Q&A: European PE Professional

Hi all,

First time poster on WSO - benefited alot from reading this site years ago and decided now's a good a time as ever to give back.

I'm also considering launching a blog to share my thoughts on LT professional development in PE (vs. just getting in) and am keen to hear what people would like to see (e.g. core skills needed in the LT, investing frameworks in PE, deal closing aspects to master, communication etc.)

**Background **(whilst trying to balance with anonymity):
- Target European Uni

  • Currently few years into PE, been at 2 different large cap funds (think >1bn transaction size)
    [Background before PE intentionally left out to maintain some anonymity (I have a somewhat unique profile)]

  • International background (lived and worked in > 3 different countries)

  • What got me into PE: always wanted to be an investor since high school. Joined to learn how to be one

    • What I like about the industry: control / influence over real decision-making at company level, operational insight (how a biz actually runs day-to-day), LT investment thinking like an owner
  • What I dislike: a lot of process work (i.e. non-thinking) at almost all levels, low velocity of investing compared to public markets (close 1 big deal a year is an achievement), senior people who "made it" from politics / optics vs. real skill (back at a time when PE wasn't as big a thing), other high ego professionals who fulfill every negative finance stereotype out there (making the workplace that much more unpleasant and unbearable)

Ask away!

Private Equity Interview Course

  • 2,447 questions - 203 PE funds. Crowdsourced from 750k+ members
  • 9 Detailed LBO Modeling Tests and 15+ hours of video solutions.
  • Trusted by over 1,000 aspiring private equity professionals just like you.

Comments (30)

  • Analyst 1 in PE - Other
May 29, 2020 - 1:32am

What's your advice for people like me who wants to transfer to Europe and work in a PE firm?

May 29, 2020 - 4:22am

Really depends on your existing situation (are you already in a PE firm?).

If you are and its a global firm, ask for a transfer.

If you're not already in PE, I would focus on reaching out to European headhunters and focusing your interviewing efforts on American funds with a meaningful Europe office. To name a few - KKR, BX, Advent, Bain Capital, Apollo, TPG etc.

  • 3
May 29, 2020 - 4:30am

Its important, but not quite so straightforward if you don't have "relevant" experience.

What I mean is if you're not already in IBD or Consulting, its not that easy to just "do an MBA and get into PE". Typically PE juniors already have relevant professional experiences. Rarely do I see MBAs jump into PE with a totally non-IBD and non-MBB background, unless its a really small LMM fund.

If the route you are looking for is MBA or MSc > Consulting or IBD > PE, then I would personally go for a MSc (simply because it saves a year in time and cost, without losing the benefit of pivoting).

Hope that helps

  • 3
Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
  • Analyst 2 in IB - Gen
May 29, 2020 - 4:18am

@European_PEMonkey Thanks for posting. As someone who is currently working in IB and looking to transition to European PE in the near future, are there any specific resources/materials/frameworks that you found helpful in developing an investor mindset before you entered the industry? On your point about launching a blog on professional development in PE, I'd love to see info on investing frameworks used and examples of them being applied

Most Helpful
May 29, 2020 - 5:18am

To be honest I've never found anything thats holistically prescriptive, with everything laid out in one source (hence my idea of creating content). I've scowered the internet and books looking for it, but with little luck.

The painful way I've done it is:

1) Reading Sponsor-led Buy-side / Sell-side IMs (given you're in a bank), Try and pick out elements of what people think as "positive" or "negative" for the investment case. HUGE caveats around:
- a lot of the info is not getting to the crux of the investment thesis, but usually descriptive. Skip those sections entirely
- Anything that has to do with exaggerated business plans / intentionally paint a rosey picture for the purposes of getting a good sale

2) Join as many Q&A calls with the buy-side as possible in your current job. It gives you an incredibly good flavour on what is a well balanced investment thought process (investor mindset is afterall, reliant on asking the right questions)
- it will never be served to you on a silver platter, so you really have to invest the time and attention to squeeze out the highlights of the call

3) "Case Study" style extraction: backing out the frameworks
- Biz school books tend to have this. Grab this from any MBA friends you have, there should always be one
- Consulting Case studies come close (although they lack the deep financial analysis in a real investment deal). They get you thinking about the right topics (market size & growth, competitive landscape etc. )

Short answer is that there's no easy textbook way of just absorbing everything in just a few resources - none that I've seen that goes into the actual depth anyway!

  • 6
  • Analyst 2 in IB - Gen
May 29, 2020 - 5:55am

Thanks, this is really helpful.

In your opinion, as someone who also has an international background (lived in 3 different countries, and currently based in Asia), is it feasible to recruit for PE in London from abroad? I'm currently considering either transferring internally or reaching out to HHs directly for PE roles. Do you think it would make a meaningful difference to have spent some time in IB in London before pursuing a PE role there? (building a network / working on European deals etc.)

  • Analyst 3+ in Consulting
May 29, 2020 - 9:12am

I am determined to break into European PE. My wife and I want to move to Europe long term, and she knows how much my career matters to me. Everyone has said it can't happen, but I am taking specific concrete steps to make it happen, though I'm not sure which efforts are misguided and which will be fruitful. May I please shoot you a PM to float a few of these by you? Some of my ideas would be instant anonymity-killers.

  • Analyst 3+ in IB - Cov
May 29, 2020 - 1:47pm

Hey, thanks a lot for the AMA!

1) Are there going to be spots open for people who are non-European and don't speak the local languages?
2) How is the PE process different between US and Europe? Are there any particular things you would recommend prepping for?
3) Is it possible to recruit as an Associate 1- Associate 2 in Europe,. I know this is nearly impossible in US.

Thanks so much for your help in advance

May 29, 2020 - 2:58pm

Answers to each question below:
1) Are there going to be spots open for people who are non-european and don't speak the local languages?

  • If you can't speak european languages comfortably, you are likely limited to London, maybe Switzerland / Dublin / Luxembourg as a real push. The reality is that local offices are set-up in Europe to do exactly that - local deal-making (which require local languages)

  • That being said, there's TONS of hope in London itself is a huge, huge market. Any major European or US PE fund would likely have a sizeable office here.

2) How is the PE process different between US and Europe? Are there any particular things you would recommend prepping for?

Key differences are:

  • i) no crazy "on-cycle" recruiting - the only common periods for hiring is post bonus (which in Europe is Jan / July, because most bonuses are paid Dec / June). These are for formal processes. I would say 20-30% of the time there are random hirings as well that are completely independent

  • ii) Hiring is less aggressive vs. US - you will never see an analyst 1 getting an offer for 2 years down the road. Never ever.

  • iii) Applicants are quite mature in age vs. US in my opinion. Loads of them do masters / b-school. In itself, I don't think this has any real implication for the competitiveness of the process, but just an observation

How to prep:

I could go into crazy detail on this because I personally went full pedal to the metal, but here are my "top tips" for the core elements of the process

  • Consulting Case Studies: almost every firm will dish this out at some point. Early on in the process you get really quick and dirty "consulting" ones that they literally come up with from thin air. Usually very hypothetical, like market sizing, how to turn around an unprofitable business etc.

The best way to prepare for this is honestly the same as preparing for a case interview at an MBB firm - but don't do this half-assed. You really have to go all-in to "get" what they are really trying to see (structured, logical, business problem solving). Its time-consuming so I would limit myself to 10-15 cases of different situations (but really think through the structure, business logic, and problem solving approach)

  • Modelling: be crazy fast on the model so you can actually answer the Q&A part of the test, or just check your work more often. Modelling in itself won't impress them (I mean its a 2 hour test - how crazy can you get?) - getting the answers crisp and intelligent will (they usually ask some qualitative questions at the end - show off your investor mindset here)

  • Investing Case Study: the difference between this and the commercial/consulting case study is that this gives you a ton of data (usually in a CIM or Management Presentation deck) and expect you to answer the question "is this a good investment"?

There are tons of threads on this site but my biggest advice is to power through all the available resources online and COME UP WITH A FRAMEWORK you will consistently use. Everything in investing needs a framework - you don't just mystically come up with topics that are "positives" and "negatives". For example, evaluating a software company will have the same core elements (Revenue Retention Bridge, Customer Cohort Analysis, Stickiness of users....etc.). You have to find a way to grab those core elements for the investment at hand.

I personally had a framework for every major industry (TMT, Industrials, Consumer & Retail, Healthcare, Business Services)

3) Is it possible to recruit as an Associate 1- Associate 2 in Europe,. I know this is nearly impossible in US.

  • Of course! Europe is more accepting of mature profiles as mentioned above. I've seen Associate 1s here at tier 1 shops at the age of 35....and the average age should be late 20s, Unless your title is VP and above, I think you have some real flexibility here in Europe
  • 3
May 31, 2020 - 7:50pm

Thank you so much, I really appreciate your help.

Would you mind perhaps linking me some of the online resources you find most helpful for the investing-type case studies? I have read the book competition demystified but nothing much else for developing these frameworks

Array

  • Analyst 1 in IB - Cov
May 30, 2020 - 2:36pm

Hi European_PEMonkey,

Thanks a lot for doing this! A few questions below if I may please:

  • Are proper consulting case interviews common for every firm or mostly known to be "consulting heavy" / operationally focused funds? (e.g. someone like Bain)

  • How common are difficult mental maths/calculation questions and brainteasers during interviews?

  • What is your view on continental Europeans with the language skills working in London rather than for them to be pushed to the respective countries? (e.g. why wouldn't a fund with an office in France not want the French speaker there given that most larger funds have offices in the large European markets)

  • Any thoughts on approaching funds directly rather than going through headhunters?

  • What's your fund's view on sustainability / ESG in the investment processes (is it really important?)

Many thanks!

May 31, 2020 - 1:11pm

Hi,

  • Case studies: these are very common, when I say "consulting" i mean some variant of it. It might not be like a full blown case interview MCK style, but they might take just 1-2 types of cases to test you. Even if they aren't operationally focused, people still want to know if you can evaluate a business

  • Mental maths is really interviewer dependent. No firm goes out saying "oh we need to include mental maths because if they cant square root 100 in their head, they are a no go". I'm sure 3-4/10 interviewers will toss it in just to see if you are arbitrarily "smart"

  • There's tons of continental Europeans in London. Keep in mind that every firms hires PER OFFICE, they don't hire for the entire global workforce and go "this french guy goes to Paris, this German guy goes to Frankfurt....". The point is London is inherently an international workforce. People come here to do international deals and so if the applicant pool has >50% non-English...that's kind of how the actual workforce would turn out?

  • Headhunters usually hold the key, but no harm trying to network with people in the firm. I would say i) at the end, headhunters will be pissed if you cut them, and they will 100% find out, ii) funds themselves might be obligated to pay the headhunters a fixed success fee, even if you approach them yourselves. There are usually agreements in place and thus the fund might still ask you to do it through the headhunter

  • ESG is a real trend in the industry but don't be fooled to think every buyout fund now makes it the central core focus of their 24 hour day. A good investment is a good investment...and they hope it fits some sort of ESG criteria so it doesn't get shot down in investment committee. This is just the plain reality of it. Not to say its not important...but if you ran a PE firm as a managing partner, you will always, regardless of your personal beliefs, tell LPs that you "love ESG and everything has an ESG framework". In practice...a good deal is a good deal... If everyone was so ESG - why not exclusively only invest in ESG companies? (which nobody does; they just set up an ESG fund and say they do their part)

  • 4
  • Analyst 1 in IB - Cov
Jun 28, 2020 - 5:54am

Many thanks, very useful insights! A few questions if I may

  • What's your view on changes to the working style post covid? (any changes to travel, work from home etc.?)

  • Any good news sources you would recommend specifically for European PE? (Deals, fundraising etc.)

  • Do you know any good resources to learn more about typically European LBO structures (relating to Loan notes, MIP, tax treatments, pensions etc.) Do these feature in interviews?

Many thanks!

Jun 28, 2020 - 8:23am
  • hate to give a hard verdict on this because behavioural shifts are very hard to predict. But directionally, I do think that people who've been against using technology for this type of flexible working from home setups are now aware and open that it totally works. if I had to guess, I think the commercial real estate market (office space is one of the highest overheads) will see some structural demand reduction, albeit it takes time for the leases renewing to reflect this. I also think people may genuinely shift their attitudes towards business travelling - flying for half a day for a 2 hour introductory meeting never really made sense to most people but it was the norm. perhaps now, if I'm thinking wishfully, people will only use business travel for important key milestone meetings vs any random meeting

  • I recommend PE insights / PE NEWs and mergermarket. I think mergermarket goes a bit deeper into the deal overview but is a paid service. Pitchbook does a decent job too and I think you can get a trial

  • I don't know specific deep dive resources, but I would say the law firms K&E, Simpson Thatcher and Weil have some white papers online that gives you bits and bobs for context.

I would say the traditional structure in Europe is to use 'shareholder loan notes' as equity, mainly because it's tax deductible to an extent. debt structures aren't very novel and it shouldn't differ too much in terms of what is possible in the US. hope this is helpful and apologies if it's not the deep insight you were hoping for! I always find legal stuff hardest to find good resources for learning. even associates at law firms take years to actually get the commercial big picture and framing that we PE folks are trying to achieve

  • 4
  • Analyst 1 in IB - Cov
Jun 28, 2020 - 12:30pm

Many Thanks, much appreciated.

As someone who just reached 2 years of experience as an Analyst would you recommend trying to get interviews now? My sense would be to wait another 6-12 months given the current macro situation and the flexibility of funds with regards to experience levels

Jun 28, 2020 - 1:06pm

no problem.

I see your POV but think differently. I wouldn't be so concerned about macro situation etc. the only 3 things I'm concerned with is I) am I ready to deliver rock solid interview performance? II) are my top choices available on the market right now? III) do I fit their paper criteria like min. years / background based on what the HH in charge says, and he will put me through the process?

if all criteria is checked, there is no such thing as 'the right time'. nobody can guarantee the future state of the employment market even a year from now - so if it's out there, and you know that you're ready, carpe diem all the way. just my two cents

  • 1
  • Analyst 3+ in IB-M&A
Jul 2, 2020 - 7:10am

Thanks for this, very insightful. Couple of questions below.

  1. What funds do you think are most willing to take English only speakers?
  2. Networking - did you do any for the role you landed? I have been thinking about reaching out to a few people with similar backgrounds at funds I like, but don't want to come across as too aggressive. Conscious that a lot of the discussion on this site is focussed on the US which has quite different attitudes / expectations in this area
  3. Comp - are there any good publicly available data points on comp? It seems very opaque, which makes it hard to assess the pros / cons vs. Banking and plan out a career. Particularly interesting in the mid market funds (maybe £500m-£1bn fund size), as I'm conscious as an English only speaker these are the most likely funds to take me on
  4. What are your thoughts on the large pension funds / SWFs? They seem to be playing an increasing role from an outside perspective
Jul 2, 2020 - 8:51am

1)What funds do you think are most willing to take English only speakers?
- Funds that have several local offices are most willing to take English speakers. For instance, BX only has one main office in London and for that reason, they need a lot of european speakers given they do Europe out of a central London Hub
- on the other hand, funds like Advent with a tons of local offices actually don't mind hiring many english-speaking only folks in their London office, given their local offices fulfil the other languages. You can judge this at a high level just by scoping their website
- As an alternative, UK focused mid-market funds like 3i / Bridgepoint might also hire you

2) Networking - did you do any for the role you landed? I have been thinking about reaching out to a few people with similar backgrounds at funds I like, but don't want to come across as too aggressive. Conscious that a lot of the discussion on this site is focussed on the US which has quite different attitudes / expectations in this area
- I did not network, but I think its perfectly fine to do so
- you are right about the difference between US vs. Eur on this topic, so I would just word your outreach message more carefully. Don't sound like you expect it and definitely do not be aggresssive. Keep it short, friendly and brief is my advice

3) Comp - are there any good publicly available data points on comp? It seems very opaque, which makes it hard to assess the pros / cons vs. Banking and plan out a career. Particularly interesting in the mid market funds (maybe PS500m-PS1bn fund size), as I'm conscious as an English only speaker these are the most likely funds to take me on)
- I think you need to ask HH for this esp. if its mid-market funds. there's a lot of variance between them. For banking, its pretty standard so you can take it from any report on google literally.

4) What are your thoughts on the large pension funds / SWFs? They seem to be playing an increasing role from an outside perspective
- You're right, a lot of them are trying to have more exposure via i) Co-invest team, ii) Directs team.
- the issue here is that they can never do what "real PE" do because of the inherent conflicts of interest. You will never see a SWF do the type of value creation real PE funds do. Most of them can't even own >50% by mandate (e.g. GIC PE team can never do this)

Hope that helps

  • 2
Jul 15, 2020 - 3:47pm

First off, thank you for taking the time to do this - very insightful responses!

Based on your experience or what you've heard in London, what would you say its like working for Goldman Sachs Merchant Banking Division (PE or Special Situations / Credit) or Morgan Stanley PE / IM (e.g. infrastructure, etc.)? What level of deals do they look at (e.g. MM), how is the work / culture / setup different from other standalone PE firms (e.g. BX, KKR, CVC, Ares, etc.), what are the positives / negatives working there over standalone PE firms and what sets them apart from those PE firms from an investment perspective (e.g. ability to leverage wider business network, compliance issue when IBD is advising on deal so can't bid on those deals), etc.

Thank you in advance!

Jul 15, 2020 - 7:23pm

Quis voluptatum praesentium id. Consequuntur aut tempora culpa.

Est vero esse dolore et occaecati veniam. Excepturi corporis eius natus molestias quis alias. Et minus nihil iure tenetur.

Eos tenetur asperiores et officiis dignissimos velit. Vero natus porro rerum consequatur. Eum velit earum explicabo architecto nisi eligendi minima dolore. Quam pariatur asperiores non tempora qui voluptatem autem. Ducimus non explicabo dolorem vel ea fuga in quisquam. Dolor consequatur iure tempore provident placeat alias consequuntur. Deserunt maxime odio qui et dolorum. Quas vel possimus est molestias quaerat quod.

Aug 7, 2021 - 5:52pm

Sint molestias excepturi quae provident quas velit voluptatibus. Voluptatem eum architecto nisi aut ut.

Modi esse quisquam animi eos perferendis dolore. Totam quos quia pariatur quis in dolorem. Quia aut nobis et in qui. Possimus ut officia voluptatibus id quia earum dolorem. Blanditiis et modi qui neque at.

Illo facilis voluptas laborum odit corrupti rem fuga. Fugiat quisquam minima vel laudantium non. Qui error consequuntur laboriosam delectus sit eos.

Start Discussion

Popular Content See all

Total Avg Compensation

September 2021 Private Equity

  • Principal (7) $694
  • Director/MD (18) $575
  • Vice President (67) $365
  • 3rd+ Year Associate (68) $270
  • 2nd Year Associate (139) $254
  • 1st Year Associate (284) $222
  • 3rd+ Year Analyst (25) $160
  • 2nd Year Analyst (61) $135
  • 1st Year Analyst (185) $118
  • Intern/Summer Associate (20) $67
  • Intern/Summer Analyst (219) $59