Private Equity Recruiting Walkthrough – My Experience

embeebee's picture
Rank: Gorilla | 528

I'm 6 weeks removed from receiving an offer at a UMM/MF - it was truly a thrilling experience. Now that I'm back into the swing of things at work, I thought I'd give back to the WSO community by providing a detailed walkthrough of my recruiting experience.

Quick background about myself:

I'm currently a 2nd year BA/A/AC at MBB at a mid-sized office, and graduated from a non-target college.

I've seen a few PE recruiting walkthroughs on WSO, but wanted to share my experience for three reasons:

  1. I will be sharing my story from a consultant's perspective (tried to keep this post relevant to all, however)
  2. Many walkthroughs provide a ton of insight but lack the more tactical tips /tangible pieces of information
  3. This post will be more recent than previous walkthroughs (actual dates, best HH firms, etc).

When going through the recruitment process, I was definitely not as structured as I may seem by this post. There were many times where I considered giving up, but I was able to pull everything together in the end with help from my friends/mentors, and a lot of luck. The people who say that landing a job in PE is easy are either 1) brilliant finance minds or 2) too cocky to say their success is due to luck/help from others.

I will present this walkthrough in 7 discrete steps to show my timeline of "milestones", and to make the material more digestible:

  1. Initial Research
  2. Networking Part 1
  3. Prep Part 1
  4. Headhunter meetings
  5. Prep Part 2
  6. Networking Part 2
  7. On-cycle process

Apologies in advance for the long memo, I'm happy to provide more color on any follow-up questions!

1) Initial Research - T-4 months

This section may seem unimportant, but I advise you to take the time to read it and be introspective. I find that most people in IB/consulting rush through PE/HF recruitment, and are not sure why they're even pursuing this career path. Assuming you want to stay in finance, there are a number of interesting possibilities: VC, corporate development, HF, PE, etc. I won't spend much time elaborating on the merits of other options, but I advise you to do your research and be 100% confident that PE is the right choice for you. Assuming you've selected PE, you will then have to decide what type of PE you want.

There are a few dimensions to this:

  • City: Choose a city where you can see yourself for at least a few years. Personally, I don't think it's worth moving to a new city where you know zero people for a job, but to each their own!
  • Firm size: The work will largely be the same across firms, but smaller funds with naturally have leaner deal teams (not always the case).
  • Investment style: Understand whether the firm does traditional buyouts, a combination of buyout and growth equity (like Warburg), and also understand how they source deals (Ex: associate experience at TA and Summit is more unique due to their sourcing model)
  • Prestige: Rule of thumb is that larger firms are more prestigious, but there are definitely exceptions. Look at your firm's B-School placements or read up on WSO to see how these firms rank
  • Compensation: Once again, the rule of thumb is that larger funds pay more. There's huge variance, but you're probably getting ~$250K at MM shops, $300K at UMM shops, and $350K at MF.
  • Industry Focus: Some firms have associates that are generalists (Ex: Berkshire Partners), some firms specialize (Ex: Sycamore), and the larger funds have groups for each industry (Ex: Carlyle)
  • Fit: Most people disregard this since it's hard enough to land a PE job (rightfully so). Based on my conversations, I found that most PE firms have similar cultures, but definitely take it into consideration if you have multiple offers.
  • Banker/Consultant ratio: Look at the company websites of the funds you're potentially interested in, and see their current associate class mix. Make sure you're comfortable with this ratio before talking to headhunters or interviewing with the fund.

After evaluating the long list of potential PE firms (using the aforementioned criteria), I made a list with tiers of funds I wanted. Tier 1 meant I would sign an offer on the spot and I'll invest more in learning about that firm prior to interviews (portfolio companies, investment style, unique office activities). Tier 2 meant that I would be happy with landing one of these firms, but they were lacking on one/two of the dimensions (It was usually in a city I didn't want). Tier 3 offered that I'd sign, but the company lacked the prestige or size that I was going after. Given I was relatively happy with my time at MBB, I wouldn't force myself to sign an offer at a fund I wasn't excited about. After my research, I had ~4-6 firms in each tier.

2) Networking Part 1 - T-3 months

After doing my initial research, I starting networking. I had two main goals of this phase of networking: make an initial contact at each PE firm (to help facilitate step 4), and start to learn the language they use when talking about PE (to help with step 4 and 7). To do this, I simply cold emailed associates at ~10 firms (my tier 1 and 2 firms) with the email title "MBB (my firm and hopefully their previous firm) Coffee Chat" and asked to speak about their experience in PE, why they chose their firm, and to walk me through their process. Most people that I emailed were kind enough to chat with me (70%+ hit rate), and some went out of their way to provide me with prep materials and raw opinions of their companies. I was able to pick up the lingo they used and tried to emulate this in all future calls/interviews. This phase was definitely the most fun - almost everyone I spoke with was super interesting, smart, and had a unique perspective.

3) Prep Part 1 - T-3 months

While I was doing my networking, I simultaneously started to prep for my headhunter meetings. I was probably ~60% ready for on-cycle interviews by the time I did my HH meetings and felt that this was the right amount of preparedness. I de-emphasized studying for technicals and placed emphasis on my story/behaviorals. I made sure I was crisp in showing my knowledge of PE, and knew exactly what opportunity I wanted. Make sure you know how to do a paper LBO very well, as you might get asked to do a simple one during your meeting (interview). I would also make sure you know which firms are covered by which headhunters prior to your meetings - GoBuyside is an excellent resource for this.

4) Headhunter Meetings - T-2 months

Some people on WSO will say that these meetings are a joke. However, I would not take these meetings lightly - HHs are equivalent to first round interviews. You shouldn't be deceived by the headhunters' friendliness and head nodding - they are always evaluating you. They're evaluating how you dress, your presentation skills, personality, understanding of PE, etc.

Here is a list of questions you will normally get:

  • What's your story
  • Why do you want PE
  • What type of PE do you want
  • What city are you interested in
  • Can you walk me through any projects/deals you've been on (Make sure you know details from your projects, as you will have to do a walkthrough of the overall deal, what your role on the team was, and whether it would be a good buyout opportunity)
  • Are any particular funds that are of interest to you
  • What is your rating at your current position
  • Might be asked to do a paper LBO if you are a banking candidate, so be prepared for this.

I would be laser focused when doing these HH meetings. If you say "I want any PE opportunity for any fund size in any city", you will not do well in your interviews and they will think you're not prepared. If you also say "I will only work for Advent's retail group in NYC", then they will probably tell you to screw off. I think the right amount of depth is "I have a strong preference for UMM/MF buyout shops in NY for X,Y,Z reasons".

The HH usually follows up with "are there any specific funds you had in mind?". This is when you name drop the people you've spoken with at your top funds: "I spoke with Joe Smith at TPG who's a fellow GS alum and he really sold me on their focus on X" or "I had a great coffee chat with Jane Smith at Sycamore who emphasized the company's unique retail focus, which is something I'm really interested in". Showing the HHs that you have done your research will make them feel much more comfortable passing along your resume to these firms. If one of the smaller HHs cover only 1-2 good funds (SG does BX, Crestview and not much else), you can be a little more direct with how you approach it.

In terms of rankings, this is how I perceived the number and prestige of opportunities by HH:

Tier 1:

  • CPI
  • HSP

Tier 2:

  • Amity
  • DSP
  • SG
  • Ratio

Tier 3:

  • Oxbridge
  • Bellcast
  • Gobuyside
  • SearchOne
  • Glocap

I only spoke to the Tier 1-2 HHs, as they covered all of my Tier 1/2/3 funds. CPI is definitely the king of HHs, so I would save them as your last HH meeting to ensure you are in top shape. Also, this list might vary slightly if you are a banker, so take it with a grain of salt! Also, always take these HH meetings in person. If they don't come to your city, don't do it via phone/skype. Show your commitment and fly to NY to meet them since it's much easier to show off your personality in person. They take around ~30 minutes, so you can schedule most of them in a single day if you're taking a personal day for this.

5) Prep Part 2 - T-2 months

I believe there are four main dimensions to interview prep, all being of equal importance:

First, the resources I used included: WSO prep pack, models and technicals that my colleagues sent me, Google (duh), WSO forums.

Behaviorals:

For this, I did a few google searches, used the vault guide, and WSO prep pack to compile a list of ~50 behavioral questions that a firm might ask. These questions ranged from my hobbies, to why I love investing, to reasons why I wanted to move to NY/BOS/SF, etc. People might say that this prep is pointless. For some, maybe it is. However, I'm naturally not the best speaker and would rather have my answers prepared in a structured way. I found this prep surprisingly helpful (I was skeptical at first) as many PE firms place a strong emphasis on behavioral, especially at the smaller funds.

Deal/case experience:

This is another must. You will 100% be asked about your deal experience. Being able to convey the highlights of your deals and your role on the team is critical. You should also invest time to explain why the company would/would not be a good buyout target, all relevant deal metrics, porters five forces, etc.

Technicals:

This is the same as banking prep (other than the possibility they ask you PE-related technicals), so I won't elaborate on it too much. Personally, I didn't get too many technicals during my interview process. However, don't let this be the reason why you don't get a job. Pick up the vault guide, WSO pack, etc. and make sure you know this stuff cold. I would like to mention, however, that the firms will ask you informal technicals such as "tell me about a good LBO candidate" or "what's an industry that you currently find attractive". Prepare answers to these, and know all of the numbers. It will convey that you can speak intelligently about investing and understand what PE firms do (don't say you're buying a company with huge CAPEX and NWC requirements)

Modeling:

Spend time perfecting the 3 types of modeling tests: paper LBO, 1-hour test, and 3-hour test. Make sure to ask all of your mentors and friends who have gone through the process for material - they probably have a handful of these to give you. This also depends on where you want to interview. For a MF, you should be a master at building out a big model very quickly. For a LMM/MM shop that mostly hires consultants, knowing a paper LBO should suffice.

Another thing to learn is the table of IRR vs investment period vs MOIC. Ex: If you have a 25% IRR for 5 years, you should know that's a 3x MOIC. Build out 3 separate sensitivity tables with IRR/Investment Period/MOIC as your variables, and just memorize them.

6) Networking Part 2 - T-1 month

Now that you've gotten phase 1 of networking out of the way, this phase will be much easier. You won't have to be proactive for this phase - you'll be reached out to. There are 2 types of networking in this phase: firm events and associates reaching out to you.

Firm events: These are done shortly before on-cycle kicks off, with many firms having to cancel their events since recruiting kicked off early this year (well it kicks off early every year...) Almost all firms have these events, and I went to 2-3 of these (was hard to attend most of them since I was not in NYC). These aren't too high value, but can still be a good opportunity to meet some folks at the various firms. Warburg does a breakfast, Bain Cap held it at a 3 Michelin star restaurant, etc. Some firms have huge events, while others are more intimate (and more valuable)

Associates reaching out to you: I had ~3 of these calls prior to on-cycle kicking off. If the HHs think you're a solid candidate, they'll send your resume early to certain PE firms, and then you'll have associates reach out to you asking to chat. These calls with go very similarly to the 1st bucket, but try to impress the associates by having great knowledge of their firm. For example, knowing that a firm has evergreen capital, or if a firm allows their associates to attend all investment committees will show your interest in the firm. Note that these calls don't guarantee you'll get an interview, but I would hypothesize it helps.

7) On-cycle process

No one ever knows when on-cycle will kick off. It's shitty, but everyone goes through the same thing so it's an even playing field. My best advice would be to always be alert. Talk to your friends and see if there is chatter at their banks, look on WSO, etc. This past year it kicked off during Halloween weekend, which was brutal. That being said, it started on a Sunday so at least you didn't have to miss too much work for it.

Late on Saturday night, I started getting calls from headhunters. I ended up getting ~5 interviews set up over the course of 3 days (basically, 1 interview per HH). Because I knew my firm rankings, I was ready to make a snap call while on the phone with HHs in terms of scheduling interviews. Depending on your risk tolerance, you can schedule interviews with Tier 2 firms later in the process in hopes of a Tier 1 firm wanting to meet you on Day 1. Luckily, one of my Tier 1 choices wanted to interview me early.

One of the PE associates I met compared on-cycle with the hunger games. Essentially, a bunch of interviewees show up, throughout the day they slowly get cut (When they tell you "we'll be in touch" it means you're done), and then there are a few left at the end that get offers. It was implied that if I left the firm's office at any point, I couldn't come back.

This is a fairly accurate depiction of how my day went. I showed up early on Sunday morning, did 10+ interviews, and then accepted my offer on the spot. All of my hard work finally paid off - receiving an offer was truly an amazing feeling, and I couldn't be happier with the firm that I will be joining. Now it's finally time to relax.

Hope this walkthrough was helpful, and once again apologies for the length. Didn't want this to turn into a novel, so happy to answer any additional questions if I missed anything!

Comments (17)

Dec 19, 2018

Great post, thank you.

Dec 19, 2018

Wouldn't say prestige correlates with b-school placement in the upper tiers of funds, though I get where you're going with that. Moreso whether the fund hires a lot out of bschool or has deep ties historically with a school (for example, Berkshire/THL and HBS).

For example, within the megafunds, I would say Apollo/KKR/BX are a bit more prestigious within the industry than Bain Cap, TPG or Warburg. However, the latter probably have more guaranteed placement into HBS/GSB.

    • 2
Dec 21, 2018

Completely agree.

Had to find areas to trim down my post, so used some generalizations. Thanks for adding!

Feb 19, 2019

Curious to know why you saw Bain Cap, TPG or WP might have stronger Bschool placement. Is there an intrinsic reason you're basing this on or historical placement?

.

Dec 21, 2018

Thanks for doing this.

Could you go into more detail on the on-cycle office visit?

You did 10+ interviews and received offer. Were there others that would do say 4, for example, then after the fourth would be told "We'll be in touch" (meaning they were dinged)?

Haven't heard as much about this aspect of process and found Hunger Games reference interesting.

Dec 21, 2018

Yea I'm interested in this too. Sounds like a crazy day for you, and congrats on getting through the whole thing!

Dec 21, 2018

For the majority of firms, you will start and finish your on-cycle interview on the same day. The only (rare) exception is if you start late at night and there are no senior people left at the office to interview you. In this case, you will be told to come back first thing the next morning as they won't want you interviewing elsewhere.

Interviewing during on-cycle is very odd because there isn't a ton of structure. There's structure in a sense that you'll definitely do a model, case study etc. if the firm requires one (this is likely the first round). The lack of structure comes in when you're doing your 1-1 interviews with more senior folks or technicals with the associates/VPs. Given the craziness of people coming in/out of the offices, it's impossible to have the whole PE firm speak with each candidate and organize everyone's schedule in the ~12 hours between the process kicking off and interviews starting.

For my firm, I know people who had ~10 interviews, and others who had ~20 interviews. This will depend on the day and time of your interview, and availability of the interviewers. For other firms, they only had ~4 interviews before giving out offers (I believe AEA is very short). Other friends did ~2 hours of interviewing, waited for 2 hours without any additional interviews, and then were given offers. Best way to put it: it's organized chaos.

If they think you're good, they'll make sure you stick around (I was just sitting in a conference room by myself for 5 x 10 minutes throughout the day between interviews). If 1 senior at the firm doesn't approve of you, you're likely cut and then you'll basically be walked out right away.

    • 4
Dec 21, 2018

Thanks for the great post! I have a few follow up questions.

1) Would you be able to elaborate on your "why do you like investing?" response? As someone who legitimately only picked it up about a year ago as a consultant working on CDDs I have been struggling with this one. I obviously wouldn't say this in an interview, but it's the truth. I think people who have been investing since high school have a much more compelling story than I do. Right now I just say some variation of "I have found the activity of validating an investment thesis through research to be intellectually satisfying, but as a CDD consultant I don't get full exposure to the deal, nor the ability to see it through its full lifecycle (all the way to the exit)".

2) For the "tell me about a LBO candidate" or "tell me about an attractive industry" - what were your answers based on? I think it's easy to talk about experience on companies/industries you have worked on, but I get the feeling that that's not what the interviewer is prodding on. I was recommended to build an LBO of a public company from scratch both for practice and to help respond to these questions. Just curious what your approach was.

3) I noticed you didn't specifically mention case studies as part of your prep, did you see these in interviews? If so, my expectation is that they are similar to consulting cases, but more interviewer lead and with financials thrown in so that you can ultimately answer the question "would you invest?".

All in all - I probably should go network with some more former consultants, but I appreciate your response nonetheless!

    • 2
Most Helpful
Dec 21, 2018

All great questions - answers below:

1) For me, I have been investing for a number of years so it was a little easier to convey my genuine interest. Several of my interviewers definitely followed up with the traditional "what stocks do you own" and "which is your favorite and least favorite stock" to make sure I was telling the truth. However, one interviewer asked "what specific element of investing do you like"? I explained how with investing and PE, after a 3-4 month DD for a deal, you will be one of the most knowledgeable people in the entire world on that specific company or industry. I think that's super cool. Your response is also pretty good, and many of the ex-consulting associates at PE shops that I've spoken with had similar responses. Saying you loved doing the DD for PE firms, but felt that you were lacking the end-to-end ownership and want to understand the entire investment story is very valid.

2) I was also recommend to build an LBO of a public company - I think it's great advice. I built a 1 hour version, and then did sensitivities around what are the largest drivers of IRR/MOIC for this potential investment. I think the interviewer is really trying to get a grasp of your investing knowledge, and how you think about a particular company. Saying "FB is a good buy because profits are going up" is brutal, but saying "I found an $100mm hospital uniform distributor that was trading at 5x EBITDA, had industry tailwinds, an economic moat / competitive advantage for X,Y,Z reason, ......" shows that you know your shit. Of course, have a much deeper understanding of the company and industry to back up your thesis, but I think you get the point.

3) You're right, I barely mentioned case studies. Reason is because I didn't do much case study prep. Being ~1-2 years removed from MBB recruitment (and mocking students still), I thought that I was sufficiently prepared for the cases. You're also correct in outlining how a typical PE case would go. To provide a little more color on my prep for this - I memorized a framework that I would use during case interviews. I memorized porter's 5 forces and the details within each one (ex: in power of supplier, you will want to ask # of supplies, size of suppliers, consolidation trends etc.) knew what's supposed to be included in an investment memo, all elements of company financials that I should know/ask, etc.

    • 6
Dec 25, 2018

This is solid advice. I think a lot of the interview process separates those who are good at banking from those who can think as investors. Always remember to think critically about what you are doing and why you are doing it. If you end up interviewing with some firms simply because it is a "buy side" gig with great comp then you are already going in with the wrong attitude and may not be as successful as you'd like in the recruiting process.

Dec 21, 2018

Thank you so much for doing this! Super helpful and goes in depth into parts of the process that other threads usually skate over - I really appreciate it!

Wanted to dive a bit deeper into DDs and get a feel for how you talked about your project experience. I noted a few of the points from your original post but could kind of tell you were looking to appeal to both bankers and consultants when it came to talking about the deal.
From my understanding (and please correct me if I'm wrong), DDs in consulting offer a bit of a different experience, and therefore different talking points. How did you tackle that and prove your thorough understanding of your project(s)?

For context, I'm starting at an mbb next year and wanted to start figuring out what to reflect on and keep track of as I jump on projects so I don't miss anything important. Thanks again!

Dec 21, 2018

Happy to elaborate - you're right that I was trying to remain generic in the post itself so that I can cater to both bankers and consultants.

I think PE firms take it a little easier on consultants than bankers in terms of talking about their projects/DDs/cases. That being said, you still have to do a great job at articulating your understanding of the case and your role.

If you have a general case: I recommend you spin your experience at MBB to be finance forward. For example, if you did strategy work for Lego, push to get on the work stream that does modeling / financing analysis. When you write your resume and talk through this experience, it'll be much easier to show off your business acumen compared to if you were doing a org redesign. PE folks love their numbers.

If you are actually doing a DD for a PE firm: You shouldn't have trouble talking through what you did. You'll have an ~100+ slide deck from your diligence saved - so I would spend time understanding all the drivers, merits and risks of the deal. At MBB, you also have a HUGE amount of proprietary information on your company's 'google drive' equivalent. Spend time going through these decks to have a good view on the industry that the PE target operates.

When describing the DD, always go in this order (this is what I did with HHs):
- What are the main highlights of the DD that your team worked on
- What are the main highlight you worked on (ex: if you built a model, be prepared to walk them through the model and all of the associated numbers)
- What was the result / what did you recommend to the client
- Did you think it was a good buyout target and why

Hope this helps!

    • 3
Dec 26, 2018

Thanks so much for this. I was wondering if you'd be willing to share some of the firms you put in your tier 1/2/3 buckets? had previously thought that besides Bain Cap, no MFs really took consultants. Also how does the process differ by consulting firm? A lot of ppl mention MBB as a whole, but it seems that Bain > Mck >> BCG when it comes to PE recruiting. If someone wants to do consulting out of undergrad then do PE, is it important to decide between MBB based on PR exit ops?

Dec 26, 2018

People group MBB together because most consultant-friendly funds are open to hiring from any of the three. It's similar to grouping Evercore and PJT together. That being said, Bain has the most success in PE recruitment because of the success/familiarity of their PEG group. I would guess the order is Bain >> McK > BCG in terms of volume of PE exits. If your single goal out of undergrad is to land a job in PE while pursuing consulting, I would probably choose Bain. If you aren't 100% sure that PE is for you, I would just choose the firm you'll enjoy the most.

I won't provide my exact rankings, but here is a non-exhaustive list of MM/UMM/MF that hire consultants:
- Bain Capital
- H&F
- TPG
- Warburg
- Advent
- New Mountain
- Berkshire Partners
- Onex
- Golden Gate
- Sycamore
- AEA
- Charlesbank

Once again, this list is non-exhaustive. I've seen (few) consultants land jobs at KKR, Carlyle, etc. I've also seen some consultants go to newer shops like Cove Hill and AVALT, etc.

All in all, I strongly recommend you look on LinkedIn or company websites to see how each firm hires, and manage your tiers accordingly.

    • 3
Feb 15, 2019

Hey, thanks for doing this.

I was wondering what you thought about the opportunities from P-EY/LEK? I've seen a fair amount of alumni from these at MM/some MF shops but obviously less than Bain or McKinsey. Just wondering if you had any insight on how HHs/PE firms screen resumes - does it seem like if you're not at M/B, you get cut?

Dec 26, 2018
Comment