Private Equity - No IBD?

Background: I've worked the past two years since college in industry, and would love to ultimately get into a (non-megafund) private equity firm focused on that industry.

College: Texas A&M, which is non-target but the network within Texas is unbelievable.

Non-NYC, but still in a massive city.

Obviously two years as an IBD analyst is by far the most common way, but what other options are there?

MBA > PE?
MBA > Management consulting > PE?
MSF + something > PE?

Very bluntly, I don't want to work 100 hours per week for two years as an analyst. Is that truly the only way?

I understand that because it's the most common path, those would be the people you're up against, but surely industry knowledge and finance classes in the form of one of those degrees could offset that, no?

Have searched a few different ways of phrasing this and haven't found too terribly much.

Thanks in advance guys, tear me apart.

Comments (38)

 
Best Response
Jul 17, 2015 - 7:30pm

There is no path that will prevent you from going into PE. Life is all about probabilities, and IB happens to be the route that has a significantly higher probability of going into PE than anything else. You can make it to lower MM PE through any of the paths you mentioned, but the probabilities are pretty low. If you network and are able to garner the respect of a lower MM shop then you can make it happen. It'll be about building relationships and networking. This is coming from a non IB guy interested in moving to PE eventually. Through networks I've been told that if I learn the modeling its definitely a possibility. Most people on this site are going to tell you that you can't do it because the probability is low, but as long as the probability isn't 0 then someone has to do it, why not you?

 
Jul 20, 2015 - 9:26am

Ha thanks BlueWing, I like the optimism. I tend to think along the same lines of your post; I think being in a non-NYC market that is still big enough to have a big PE presence, and focusing on smaller shops will probably increase my odds.

Hopefully someone who has done it/knows people who've done it will chime in here...

 
Jul 20, 2015 - 9:42am

NotInFuh-nance:

Ha thanks BlueWing, I like the optimism. I tend to think along the same lines of your post; I think being in a non-NYC market that is still big enough to have a big PE presence, and focusing on smaller shops will probably increase my odds.

Hopefully someone who has done it/knows people who've done it will chime in here...

I don't want to sound too negative here -- more just trying to temper your optimism -- but the case in many mid-size markets is that a lot of guys who come from them but have big-city, brand-name experience end up going back home, which can make things quite competitive.

Step 1: Take a hard look at your resume and make it as "PE" as possible -- focus on any financial modelling you've done, M&A/strategic transactions, management-type stuff, etc...(I'm assuming you are in a Corp Dev or FP&A-type role...if you're not, you might want to skip straight to Step 3)

Step 2: Reach out to shops that play in the same industry as your current company and also to alumni. Do this slowly and don't necessarily focus on your first choices right away. You want to gauge the reaction you get so you can keep tweaking or overhaul your pitch and resume. In other words, don't spend all your bullets at once.

Step 3: Start applying for MBA programs.

 
Jul 20, 2015 - 9:54am

good advice here. you can also take the consulting to PE route. i've seen people work in real estate underwriting and end up at real estate focused PE firms so industry-specific shops can be helpful if you don't have a traditional background.

MBA can definitely be a "reset button" for career change too.

 
Jul 20, 2015 - 11:16am

I'd recommend against going into MBA with the intent of getting a position in PE after graduation. The likelihood of achieving this without pre-MBA PE experience is probably as low as trying to break in now, and you'd be sinking $100-200k into the program for not much benefit (plus opportunity cost). Most people that want to go into PE post-MBA that I've talked to are attempting to get into banking after graduating then making the jump to the buy side further down the line.

It all comes down to networking, and getting as skilled at the basics as possible. If you're persistent you can probably break in eventually.

 
Jul 20, 2015 - 11:36am

Khayembii:

I'd recommend against going into MBA with the intent of getting a position in PE after graduation. The likelihood of achieving this without pre-MBA PE experience is probably as low as trying to break in now, and you'd be sinking $100-200k into the program for not much benefit (plus opportunity cost). Most people that want to go into PE post-MBA that I've talked to are attempting to get into banking after graduating then making the jump to the buy side further down the line.

I did caveat that in my 2nd post. But really, depending on exactly what he's doing and where he is, going straight to PE may be highly unrealistic and getting an MBA may be the safer route even if it is potentially longer.

His options are basically shoot for PE right now or try and go consulting-->PE. If the first two start to seem unlikely he is better off going to B-school and then trying for PE from there or going IBD/consulting to PE, rather than continting to waste time networking. MBA will make the latter much easier. And then he can try tapping those contacts again.

 
Jul 20, 2015 - 11:37am

Khayembii:

I'd recommend against going into MBA with the intent of getting a position in PE after graduation.


mrb87:

Also, I should caveat that even with an MBA it will be challenging to land a PE role right away without any pre-MBA PE or investing experience.

Yeah, from what I can tell that is the second least likely route, second only to going straight out of what I am doing now and into PE.

wallstreetcatalyst:

MBA can definitely be a "reset button" for career change too.


mrb87:

Step 3: Start applying for MBA programs.

I've always planned on an MBA eventually, so I guess that's a good route anyway. Management consulting post-MBA seems more attractive, since it's something I would be happy with in the event that PE never materialized. I would assume choosing a finance focus in the MBA is almost a must?

Hope this thread helps some others in this position, since I am positive I'm not the only one and the cursory searches didn't turn up much.

Thanks for the feedback guys, I really appreciate it. Keep it coming!

 
Jul 20, 2015 - 11:54am

I would like to throw out an alternative option. Obviously your target firms are those with AUM below $250MM and the comp is not very strong, so if these are monetarily driven decisions, I would revisit why you want to get into the industry. With smaller end PE funds, I have seen a number of analysts who have come from Big 4 TAS (Transaction Advisory Services). I believe you would have improved luck than coming from industry (unless you are in CorpDev). However, working in Big 4 TAS is a somewhat rough schedule (~50-65 hours weeks), and the comp is not excellent.

I would recommend you evaluate regional investment bank and/or local MBA programs. The hours at regional investment banks can be more bearable and MBA programs are logical considering you are 2+ years out of undergrad.

If it was really easy to join the industry... none of us would have gone to investment banking in the first place.

Best of luck!

Play the long game - give back, help out, mentor - just don't ever forget where you came from. #Bootstrapped
  • 1
 
Jul 20, 2015 - 12:19pm

EightAceTres:

I would like to throw out an alternative option. Obviously your target firms are those with AUM below $250MM and the comp is not very strong, so if these are monetarily driven decisions, I would revisit why you want to get into the industry. With smaller end PE funds, I have seen a number of analysts who have come from Big 4 TAS (Transaction Advisory Services). I believe you would have improved luck than coming from industry (unless you are in CorpDev). However, working in Big 4 TAS is a somewhat rough schedule (~50-65 hours weeks), and the comp is not excellent.

I would recommend you evaluate regional investment bank and/or local MBA programs. The hours at regional investment banks can be more bearable and MBA programs are logical considering you are 2+ years out of undergrad.

If it was really easy to join the industry... none of us would have gone to investment banking in the first place.

Best of luck!


Yep - totally get that! I fully understand why IB is the logical precursor and most common barrier to entry for PE, from several angles.

I think that's a reasonable assumption (target firms) - but can you quantify not very strong? Obviously coming in from a less qualified background and learning more on-the-job than someone like a top bucket GS analyst, I don't expect the same compensation.

I've thought about regional (for me that's Simmons & Co. or TPH) banks, but again would probably be post-MBA as with the other alternatives.

TAS is an interesting angle; I hadn't thought about that route. Will have to look into the comp. there, but 50-60 hours a week isn't the end of the world. I'd expect to work that in PE anyway.

 
Jul 21, 2015 - 12:02am

NotInFuh-nance:

EightAceTres: I would like to throw out an alternative option. Obviously your target firms are those with AUM below $250MM and the comp is not very strong, so if these are monetarily driven decisions, I would revisit why you want to get into the industry. With smaller end PE funds, I have seen a number of analysts who have come from Big 4 TAS (Transaction Advisory Services). I believe you would have improved luck than coming from industry (unless you are in CorpDev). However, working in Big 4 TAS is a somewhat rough schedule (~50-65 hours weeks), and the comp is not excellent.
I would recommend you evaluate regional investment bank and/or local MBA programs. The hours at regional investment banks can be more bearable and MBA programs are logical considering you are 2+ years out of undergrad.
If it was really easy to join the industry... none of us would have gone to investment banking in the first place.
Best of luck!

Yep - totally get that! I fully understand why IB is the logical precursor and most common barrier to entry for PE, from several angles.

I think that's a reasonable assumption (target firms) - but can you quantify not very strong? Obviously coming in from a less qualified background and learning more on-the-job than someone like a top bucket GS analyst, I don't expect the same compensation.

I've thought about regional (for me that's Simmons & Co. or TPH) banks, but again would probably be post-MBA as with the other alternatives.

TAS is an interesting angle; I hadn't thought about that route. Will have to look into the comp. there, but 50-60 hours a week isn't the end of the world. I'd expect to work that in PE anyway.

Aggressively, I'm thinking ~$100k. Most investment banks would put you as a first year, so you're down to analyst comp. At firms of that size, you're probably talking ~$70-80k, which is~20% more than what I had seen ~3 years ago. It goes without saying, every firm is different...

Play the long game - give back, help out, mentor - just don't ever forget where you came from. #Bootstrapped
 
Jul 21, 2015 - 9:20pm

if you dont want to work long hours, then doesnt sound like PE is a good fit for you. at least if you want to make money and work a good firm that's making money. i work at a highly regarded upper mm firm and we have VPs and principals that consistently work until midnight a few times a week. when you have carry and that much money at stake, would you expect anything different?

 
Jul 22, 2015 - 8:05am

ledger123:

if you dont want to work long hours, then doesnt sound like PE is a good fit for you. at least if you want to make money and work a good firm that's making money. i work at a highly regarded upper mm firm and we have VPs and principals that consistently work until midnight a few times a week. when you have carry and that much money at stake, would you expect anything different?


Isn't the lure of fewer hours than banking one of the main draws of PE?

Never said I wanted to work no more than 40 hours per week, just not the standard 80-100 of banking. Totally willing to put in a good amount of time.

 
Jul 22, 2015 - 10:40am

NotInFuh-nance:

ledger123: if you dont want to work long hours, then doesnt sound like PE is a good fit for you. at least if you want to make money and work a good firm that's making money. i work at a highly regarded upper mm firm and we have VPs and principals that consistently work until midnight a few times a week. when you have carry and that much money at stake, would you expect anything different?

Isn't the lure of fewer hours than banking one of the main draws of PE?

Never said I wanted to work no more than 40 hours per week, just not the standard 80-100 of banking. Totally willing to put in a good amount of time.

I'd say that PE hours and culture are much more firm-dependent, whereas for banking, aside from smaller boutiques (which can always be the exception), is generally industry standard. In other words, whereas it's fairly common at the vast majority of banks to be working long hours, in PE it entirely depends on the firm. Some firms are set up where the hours are extremely grueling and comparable to banker hours, whereas others are much more laid back. I'd say that in general PE has much better hours, with the exception being an active deal where you'll be working long hours to get it done.

 
Jul 22, 2015 - 11:23am

true, pe hours and culture are very firm-dependent. let's just say if you're working 50 hours as an associate, you're probably at a smaller firm that isn't growing that fast. big assumption, but probably not that too off. i consider the firm i'm at to have a very good culture. but associates still work 80 hours a week because we have incredible dealflow and are growing fast and putting equity to work. all my other friends at other successful firms also work this much.

what im saying is this: dont get into PE, if you want to have a chill life. in general, while the hours are less than banking, overall it is MUCH more stressful. im sure there are a lot of threads on here that go into why, but it so much more granular and draining than banking.

 
Jul 22, 2015 - 8:02pm

ledger123:

true, pe hours and culture are very firm-dependent. let's just say if you're working 50 hours as an associate, you're probably at a smaller firm that isn't growing that fast. big assumption, but probably not that too off. i consider the firm i'm at to have a very good culture. but associates still work 80 hours a week because we have incredible dealflow and are growing fast and putting equity to work. all my other friends at other successful firms also work this much.

what im saying is this: dont get into PE, if you want to have a chill life. in general, while the hours are less than banking, overall it is MUCH more stressful. im sure there are a lot of threads on here that go into why, but it so much more granular and draining than banking.


Honestly, with my background I would be thrilled to work at one of the aforementioned smaller firms that isn't growing as fast. At least I would be in the game.

Did you get to your current firm out of IBD, Ledger?

 
Jul 22, 2015 - 8:45pm

ledger123:

true, pe hours and culture are very firm-dependent. let's just say if you're working 50 hours as an associate, you're probably at a smaller firm that isn't growing that fast. big assumption, but probably not that too off. i consider the firm i'm at to have a very good culture. but associates still work 80 hours a week because we have incredible dealflow and are growing fast and putting equity to work. all my other friends at other successful firms also work this much.

what im saying is this: dont get into PE, if you want to have a chill life. in general, while the hours are less than banking, overall it is MUCH more stressful. im sure there are a lot of threads on here that go into why, but it so much more granular and draining than banking.

This isn't true. Just because you're working longer hours doesn't mean you're more "successful" at all. Putting time and resources into reviewing 100 potential targets doesn't mean in any way that one is a better investor than another firm who looks at 10. In fact having lower volume and higher hit rates would be indicative of better management of deal flow than taking a machine gun approach. There are plenty of people on here who have had much, much better hours than banker hours.

 
Jul 24, 2015 - 8:04pm

Khayembii:

ledger123: true, pe hours and culture are very firm-dependent. let's just say if you're working 50 hours as an associate, you're probably at a smaller firm that isn't growing that fast. big assumption, but probably not that too off. i consider the firm i'm at to have a very good culture. but associates still work 80 hours a week because we have incredible dealflow and are growing fast and putting equity to work. all my other friends at other successful firms also work this much.
what im saying is this: dont get into PE, if you want to have a chill life. in general, while the hours are less than banking, overall it is MUCH more stressful. im sure there are a lot of threads on here that go into why, but it so much more granular and draining than banking.

This isn't true. Just because you're working longer hours doesn't mean you're more "successful" at all. Putting time and resources into reviewing 100 potential targets doesn't mean in any way that one is a better investor than another firm who looks at 10. In fact having lower volume and higher hit rates would be indicative of better management of deal flow than taking a machine gun approach. There are plenty of people on here who have had much, much better hours than banker hours.

yeah, you're not really understanding my post. I'm assuming you work at a small PE shop based on your assessment of a "successful" firm. In no way way, did I mean "more time" = more success. Of course PE hours in general are better than banking hours. I did banking for 2 years. Would never go back. But AT TIMES, PE can be just as brutal. And overall, at the top tier funds, VPs and Principals are working later than you'd think (definitely more than what I thought when I first entered the industry).

For MF or upper middle market (even just mid middle market) - there is so much competition for deals. Also, it's not just the number of deals, it's the amount of work that you need to do just to close a deal.

 
Jul 24, 2015 - 12:41pm

Putting a lot more thought/research into full time MBA (Rice) for fall 2016 v. the 'professional' options I was originally looking at (Rice, UT and A&M). Would obviously do a finance focus.

Just struggling to justify the opportunity cost of ~16 months with no pay versus the working while getting my MBA.

Then I would target boutique PE (least likely) or boutique and BB IBD associate and MBB jobs for graduation.

 
Jul 26, 2015 - 3:34pm

I'm 3 years out of school and was in a similar position to you a year ago. I did it through one year of consulting. If you choose the consulting route, I'd recommend taking the CFA. I began taking the exams as soon as I transitioned to my consulting firm. It will demonstrate that you have a basic understanding of finance, and more importantly, that you have the desire/motivation to succeed. Networking, as someone mentioned, is also essential. Someone will have to refer you for the position.

Also mentioned above, unless you're in IBD or in consulting at one of the top 3 firms, your chances are generally very, very low. I'd say tough it out and try to move to an analyst role in IBD if you're set on PE.

You can PM me if you have more specific questions.

 
Jul 27, 2015 - 11:17pm

LOL to everyone who thinks PE is chill. Agree with the poster here who said VPs and Principals consistently work past midnight that happened all the time at my PE firm and associates worked quite a bit more than that (MM PE, not even Upper MM PE, and not a traditionally known sweatshop like Audax, etc). Most friends I knew in MM PE worked as much or more than I did.

Array
 
Jul 28, 2015 - 11:08am

wso_user:

LOL to everyone who thinks PE is chill. Agree with the poster here who said VPs and Principals consistently work past midnight that happened all the time at my PE firm and associates worked quite a bit more than that (MM PE, not even Upper MM PE, and not a traditionally known sweatshop like Audax, etc). Most friends I knew in MM PE worked as much or more than I did.

Nobody said it was "chill"...

 
Jul 29, 2015 - 8:42am

Khayembii:

Nobody said it was "chill"...


Yeah I don't remember anyone saying it was "chill" or easy or laid back? Might hazard a guess that he's the one who threw monkey shit at my post...

Thanks to all the helpful posts so far, very much appreciated!

 
Jul 28, 2015 - 9:13am

In Europe management consulting (McKinsey, Bain, BCG, L.E.K.) > private equity is a quite common path to PE. From what I've seen I would say 50% come from M&A (mainly BB banks and elite boutiques), 35% come from management consulting and 15% come from other backgrounds. It pretty much depends on an investment strategy of a particular PE fund.

 
Jul 29, 2015 - 8:43am

PE out of MBA with no IB experience (Originally Posted: 06/14/2009)

Will PE shops hire an associate with no IB experience if the associate is coming out of a target MBA program?

I know BBs hire MBA asscoiates without IB exp for IB positions. Not sure about PE's.

 
Jul 29, 2015 - 8:44am

About 90% of post-MBA PE positions are filled by people with prior PE experience. It's possible to break in without prior PE experience but it's hard and will probably be especially hard this year and next year due to the small number of jobs and large number of candidates. For more info check out either the Glocap guide or the WSO guide on breaking into PE. Both have very good info on this topic.

 
Jul 29, 2015 - 8:46am

The WSO guide has most of the really important info and costs less than half as much. The Glocap guide, however, is about 4 times longer and has a lot of "case studies" from various types of people who have tried to get into PE. If you are serious about PE and have the additional $50 to spare for the glocap guide I would recommend reading both.

 
Jul 29, 2015 - 8:47am

Thanks.

What about 2 years after MBA graduation, after working in IB? What if I took a BB IB role as an assoicate for a few years? Is it possible to lateral into PE after 3 years as an assoicate?

I know this happens all the time at the analyst level. Not sure about post MBA.

 
Jul 29, 2015 - 8:48am

If you already have IB experience and really want to make it into PE I would advise going for it balls to the wall while still in business school. You have a lot more time to network and do the legwork while still in school than you do while working as an IB associate. Furthermore, if you go to work in IB for a couple of years post MBA you would still be essentially applying for the same post-MBA senior associate PE positions as you can while still in school.

That said, if you have no IB or top tier consulting experience, then it's almost impossible to break into late stage (buyouts) PE immediately out of an MBA program even if you go to H/S/W. I would recommend going to an earlier stage VC role. If you spend a couple years in a BB M&A group post-MBA you might get lucky and land in PE ... but it will be difficult. I strongly recommend that you read the Glocap and WSO guides (and the Vault Career Guide to PE ... but it's less useful than the first two I just mentioned).

Good luck!

 
Jul 29, 2015 - 8:50am

Remember that your odds grow much better if you are willing to dedicate yourself full bore to networking. PE isn't rocket science. You just need to get your big break. hundreds of people with non traditional backgrounds get in every year. The most common theme for them is that they were tenacious, creative, and networked their asses off.

By the way ... your AM background might be tempting to some hedge funds. Ever consider that?

 
Jul 29, 2015 - 8:54am

spinner:
Remember that your odds grow much better if you are willing to dedicate yourself full bore to networking. PE isn't rocket science. You just need to get your big break. hundreds of people with non traditional backgrounds get in every year. The most common theme for them is that they were tenacious, creative, and networked their asses off.

By the way ... your AM background might be tempting to some hedge funds. Ever consider that?

Another thing to keep in mind RE: MBA programs. Recruiting for banking and consulting (both internships and full-time) will take place on-campus and will happen early in the school year. If you are chasing PE, you will have to forego this stuff and watch all of your friends land jobs in banking/consulting while you have nothing. PE recruiting happens at the very tail end of the school year. If you are recruiting for PE, you are basically going for broke. You're either going to land something at the end of the school year, or you are going to be sitting on nothing. It is not a path for the risk averse - you should be fairly confident in your abilities to land PE if you are chasing it.

 
Jul 29, 2015 - 8:52am

hehe yeah. stability. the PE industry cycles do tend to play out over a longer term than hedge funds because we don't do redemptions, but these cycles can be equally severe. many of my friends in PE have recently been laid off. about 30 - 40% of PE LPs are currently planning on cutting back on current and future funding commitments. a few months ago BCG put out a report predicting that the industry could shrink by as much as 40-50% during the course of this down cycle. i personally believe this prediction is too gloomy ... but i could see a 20 - 30% drop quite easily.

 
Jul 29, 2015 - 8:53am

I know of former associates and friends who did part time internships during their MBA programs in PE (may be unpaid in this market), landed at BB for summer, and were able to make the jump into PE around full time recruiting. None of them went to the mega funds or even the top MM funds. They went to growth equity, co-investment teams of FoF, 4-5 person mid cap LBO shops, basically something much much smaller than a Carlyle or KKR.

Then again, these guys got in during the 05-06 cycle.

May be a different story now.

I'm making it up as I go along.

------------ I'm making it up as I go along.
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