six pack... a little bit of ambition is just a bronzer.

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Jul 7, 2016

We take investor funds to buy companies, grow them, and sell them for a profit.

Jul 7, 2016

"Other people give us money and then pay us 1 - 2% pa on every dollar of that money we spend."

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Jul 7, 2016

I usually say I'm a big swinging dick who makes Gecko look like a piker. If you're not liquid to a few hundred mil you're shit.

I just say I work in finance. If someone cares and asks more I go into one of the explanations above. Depends on how much someone is interested. Most of the time people ask what you do just to have something to talk about. Kind of like talking about the weather.

Jul 7, 2016

I just say:

"I own a bunch of sweat shops in the Philippines... you should see those kids make those hats"

Jul 7, 2016
ArcherVice:

I just say:

"I own a bunch of sweat shops in the Philippines... you should see those kids make those hats"

lol.

Jul 7, 2016

Such an underrated movie

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Jul 7, 2016

for females you can always use the richard gere in pretty women explanation

Otherwise i would make sure to use the words international business, high finance (spoken fiiinance) and leverage in an aggressive manner.

Jul 7, 2016

Ask them if they know what a mutual fund is. Say - that invests in stocks right? Like stocks that you can buy in public markets? Well PE is similar but in private companies (use the local coffee shop or any small private company/ enterprise that they will know of as an example). Then say, to the person "so you owned a company, and I had a fund. People who invest in my fund are pensions, university endowments and rich people. Now your company probably isn't big enough to be on the stock market is it? It's not like Nike, Pepsi etc, right?" they will shake their heads. "Well my fund would buy your company, try to grow it and sell it to some other person, company or fund for a profit."

That usually works. Or if people are confused but interested, I draw it out on a sheet of paper. A box in the middle that represents the fund. 1 box above that with a line drawn down which represents the LP. (I saw assume the LP invests $100). Then three boxes below that respresents investee companies. I assume one write off, one investment making like 2x or cost and one home run deal. Then I show them how carry works (I also assume 2% flat management fee a year).

So the $100 becomes $90 to be invested since investment periods are 5 years long (I ignore the back end). Assume the $90 becomes $180 ie $90 bucks profit .Take 20% from that and that's carry. Investor is left with the rest. Explain that management fees pay for salaries, office space, flights, lawyers etc (just to keep it simple). After they understand it, make the $100 into a $1bn dollars and all the sudden people are like "whoa PE guys can make a LOT of money!! I'm in the wrong business"

Oversimplified, but that's what I usually do so that people can grasp the basic concepts if they are interested in doing so

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Jul 7, 2016

this is what I would tell "We find undervalued companies, buy them, make them even better and sell them for a lot more than what we bought them for". Also using the housing example as some one stated above drives the point.

Jul 7, 2016

When it is someone that you do NOT wish to go into detail with about what you do. (spouse of someone you dislike, some drunk at a bar, random airplane seat neighbor) I just say that I am a garbage man or that I drive a garbage truck, nobody really asks anything further or wishes to continue the conversation. Sometimes the way out of that question is more important to have in your back pocket.

Jul 7, 2016

If you can't explain it in simple terms then there is a strong chance that you don't have a good grasp on what it is that you actually do... If you can't explain it to a child or to your grandmother, you are either overthinking it or don't understand it yourself.

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Jul 7, 2016

How about you just say, "I work in private equity.". 99% of people will know what it is or don't give a shit. If they care to know more, they'll ask.

This question makes me wonder how many autistic people visit WSO? You're failing Life 101, so I'm amazed you can actually hold a job down, let alone one in PE.

Jul 7, 2016

For the remaining 1%, just tell them you turn lumps of shit into piles of gold.

Jul 7, 2016
DickFuld:

For the remaining 1%, just tell them you turn lumps of shit into piles of gold.

This.

Jul 7, 2016

I have always just compared it to when people buy and flip houses. Much easier than trying to explain all the components of your particular group's investment strategy.

Jul 7, 2016

The Galaxy Beam (http://www.samsung.com/global/microsite/galaxybeam...) is perfect for this. You can pre-load a simple powerpoint presentation and then use the phone's in-built projector to walk them through your job. even sticking to the "no more than 7 bullet per slide" rule, you can typically keep it to less than 20 slides.

I usually carry hard copies of the slides with my contact details on the last slide of the hard copy, but sometimes you get stuck without your brief case and just have to rely on the projector-phone.

If they have questions not covered in the slides, I suggest you give them a brief answer (30 seconds max) and ask for their contact details so you can give them more information offline. This is a great way to collect digits.

Serious answer: "I work in finance. [insert question here that lets you both talk about something interesting that doesn't involve long exposition on your part]".

You're looking for conversation, not an excuse to lecture someone about what you do.

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Jul 7, 2016
SSits:

The Galaxy Beam (http://www.samsung.com/global/microsite/galaxybeam...) is perfect for this. You can pre-load a simple powerpoint presentation and then use the phone's in-built projector to walk them through your job. even sticking to the "no more than 7 bullet per slide" rule, you can typically keep it to less than 20 slides.

I usually carry hard copies of the slides with my contact details on the last slide of the hard copy, but sometimes you get stuck without your brief case and just have to rely on the projector-phone.

If they have questions not covered in the slides, I suggest you give them a brief answer (30 seconds max) and ask for their contact details so you can give them more information offline. This is a great way to collect digits.

haha ..thanks for the laughs.

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9 LBO Modeling Tests, 10+ hours of PE Cases and 2,447+ interview insights across 203 private equity funds. The WSO Private Equity Interview Prep Course has everything you'll ever need to break into the competitive PE industry. Learn more.

Jul 30, 2006

I was just curious about how exactly PE shops ensure that they sell off their investments at a profit? Do they actually get their hands dirty on the strategic and operational management side? Or do they solely focus on financial engineering to be the source of their returns?And what about a lateral move from strategy consulting then?Would some sort of strategy experience be helpful?

Jul 30, 2006

well, there isn't such a thing as guaranteed profit, but PE is mostly about leverage (debt), multiple arbitrage (not gonna happen with current deals though), and ability to spot undervalued assets. The operational improvement thing has been talked about for years, still only a few shops really doing it... at the core, it is just very very tricky to do turnarounds, high risk with all that debt, and you don't want to antagonize management...

strat consulting background is valued by some shops, not others. Would advise you to switch and do an analyst sting at a PE shop before b-school though, afterwards it gets real difficult

Jul 7, 2016

You buy companies and then sell them for a profit

Jul 31, 2006

in some ways this can be the "loophole" route in that you can skip the two years of banking hell but still end up in PE... but if you're not at B/BCG/McK, forget it. interestingly, i think B is the best bet because they have the strongest PE consulting practice

Best Response
Jul 7, 2016

Flipping houses. Only with businesses.

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Jul 7, 2016

Private Equity is an asset class, just like real estate, stocks, bonds, baseball cards, etc. It consists of the ownership securities in privately owned companies versus public equity which is publically available on a stock exchange and anyone can buy it. Private Equity firms specialize in investing in that asset class, typically either with the own money or they invest other people's money in that asset class for them.

Jul 7, 2016

"You see a streetwalking prostitue in some poor, agrarian Eastern European country. Say, Moldova. She's got a slim body, 5'10'', but her fashion sense is way off and you know some basic facial toning/therapy could turn her from a 6 to a 10.

You fly her to a high-earning country [analagous to tax inversions to a lower corporate tax rate country], fix her up, now she's gorgeous.

Pimp her out for $5,000/night. You keep a healthy percentage. Voila, private equity."

*note- I don't condone any of the activities above, as (depending on jurisdiction) could be illegal. It's purely a thought experiment.

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Jul 30, 2006

Right, but I'm wondering about how exactly do PE guys actually exert influence in their portfolio companies on a day to day basis? do they sit on the board of directors? or do they actually have people in house who take over senior executive positions? So that once the deal is structured and you've got the signitures and the handshakes and all that hoopla, what happens next? I hear a lot about the deals, but what do PE guys actually do once the deal is consummated, is it just monitoring or do they actually play an active role in the strategic positioning and decision making?
Thanks for the comments!

Dec 20, 2013
Comment
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Aug 1, 2006
Dec 20, 2013