Q&A - Analyst at Top PE Fund (TPG, KKR, BX, OAK, Carlyle, APO)

Hi everyone! Long term user, but new account here to preserve my anonymity.

My background:

I'm currently a private equity analyst at one of the funds in the topic title. As some of our processes are slowing down, I wanted to check back into the forum and give back to the community. I still remember when I was a sophomore in college not knowing what a DCF or EV/EBITDA multiple was (I was a science major back then). This community pointed me to the right resources, and I eventually landed an internship in finance my junior year. I converted my summer experience into a FT role at a Mega-Fund out of college with some help from my network. I can say that I wouldn't be here today without this community. As a result, I'm going to be doing a Q&A to give back; I will be answering periodically until work starts to pick up again. **I've also been working on a book/manuscript for a couple of my friends who wanted to learn about finance, but don't have any knowledge of the area. My hope for the book was to give an overview on basic accounting and valuation in a simple manner. If anyone is interested in giving me some feedback, please PM me! Also, I know that PE recruiting is largely over, but check out the WSO private equity course. It will give you more than enough information for the tests you'll be getting.

Comments (229)

 
Feb 1, 2017 - 12:41am

doppelanger:

Hahahah wish I could give you a SB for this. V good.

(For students/prospective IBers, in case you guys don't know, toilets at IBs are usually filthy and splattered with 'bits')

This is true of every office building, not just IBs. The trick is to avoid floors with people that are working jobs requiring high stress (i.e. sales), long hours (i.e. lawyers), or poor diets (software engineers).

Head on down to HR, accounting, or marketing and you'll be just fine.

 
Jan 28, 2017 - 4:11pm

1) What is the difference between the valuations team and the investment teams?
2) Have you seen only strict 2 yr Banking > PE moves in your firm or have there been some nontraditional moves that you're aware of.. and if so how?
3) What kinds of projects/tasks do they have you working on?

Thanks for the AMA!

 
Jan 29, 2017 - 9:17pm

1) The valuation teams are more like the middle office jobs you see at the bulge bracket banks. They don't work on transactions and there's a lot of reporting that goes on behind the scene. That being said, they do report to the CFO of the group and have exposure to senior management. They are the one's that communicate to investor relations when an IRR number needs to be reported.

Investment teams are only working on transactions - they do some reporting, but they send all that information to the valuation teams who aggregate. They work on ICMs and pitch deals constantly. At the higher level, you see more interaction between the valuation team and investment team - not so much at the junior level.

2) For the most part, I've only seen 2 year banking and PE -> MF PE moves. In the real estate group, it's more common to see someone move from a brokerage house (Eastdil) to PE.

3) A lot of times I'm working on manipulating data for my MD so that they can talk to the banker or off market buyer. Some of the analysis is interesting, but similar to investment banking there's still process oriented tasks. Although not as pronounced in banking, there's a good amount of emphasis on aesthetics / presentation.

I'm currently working on a couple of deals (acq. and dispos) and running different analysis / scenarios for each one. I also interact regularly with the CEO, CFO of our portfolio companies. And it's always fun to talk to an MD at a Bulge Bracket too when I need additional information.

 
Jan 28, 2017 - 5:05pm

1) Know that it's a standard answer, but would really have to say the people and the culture. I shoot the shit with my associate, principal, and MD. We talk about relationships and thoughts about front page Bloomberg news. I'm not afraid to say what I think. It's a pretty open work environment
2) I want to do something more entrepreneurial so not sure if I want to stay until I'm an MD
3) I came straight to my current fund after graduating from college. As mentioned above, I was a science major so breaking in was difficult. I got my foot in the door by landing a middle market investment banking summer internship my sophomore year. I turned that into a private equity internship the following year at a middle market firm then leveraged that into a MF FT offer.

 
Jan 28, 2017 - 5:56pm

1) I'm in New York
2) As I mentioned before, there's a lot of processes that I don't think are efficient. Viewing the exact same data and output different ways (just for aesthetics), spending time on things that don't matter (Powerpoint formatting). Some of the transactional stuff is pushed behind things that are going to be seen by top management - when they spend little to no time on presentation materials. I made a giant slide deck for a senior level management meeting and the head of the group flipped through the pages and put it aside to discuss macro level themes in the sector.

 
Jan 28, 2017 - 7:09pm

So would you say it is better breaking into MF PE as a full time IB analyst, or converting your MM PE internship? What's your comp like?

Array
 
Jan 29, 2017 - 10:56am

Thanks for the AMA and I assume that you are currently doing RE based on your response. Is price/valuation the main differentiating factor when the various MF PEs compete for deals in an auction?

In addition, may I know if you could share how much exposure to the operational side of things do analysts have in your fund. Lastly, is there a difference in career progression for people like you who join out of undergrad vs those who did IBD for 2 years.

Thanks and gave SB+

 
Jan 29, 2017 - 1:00pm

I would say that's the main factor, but there's also ease of execution and certainty of closing. We've won some transactions where we aren't the highest bidder, but because of our reputation for closing we are awarded the deal at a cheaper price.

I'm not involved that much in running the portfolio companies, but I do get a lot of exposure to them. The CFO knows me on a first name basis and I've had dinner with senior management. That being said, I work directly with the analysts at the portfolio company. If I see something that we can do better or more efficiently, I bring it directly to the analysts.

I'm also the first to read through smaller decisions that the portfolio company has to get MD approval from. For example, we want to increase our widgets output to x; capex is y. I run the numbers then give a recommendation to my MD - we discuss afterwards.

In terms of career progression, a lot of us go to business school after our analyst stint or go to a smaller PE shop. It's extremely competitive to climb the corporate ladder at a MF. Staying 10+ years doesn't guarantee MD status.

 
Jun 30, 2017 - 3:23pm

Hey follow up question: You said its difficult to climb the corporate ladder, why do you think that is? I hear in banking you are pretty much guaranteed at least VP if you are decently competent.

Also, when you do your 2 year stint in MF PE after 2 years in banking, is it common for people to get a return offer upon completion of business school?

 
Jan 29, 2017 - 7:28pm

I would say comparable to investment banking, but a little bit better. I'm on call on the weekends and am expected to push out product if asked to do so.

Typical hours are 9am - 12am on the weekdays. On the weekends, I'm expected to work, but can do so from home if the team isn't there.

There's also less last minute requests compared to investment banking (so I hear), so I can plan things ahead of time and expect to attend.

 
Jan 30, 2017 - 12:14am

Within the firm, there's a lot of politics involved in staffing so it's difficult to move across industries. You have to be a high performer and people have to like working with you. It's difficult when you're an analyst since you're the lowest on the totem pole. I think it's easier to move across industries to another mega fund, but not sure how competitive you would look if you're in industrials and looking to move to a Silverlake.

 
Jan 31, 2017 - 1:15am

I don't think I'm going to business school. I want to do something more entrepreneurial when my time here is up.

If I had $100mm, I would invest 20% in my fund's opportunistic fund haha. Honestly, I feel like it's pretty toppy right now and would be hesitant to invest a large sum given the political environment and the market baking a lot of economic growth in already.

 
Jan 31, 2017 - 1:18am

Agreed. I'm not targeting the people of this forum though. My friends found it difficult to find information online (maybe they were lazy) and wanted to know what people in finance did at a very basic level. I'm no Rosenbaum - that book is definitely the primer for investment banking, but it's too comprehensive for your Average Joe.

 
Jan 31, 2017 - 1:39am

All of the above besides starting from scratch. An MBA might help, but I would network aggressively and know how to model on your own. It might be beneficial to you (also financially) if you do a deep dive on a publicly traded company and model a take private transaction. You might even discover that they're a potential target and load up on the stock!

It's going to an uphill battle unfortunately.

 
Jan 31, 2017 - 2:09am

I'll figure out how to network as much as possible within my geography. I'm intersted in an MBA for potentially moving upstream in management consulting into strategy; however will focus on building my financial modelling skills in the interim.

Do you recommend undertaking courses by which I will be accredited? e.g. coursera

 
Jan 31, 2017 - 2:03am

Graduated from an Ivy League. Did science internships throughout freshmen and sophomore year and landed a finance internship sophomore year summer through self-teaching. I didn't know a single thing about finance then, but I took an economics class and started reading about the markets. This is where my interest in finance began. My overall GPA isn't that great. Lots of IB analysts have better GPAs than me.

There's such a huge emphasis on culture at the MFs since they could have anyone they want. You could slip on a technical, but if everyone likes you, then it's fine.

 
Jan 30, 2017 - 1:21pm

I'm assuming your IB analyst peers have already securred associate positions and thus your firm has the associate class set up for summer 2018. Was always curious what you top candidates that are already at a PE MF as an analyst do during the crazy hectic PE recruiting season. Do you just not participate and not really interact with head hunters and attend other interviews and reception dinners? Are you this basically all in or die on getting an associate return offer from your current fund. Has your firm specified to you that you have a job as an associate there for summer 2018? Thanks

We're not lawyers. We're investment bankers. We didn't go to Harvard. We Went to Wharton!
 
Jan 31, 2017 - 1:31am

I've been ignoring the headhunting emails - I actually didn't get many recruiting emails this cycle. From what I can see, all the analysts on our floor don't participate in recruiting.

No, we get notified in the spring if we've made associate or not. I personally am ambivalent. Grass is always greener on the other side. I think I want to do something more entrepreneurial after my time here is up and join a smaller fund (~1bn AUM?). It's very hard to climb the corporate ladder here and even 10+ years of experiences doesn't guarantee a position as a MD.

You could also be in associate purgatory... (e.g. ~ 6 years as an associate).

 
Jan 31, 2017 - 1:17pm

Gotcha.. Sounds like you were a very competitive candidate coming out of college. Wouldn't have been better for you to gone to a top BB/EB, and gotten the associate offer earlier this month through recruiting. At your current place, if you're not doing too well, you may not get an offer. In BB/EB, all they see is a hypothetical "Harvard grad, 3.9 GPA, Goldman IB, Closed Deal" and then you get an offer. Seems like the 'risk adjusted returns' of started at a PE MF analyst doesn't outweigh those of going the traditional route. There's a previous post discussing this.

We're not lawyers. We're investment bankers. We didn't go to Harvard. We Went to Wharton!
 
Jan 30, 2017 - 4:19pm
  1. commando, boxers or briefs?
  2. condoms or pull out?
  3. boobs or ass?
  4. tequila or bourbon?
  5. do your higher ups express any concern with "too much money chasing too few deals?"
 
Feb 3, 2017 - 10:21pm

I don't see anyone during the weekdays... actually. Not even my roommates. I usually do my socializing on the weekends past 7~ pm. I love the people I work with and that keeps me going. Not going to make it sound better than it is, but it's actually fun to work here since we shoot the shit all the time on our floor.

 
Feb 3, 2017 - 12:52pm

Thanks for the AMA - really appreciate the insights here! I apologize if some of my questions seem like repeat that others have asked.

  1. In terms of direct college -> MF (or even a decent PE firm), must one have a prior top PE internship? I will be doing a BB summer internship and want to know if it's at all possible to connect with alumni and network to a MF (not top ones, but maybe one like Warburg, Audax level) to line up the FT?

1.5. Any tips for networking and how to differentiate yourself versus all the other 1st/2nd IB analysts?

  1. If the above is possible, what prep would you recommend aside from practicing LBO models, MOIC, and possibly case studies?

  2. What are your thoughts on doing BB for two years -> MF versus FT at a lesser known fund? Would the technical/transactional experience be better for one versus the other? Or might some treat analysts worse than how IB monkeys are treated?

 
Feb 3, 2017 - 10:33pm

1) No need. If you're at a top bank and network you might be able to get an interview. I know that our fund and some of the other MF have somewhat regular analyst recruiting every year
1.5) Just practice. Network whenever and wherever. You'll get better and connecting with people. I've always found my strongest connections to be when you're shooting the shit with someone
2) That's enough prep. Practice some mental math; quick division
3) It depends on your end goal. As I mentioned before, I don't think I want to be a MD eventually at a MF. There's too much time invested and a lot of efficiencies still. Not a lot of autonomy at the MD level - there's SMDs who just dictate the strategy the firm is going

I think you'd get better transaction at a BB if the lesser known fund doesn't have a system in place

 
Feb 3, 2017 - 1:03pm

Hi,

Think it's great that you're sharing your knowledge.
Any advice on the best path into PE and what role do you think is the most rewarding within your firm?
As an outsider I can only understand so much about PE, is there any other advice you can provide on the life/culture?

 
Feb 3, 2017 - 1:04pm

I am at Widener University in Chester, PA. Not a target school. What is the least competitive part of IB to get into? The Art of War says to attack where your enemy is weak not strong. I want to avoid the steepest uphill battle if I can. Thanks for your time.

 
Feb 3, 2017 - 2:27pm

Sorry if this may seem like a stupid question, but as I go through financial literature I find inconsistencies when it comes to formulas, ratios etc. For example. one source says that you should use average equity, whereas the other says you should use the beginning equity in a certain ratio. Did the firm give you instructions on which to use, or do you simply use whichever you find better when working?

 
Feb 3, 2017 - 3:57pm

I encounter this all the time. When this happens and if your MD/VP hasn't already told you about which method they prefer, think critically about the formula in question and why both ways could possibly be 'correct'. If you truly understand corporate finance and modeling, you should be able to think about the purpose of the formula in the context of your own analysis, and determine which method makes more sense. As long as you can articulate a reason for doing it one way versus the other, you will be OK. If people disagree, they will just tell you to do it a different way and move on.

Just don't get too cute. Some formulas are pretty standard and shouldn't be fucked with. Also, never trust anything on investopedia - I've found glaring mistakes in several of their articles.

 
Feb 3, 2017 - 3:59pm

NuckFuts:

I encounter this all the time. When this happens and if your MD/VP hasn't already told you about which method they prefer, think critically about the formula in question and why both ways could possibly be 'correct'. If you truly understand corporate finance and modeling, you should be able to think about the purpose of the formula in the context of your own analysis, and determine which method makes more sense. As long as you can articulate a reason for doing it one way versus the other, you will be OK. If people disagree, they will just tell you to do it a different way and move on.

Just don't get too cute. Some formulas are pretty standard and shouldn't be fucked with. Also, never trust anything on investopedia - I've found glaring mistakes in several of their articles.

Thanks! I know about Investopedia, I've noticed it as well

 
Feb 3, 2017 - 6:54pm

Thank you very much for doing this.

1) How can an equity analyst break into PE?
I have been working as an equity analyst for 4 years, 3 years in real estate and 1 years in machinery sector. Experience with several IPO has raised my interests in primary market.

However, Equity analyst > PE seems to be an unusual route compared with IB analyst > PE.
What skills or experience should I obtain? Equity > smaller PE fund > big PE fund?

2) Real estate PE vs other PE
It seems that real estate PE and other PE (PE investing other industries) are considered different and clearly divided.
Is it possible to do both at a PE firm?
Since I have experience in both real estate and machinery sector, I wish to utilize both if possible.

 
Feb 3, 2017 - 10:38pm

1) Sorry - no idea about this...but if you can land yourself at a smaller fund (around $500mm+) that might be a good place to start in the PE world
2) They're two different groups and you can usually switch between corporate PE to real estate PE, but not necessarily the other way around. Corporate PE is more complicated. That being said, a take private of a real estate company is like "regular PE"

 
Feb 3, 2017 - 8:13pm

I'm currently interning at a PE firm, mainly originating deals and trying to increase deal flow. It has the potential to turn into a full time postion. Would you recommend staying here if possible since it's an in into private equity or becoming an IB analyst after I graduate? Also, any tips for generating more deal flow? Any help would be much appreciated, thanks!

 
Feb 3, 2017 - 11:03pm

Wanna ask how you build on your network to get a job? I.e. It takes long before ppl starting to trust you and refer u, right? Is it alum group or other community?

2nd thing, what are the resources U recommend to learn valuation and modeling as in tge survival skills for PE analyst?

3rd ,i was taking the so called "grad program" & end up getting placed in some wt not RM role, whIch feels like getting on the wrong track 3 yrs down the road, wt are the good ways to get back on AM/PE side of the story if u hv frds wif similar expwrince tho?

 
Feb 19, 2017 - 1:19am

If it's recruiting season and you demonstrate that you're smart and won't mess up the interview, I would refer you. Be prepared during informational interviews. If I ask you what a EV/EBITDA multiple is and you can't even build up to that then I'm wasting my time and so are you.

You can learn valuation / modeling things from Google tbh. Just look around for models. Buy Finance books. Take a look at the Rosenbaum book or WSO resources

 
Feb 5, 2017 - 1:17pm

Thanks for doing this! A few questions:

1) Why are PE programs 2-years and out?
2) Generally speaking, aside from the standard valuation techniques, what types of analyses are you doing?

Good luck on our search for something entrepreneurial!

 
Feb 5, 2017 - 11:17pm

1) They aren't at my firm. There's a chance to be an associate
2) Capex / incremental EBITDA analysis based on inputs from portfolio company, projected distributions analyses. It's similar to IRR, but it projects different scenarios of an exit (sell segment one at this time, sell the others at this time) and then find out how much our LPs are going to get this year

 
Feb 7, 2017 - 4:13pm

Another question in transitioning. Do you see any Risk persons moving to PE and what path?
I have background in Risk Analyst @ BB, ungrad @ Ivy. How do I start my network to move there? Understand that LBO, DCF are the basic talents. As a 1st year analyst, I don't mind doing analyst again. Should I wait to try at @associate level though?

 
Feb 8, 2017 - 11:02pm

Hey, not sure if you still check this, I've heard that the usual path to one of the firms you mentioned is 99 times out of 100 via IB; do non-IB'ers have a chance? (I guess a better question is what are the usual fields analysts are hired out of when transitioning to such a PE firm?). If it is IB, is there typically a preference if its BB or boutique?

 
Feb 21, 2017 - 4:55pm

1.) What kind of traits are MFs generally looking at to decide who gets promoted
from analyst to associate?
2.) Does it help to specialise in specific industries in the long run?
3.) Do MFs pay for your MBA if they want you to
continue post MBA as an associate?

Array
 
Feb 22, 2017 - 4:55am

Quick Questions:
Would a non-target international has any chance ending up at PE straight from grad?
What top skill does PE value most like sales for IB, Market actions for trading etc.
For a jump to an associate, is a MBA imperative and not dependent on his work productivity.

Array
 
Dec 5, 2017 - 9:51am

Hi,

Thank you for taking the time to do the AMA.

Do you think it would be difficult to make a transition from high yield credit research to a job in PE? And to be more granular, i'm wondering about these 3 components:

1) Skills (I spend a good amount of time modelling (50-60%), 10-20% Meeting mgmt teams and going to conferences, and the rest on macro)

2) Culture

3) Just getting my foot in the door, given that I did not go through the classic IB route

 
Dec 5, 2017 - 1:58pm

Really appreciate you doing this. My questions are the following :

1) How did you network with MFs? Did you just send out cold-emails to people at the fund to land an internship and then asked if you had a shot at their firm for a Junior Year Internship?

2) Is having a BB sophomore year essential to landing a MF Junior Year internship?

3) Similar ot the first question, how did you make the ask to your network? I know that PE recruits using headhunters, so did you bypass that and just ask your network how its possible for you to land an Analyst Internship/FT offer?

Again, thanks so much.

 
Dec 5, 2017 - 1:59pm

Answering questions about private equity. (Originally Posted: 09/27/2008)

Excuse this useless post, but I just got an offer at R.B.C. Capital Markets, in the Private Equity division (Tech Group). I'll answer any questions anyone has about comp, lifestyle, how to get in PE from undergrad, experiences, technical, interview, brainteaser, quantitative, or networking opps, exit opportunities or anything else you can come up with. I'll answer your question as quickly as possible.

 
Dec 5, 2017 - 2:11pm

Private Equity and hedge fund jobs jobs are notoriously hard to get, even more so than Investment Banking. I'll list questions.
1.What major should I get?
Q.It really depends. The consensus is Finance, or Economics. The same as Investment Banking. That being said, the Middle Market Prviate Equity Firms and Elite Private Equity Firms will accept liberal arts, english, philosphy, etc.
2.What is the Starting Compensation?
Q.It's very hard to get a Blackstone or Bulge Bracket Private Equity gig, and it's impossible to get into KKR out undergrad. But for MM PE firms, it's $60K-$69K salary. If a Private Equity firm offers lower than $60K, reject the offer. Unless it's a boutique. In a boutique, you'd get more exposure, but it'll be hard for you to move on up to TPG, Blackstone, KKR, because they automatically recruit at BB, top PE, Fundemental HF, etc. The signing bonus should be $10-$20K. The bonus should be 80-100%+, but expect small bonuses this year. For Toronto however, it should be signifigantly higher.
3.What was my previous experience?
I graduated Magna Cum Laude fomr Princeton, with BA Economics. I had a junior internship at RBC Capital Markets, and an SA position at Lehman Bros before the collapse. This should be noted: If you want to land a PE gig out of undergrad, you must have junior, and senior interships under your belt. An ivy league school is a small advantage, but most is very overhyped. A kid at Harvard, whom is lazy, and has no experience will get trumped by the State-Schooler with two internships and a good work ethic. But Junior, and Senior internships are required, if you want to last in the recruiting process. I had a 4.0, and joined Beta Theta Psi, a volunteer organization, and a sport.

 
Dec 5, 2017 - 2:20pm

Drama:
Private Equity and hedge fund jobs jobs are notoriously hard to get, even more so than Investment Banking. I'll list questions.
1.What major should I get?
Q.It really depends. The consensus is Finance, or Economics. The same as Investment Banking. That being said, the Middle Market Prviate Equity Firms and Elite Private Equity Firms will accept liberal arts, english, philosphy, etc.
2.What is the Starting Compensation?
Q.It's very hard to get a Blackstone or Bulge Bracket Private Equity gig, and it's impossible to get into KKR out undergrad. But for MM PE firms, it's $60K-$69K salary. If a Private Equity firm offers lower than $60K, reject the offer. Unless it's a boutique. In a boutique, you'd get more exposure, but it'll be hard for you to move on up to TPG, Blackstone, KKR, because they automatically recruit at BB, top PE, Fundemental HF, etc. The signing bonus should be $10-$20K. The bonus should be 80-100%+, but expect small bonuses this year. For Toronto however, it should be signifigantly higher.
3.What was my previous experience?
I graduated Magna Cum Laude fomr Princeton, with BA Economics. I had a junior internship at RBC Capital Markets, and an SA position at Lehman Bros before the collapse. This should be noted: If you want to land a PE gig out of undergrad, you must have junior, and senior interships under your belt. An ivy league school is a small advantage, but most is very overhyped. A kid at Harvard, whom is lazy, and has no experience will get trumped by the State-Schooler with two internships and a good work ethic. But Junior, and Senior internships are required, if you want to last in the recruiting process. I had a 4.0, and joined Beta Theta Psi, a volunteer organization, and a sport.

Complete bullsh*t.

1.) Princeton grade deflates like crazy - no way someone this dumb could graduate w/ a 4.0 (he obviously went to a Canadian school which grades on a 5.0 scale so he doesn't realize how difficult it would be to obtain a 4.0)

2.) PE gigs are NOT more highly chased out of undergrad than banking. only failures such as notyourtypicalbanker have to settle for a PE gig.

3.) No 4.0 Princeton grad would settle for such a sh*tty bank such as RBC.

4.) Princeton doesn't offer a BA degree. It, along with other ivies, differentiate themselves w/ A.B. degrees. No Princeton/Harvard/etc. grad would ever say that he got a BA from Princeton.

Here's the real story:
"I went to s shtty Canadian university, such as Queens/Ivey/UofT. Wanted to break into NY, but was unsuccessful. Had to settle for a shtty Canadian bank in a sh*tty division (PE is considered part of IM in major banks, which is a huge step down from IB). Now I post about my greatness and feign helpfulness to gain appreciation and acceptance."

This clown doesn't even know the difference between "real" PE and sh*tty, straight-from-undergrad, bank-arm PE.

I vote for IP ban.

 
Dec 5, 2017 - 2:21pm

Drama:
A kid at Harvard, whom is lazy, and has no experience will get trumped by the State-Schooler with two internships and a good work ethic.

I'm sorry, did you really just use an object in a subjective manner? What, they don't teach English at Princeton?

I'm sick of these kids who pretend to be smart, yet don't even know the basics of the English language. Your intelligence is conveyed partially through the manner in which you express yourself, and it's readily obvious from one's writing whether he is actually intelligent. At least people with half a brain (most bankers) discern relatively quickly.

 
Dec 5, 2017 - 2:32pm

Private Equity Questions (Originally Posted: 07/29/2013)

Hello, I am new to this forum, and I've come here because I have lots of questions. (Way more than I can fit into a single forum post) Before I ask my questions, it's probably important I tell you a little about myself so that you understand where I'm coming from.

I went to a small liberal arts college, where I studied electronic game development for my bachelor's degree. I got a job working at Warner Brothers, and after about two years in the field as a software engineer, I came to the realization that I'd prefer a much more lucrative position, even if it isn't quite as fun. I started doing my research, and I came across several articles about how much money young private equity analysts are making. These articles made it sound like most private equity analysts were making $200,000 - $300,00 a year withing a year or two of their graduation. After reading many articles about how much they make, and what it takes to become one, I enrolled in a course at Harvard through its extension school. I intend to earn my masters in Financial Management, and Apply to a major bank, with the hope of one day becoming wealthy, likely by accepting an offer from a private equity firm.

My questions are:

What advice would you give to someone in their early 20's who is returning to college with this career path in mind?

Do Private Equity Analysts normally make $200,000 in their first year or two, or is this only something the best should come to expect?

Is becoming an analyst at a major bank the best way to become an analyst at a private equity firm?

Exactly how difficult is it to get an analyst position for a major bank? I understand these are probably tough to get, but should I aim to be the top 10% of my class, the top 5%? or is it easier than that?

After becoming an analyst at a major bank, how tough is it to get recruited by a private equity firm?

Are private equity analysts usually recruited, or do they apply?

What are the drop out rates? IE: How many people quit being an analyst for a major bank? How many people quit being a private equity analyst? Do they usually leave for better things? Do they leave due to stress, or do they simply fail to make themselves profitable?

How unrealistic are my goals? What should I expect? What do you think a headhunter's view of the extension school is? If you had to recommend a better job for someone who want to become wealthy, what would you suggest?

I have about a million more questions, but I think that's a good start. Thanks for taking the time to read. I look forward to some responses.

 
Dec 5, 2017 - 2:35pm

Doesn't seem like a troll to me so I'll bite

- Use the search function on some of these

1) Advice: Obviously an uphill battle for you given your work experience, non-target background, etc. but you would be best served by networking, reaching out to alums, and continuing to do more research on PE and other finance fields that may offer attractive compensation packages. Your best bet would probably be to get into a top 10 b-school, try to get a PE or IB internship, and then take a PE or IB job upon graduation. The problem is that this field is incredibly competitive and it is difficult to get into PE post b-school even for those people who have pre-MBA PE experience.

2) Compensation varies across firms and locations. If you are only in it for the money you will not last and probably will not even get through the interview process.

3) IB Analyst > PE > b-school > back to PE is the typical track

4) If you get into a top b-school and perform well you should have no problem at least getting a few banking interviews. Again, no guarantees given your background but (top program) b-schools offer an opportunity to rebrand and change careers.

5) Headhunters often contact IB analysts or IB analysts actively pursue through headhunters or industry contacts. The top recruiters for PE are generally Oxbridge, SG Partners, and CPI.

Definitely use the search function as this stuff has been covered and you are being lazy.

 
Dec 5, 2017 - 2:37pm

Not a troll, I swear, I'm just a complete newbie looking for some direction.

I'm not just in it for the money, but, in my mind, for someone to pursue this type of career, they need to be very interested in making money. If you aren't, then there are probably several other easier, more fun positions you could get instead. I've tried doing some research on this career path, but I figured the best way to learn was to ask questions. JunkBondSwap, thank you for taking the time to answer some of my questions.

 
Dec 5, 2017 - 2:38pm

I don't want to answer all your questions without knowing if you're a troll or not.

However, I will say this:

If you are only motivated by money then you won't make it very far. You really have to like working in this field. The "analysis" is the easy part, and while the skills one gets from working at an ibank are certainly transferable, there are tons of other things you need to do well and know in order to succeed. You really have to live and breathe your job and love what you do. If your goal is to just sit at a desk and play with excel all day and make 100k, that's never going to happen. And no, private equity analysts do not typically make 200k-300k per year. Some do, but most don't. That's more associate and VP level.

 
Dec 5, 2017 - 2:39pm

So what does it take to reach 200k a year? If that were my goal, what would I need to do? (Besides living and breathing my job.) I'm the kind of person that takes pride in their work, no matter what it is. What steps should I take to advance in private equity?

Money is not my only motivation, but I'll be the first to admit it is a big factor for me. I will not hide the fact that many of my career goals are financially motivated, but I have an interest in this career path beyond making more money.

 
Dec 5, 2017 - 2:40pm

JohnDavisMIT:

So what does it take to reach 200k a year? If that were my goal, what would I need to do? (Besides living and breathing my job.) I'm the kind of person that takes pride in their work, no matter what it is. What steps should I take to advance in private equity?

Money is not my only motivation, but I'll be the first to admit it is a big factor for me. I will not hide the fact that many of my career goals are financially motivated, but I have an interest in this career path beyond making more money.

Give it up man. You aren't breaking into PE.

 
Dec 5, 2017 - 2:41pm

JohnDavisMIT:

So what does it take to reach 200k a year? If that were my goal, what would I need to do? (Besides living and breathing my job.) I'm the kind of person that takes pride in their work, no matter what it is. What steps should I take to advance in private equity?

Money is not my only motivation, but I'll be the first to admit it is a big factor for me. I will not hide the fact that many of my career goals are financially motivated, but I have an interest in this career path beyond making more money.

Jesus man, I don't know. There are plenty of ways to make that kind of money without going through the extremely competitive process of breaking into private equity. People get all giddy when they read all these super high salary numbers, but all the numbers you see on this forum are generally quite inflated since a lot come from guys living in New York, LA, or Chicago. You never really hear about the rest of the shops all over the country. Even though it's still somewhat high (in both banking and PE), the average salary for an analyst is nowhere near 200-300k.

I think you should also read up on who you will be competing against for jobs in this business, as it's easily one of the most underestimated variables newbies consider. Everyone says they take pride in their work, but the type of person it takes to work in this business is not even close to your average office bro. The very same thing same goes for people working in investment banking and a lot of the other forum topics on this website. You're competing with the most competitive people in the entire job market. You know those guys who were good at everything in high school and college? The rich kids who always had good grades, were attractive, outgoing, super smart, athletic, and generally just good at everything? Those are (for the most part) the people you will be competing against. They are the kind of people who make everything a competition and are able to work 100 hours per week and still work out and go out daily. Sure, you'll get your super smart brainiac kids who work in investment banking and can hammer out excel models all day, but are they suited for PE where creativity is one of the most important traits? No way. I mean, yeah, there are plenty of average guys working in this business too, but is it common? No.

I would really just read up on the business as a whole before coming back to ask more questions. PE, iBanking, Hedge Funds, etc. are not the type of businesses you can break into within a year or two. All that being said though, I wish you luck.

 
Dec 5, 2017 - 2:44pm
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