Q&A - Post-MBA VP

Hello Monkeys - I've been active on the site for around 8 years but decided that the time has finally come to give back! Making a new username to preserve anonymity...

My background

My dad worked in a small business when I was growing up so I was always interested in "business" in a vague sense. I was the nerdy kid growing up and was planning to get a PhD in math or economics. I went to a semi-target undergrad and heard about banking as a way to learn a lot about business at a young age with no experience. Did my summer internship and then 2 years as an Analyst at an EB. Made the transition to a middle market PE fund (think $1B - $5B fund size) and spent a few years there as an Associate. Loved PE but decided for personal reasons (i.e., my girlfriend) to go to B school (HSW). Will be graduating shortly and joining a different MM fund ( $1B - $5B fund size) as a VP. Hope that helps provide context on where I'm coming from.

Anyways, I guess you can say that the combination of Zoom B school courses and social distancing have me yearning for human interaction so I've finally decided to answer some WSO questions...

Q&A

Happy to share my opinion on topics such as PE recruiting, how to stand out as an Associate, B school, post MBA recruiting, making the jump to VP, how to stay intellectually curious / intellectually honest in the industry, etc. I'm not qualified on most other topics but can weigh in nonetheless. I'll do my best to respond to everything.

Cheers!

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Comments (46)

May 5, 2020 - 7:21pm

Thanks a lot for doing this. As you know, I'm sure, threads like these are instrumental for those of who try to be thoughtful about our careers, but have no peers or industry mentors to learn from. Threads like these fill that role, thread by thread, so thank you.

I am about to enter a fund similar to yours or slightly larger. My goal is also to attend HSW if I am so lucky as to gain admission.

  1. How do I stand out as an Associate? What do you wish you knew when you started that you know now?

  2. What do you attribute your bschool application success to? Like you I went to a semi-target, and so worry about pedigree.

  3. What do you wish you knew about bschool before starting? Specifically with regards to PE recruiting, and maximizing your overall experience (e.g., fun areas, intellectual curiosity areas, etc.)

  4. Can you please describe MBA VP recruiting in detail? If you have to prioritize one question, this is it. This forum lacks sorely on this topic.

I am not sure if I will love PE, but I have a hunch that I will. Therefore I want to go in with as much knowledge of important factors as possible relating to succeeding as an associate, gaining admission to a top bschool, and securing a VP spot from there, so as to set myself up for future success if it proves that I do like working in PE.

Thank you very much.

Most Helpful
May 5, 2020 - 8:14pm

First of all, congrats on the new job! I hope the transition goes well for you.

ccvv intern:
1. How do I stand out as an Associate? What do you wish you knew when you started that you know now?

It's important to acknowledge what the table stakes are as a PE Associate: producing flawless work (no exceptions, including late at night, on multiple deals at a time, etc.), cranking out models and churning through data rooms quickly and accurately, being able to think critically about investment theses / risks. There's probably more that others would reference, but I think most would agree that these are expected of any Associate as a baseline.

In terms of standing out, I would say there are several ways to do this and I'll try to order these from easiest / Senior Associate level to hardest / Partner level.

  1. Processing CIMs quickly: Be able to read through a CIM in 20-30 minutes and figure out if it's a good business, if there's an angle for your fund, if it's worth spending more time on / running up the flagpole. This will largely come with reps but I think some will pick it up more quickly than others.

  2. Taking on more VP-level workstreams: This includes directing commercial diligence, reading the QoE to provide comments to the accountants, handling a diligence call with lenders, speaking more in diligence meetings / IC. You will need to prove yourself with the basics and then you can gradually start asking for more responsibility. One way to do this is on add-on acquisitions -- more senior folks won't care as much so you can try to get some reps that way.

  3. Understanding what is important and having an opinion: At my fund, partners liked to ask Associates what they think (usually when I was least expecting it...) and you can really separate yourself here. You should be able to link all of the detailed diligence schedules in the deal that you've been spending hours on to the investment thesis and why they truly matter. In 30-60 seconds, summarize what you've learned so far. Don't be afraid to disagree with things you've said before or the team's "view" to date, if that's what the data is telling you. My best advice on this one is to remain "engaged" when you're doing your work -- you are not just processing information / cranking out models anymore like in banking. You need to be thinking constantly about what the data means.

  4. Interacting with people: Try to form relationships with folks at your firm, lenders, mgmt teams. This is a people-centric business (particularly in more senior roles) and your firm wants to see that you can be a partner some day. From the beginning, I tried to separate my interactions with portco mgmt from being too "transactional" (i.e., don't just call them when you need something). We would speak every few days just to see what was going on, if I could be helpful on anything, what was happening in their personal life, etc. You'll be surprised how often mgmt teams will provide positive feedback to the partner on your deals if you just treat them like a human being.

ccvv intern:
2. What do you attribute your bschool application success to?

There's a lot of resumes that looked like mine in the B school stack, so there's a few things I tried to do to stand out.

  1. Don't give them a reason not to pick you compared to the other PE candidates. In my mind, this means you need a 750+ GMAT if you want a good chance of getting in. They have a lot of options, so you may as well boost their average GMAT.

  2. Developed a "narrative" -- human beings respond to stories, so I tried to establish myself as something more than just another PE candidate. Imagine if the Dean of Admissions read your admissions package. How do you want them to think of you? For me, I told the story of growing up and seeing my dad in the neighborhood small business and how I'm inspired to work to grow and build small businesses. It sounds corny but I think it works, particularly if you can be specific.

  3. Have a concrete plan for what you want to get out of B school and how you will contribute while you're there. If you want to pivot industry focus / investment style, work on your mgmt / soft skills, or brush up on your accounting / finance skills, have a concrete view of what you're going to do. I knew the type of summer internship I wanted, the classes I wanted to take, and the clubs I wanted to join. It makes you look interested and prepared.

ccvv intern:
3. What do you wish you knew about bschool before starting? Specifically with regards to PE recruiting, and maximizing your overall experience (e.g., fun areas, intellectual curiosity areas, etc.)

If you want to go back into PE, you essentially get a free pass for your summer internship. The most common uses are trying another investing style (VC, hedge fund), doing something operational (chief of staff), or doing something entrepreneurial (big tech company, working on a friend's start-up). Choose something based on your intellectual interests, not based on what you think it will do to your resume. I took the operational route and learned a lot.

In terms of intellectual curiosity, there's a lot you can do. Your grades don't matter, so you can take classes in all sorts of esoteric topics (many schools let you take classes outside of the business school as well). Make sure you cover your bases on things that will help your career, but I tried to take at least one class per semester just based on what sounded interesting.

Definitely take advantage of all of the fun stuff that comes with being a student again (but this time hopefully with some $$ saved) - traveling, exercising, reading books, trying a new hobby. Your fellow classmates will also be a really interesting bunch - basically think about the most random thing you can imagine and at least one person in your class will be an expert in this. Take advantage of it while you can! You will make lifelong friends.

ccvv intern:
4. Can you please describe MBA VP recruiting in detail? If you have to prioritize one question, this is it. This forum lacks sorely on this topic.

I could talk about this for hours but will start with just some high-level things here. Happy to expand on anything so please feel free to ask follow-up questions. Also, this is all based on my experience (and was Pre-COVID) so take it all with a grain of salt.

  1. I said this before but your summer internship largely doesn't matter. At worst, it's a conversation starter in interviews.
  2. Career management will be helpful but headhunters remain as important as ever. I'd say 50% - 75% of post-MBA roles with come from HHs. Keep in touch with them and let them know your plans / timeline. I visited several in person in the spring as well.
  3. Timing: There's typically a few "waves" but processes start kicking off as soon as you get back to campus fall of your 2nd year. You'll want to be prepared to interview as early as September. This wave continued until November or so. There is typically a second wave in late January / February after folks quit and firms re-assess their staffing plans. There may be a small "just in time" wave in May / June as well.
  4. Try to keep your deal memos. A lot of post MBA recruiting will be focused around the deals you did. It will be way easier if you have some memos handy.
  5. Most processes will include some form of a case study. Most common was that you have a few days to do it at home and then present to them on the phone or in person. Model / short memo format.
  6. Leave your old firm on good terms and stay in touch with them. They may be able to provide some intros for you. You will also very likely need to provide several references in order to get a job, and they will need to sing your praises. If they just say you were a "great Associate", that may not be enough.
  7. Overall, these processes are all about splitting hairs. Sadly, you can get dinged because 1 person didn't like 1 thing you said. There's so many good candidates that they can be as stringent as they like with their selection. However, by and large, I found that at my B school that people generally ended up where I expected. No one really traded up in an insane way and no legitimately amazing candidates were left high and dry.
May 5, 2020 - 9:15pm

This is extremely helpful. Thanks so much. I want to ask a few follow up questions while I still have you.

Succeeding as an associate:

  1. What do you look for in a CIM? I do not have an investment banking background so it is hard for me to identify what's meaty and what's marketing crap.

  2. What does "providing comments to the accountants" look like? What about handling a diligence call with lenders?

  3. This will sound silly, but re: treating management like humans and asking about their personal life, how do you go about developing that type of relationship? I have always been coached to get straight to business, nothing more than "Hey Tom how are you?".

  4. Further on the point of developing relationships, how do you develop external relationships that aren't directly tangential to project work? For example, I know down the road it will be helpful to know X Y Z Business Brokers, but I don't currently work with them. My firm might. I don't know. Should I reach out to the Associate/VP on their team and take them out to lunch? It makes sense to nurture a banker / lender relationship if they're on my deal, as I have an institutional intro, but I am curious beyond that (or if I should not bark up the tree as I am describing).

Recruiting for VP:

  1. To clarify, one should not be worried about summer internship and conversion to full time offer?

Thanks again!

May 5, 2020 - 7:53pm

Great questions from @ccvv intern" above. Will add a few that only apply if you're keyed into consulting:
1. Did your Pre-MBA firm also hire consultants? If so, were they any better/worse at the job than bankers?
2. For VP recruiting in B School coming from HSW, does IB vs. Consulting background matter? For example, if someone does 2 years MBB then 2 years MM PE (~$1B - $5B fund size), then HSW are they competitive for a VP role at the funds that only hire banking Associates? Or would they have to recruit for a VP role only at consultant-friendly shops?

Thanks in advance!

Array
  • 3
May 5, 2020 - 8:24pm
1600mPenn:

1. Did your Pre-MBA firm also hire consultants? If so, were they any better/worse at the job than bankers?
2. For VP recruiting in B School coming from HSW, does IB vs. Consulting background matter? For example, if someone does 2 years MBB then 2 years MM PE (~$1B - $5B fund size), then HSW are they competitive for a VP role at the funds that only hire banking Associates? Or would they have to recruit for a VP role only at consultant-friendly shops?

My Pre-MBA firm did not hire any consultants as far as I'm aware. That being said, I don't think they were negatively predisposed against consultants, it just wasn't their MO. There are certainly some firms that do like consultants (Bain, Charlesbank, Golden Gate, probably others) and probably others that don't. I didn't notice any appreciable difference at B school between people who worked in IB vs. consulting (before PE). Ceteris paribus, I'd say they were equally qualified and did equally well during recruiting. I don't think you would be restricted during recruiting for VP jobs at "consultant-friendly" shops. In some respects, the consultant training around strategic analysis would be helpful for VP recruiting - I had a bunch of interviews that were just dissecting a business for an hour (Porter's five forces, competitive moat, etc.).

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May 5, 2020 - 10:12pm
jpn16:

what's market vp comp?

My understanding is that MM VP cash comp is typically $325k on the low end to maybe $400k on the upper end. Could be some outliers. Market for this size fund is typically around 50 bps of carry.

May 5, 2020 - 10:12pm

Thanks for doing this!

You mentioned that your girlfriend played a role in your decision in deciding to attend b school. I was wondering what specific type of influence did she have? Did you guys meet in College or during your EB/PE position? In your opinion, do you think it's possible to foster a healthy relationship while being a fresh college grad and entering high finance? It sounds like you have had some success and was wondering if you could maybe share a little bit about how you've been able to manage your personal life!

Best!

May 5, 2020 - 11:20pm

No problem, happy to help!

Vitamin Water:

You mentioned that your girlfriend played a role in your decision in deciding to attend b school. I was wondering what specific type of influence did she have? Did you guys meet in College or during your EB/PE position? In your opinion, do you think it's possible to foster a healthy relationship while being a fresh college grad and entering high finance? It sounds like you have had some success and was wondering if you could maybe share a little bit about how you've been able to manage your personal life!

My girlfriend and I met when I was a 1st year PE Associate.

I'd say she had an influence in a couple of ways. First, I started valuing time away from work more and I realized that I didn't want to be a 35 year old partner grinding it out in the office 6-7 days a week until late at night. I wanted a more normal life. Some of this happens with seniority but it still is quite firm dependent in my experience. I'd like to make it home a few times a week for dinner with my family. I don't want to be in the office on the weekend.

Second, she had a preference for changing geographies (I was geography agnostic) so that was the more tactical reason to go to B school - it helped us change geographies easily (and she wasn't able to move for 2 years anyways).

I think it would have been quite difficult to have a functional relationship as a banking Analyst (mainly due to hours and unpredictability of the job) unless you have a VERY understanding significant other.

To that end, I think the most important thing is communication. Your SO will need to understand that your job can be quite busy sometimes (need to be more flexible during an intense live deal). You will need to communicate frequently how busy you expect to be and make sure you make good use of the slower times. Remind them that they are important to you and you'd rather be spending time with them. You should also communicate with those you're working most closely with at your firm to let them know if you want certain boundaries (e.g., a night out for dinner, Saturday plans). Obviously this gets a lot easier with seniority as well and you can't exploit it willy nilly, but I think most firms will understand that you have other priorities as long as you get your work done.

Best of luck!

May 6, 2020 - 10:09am
meep11:

During your associate interviews, how did you prove you had the infamous "investor mindset?"

There isn't a one-size-fits-all answer for this one. I think there's a couple small things you can do though:

  1. Simply the way you talk about companies is important, try to use a more "strategic" mindset. What about a firm's industry is attractive -- are there secular tailwinds? Will the company grow faster than the broader industry / their competitors? If so, why? If not, why not, and what would you change about it? Private equity in particular is a more hands-on investing style focused on value creation. Returns are driven by EBITDA growth (organic vs. M&A, top-line growth vs. margin expansion), debt paydown, and multiple expansion / contraction. For each investment you talk about, try to frame the breakdown of returns into these types of buckets.

  2. Try to start doing some of your own personal investing on the side. It doesn't need to be much money at all but it's a healthy practice. Choose some companies you've heard about that you think sound interesting. Read a bunch of company investor presentations online. Download their 10-Ks and read through them. If there's one or two that stand out, buy a couple shares. The simple process of researching companies and assessing them critically will be instrumental. You can reference this process in interviews to show how you've been proactively working to develop your investing acumen.

Happy to expand further if you have follow-ups.

May 6, 2020 - 10:19am
Analyst 2 in PE - Other:

Has your fund interviewed credit professionals in the past (Audax Credit, PennantPark, Comvest Credit, etc)? How would you view a credit professional interviewing for a PE associate role?

I don't believe my pre-MBA firm did at all. This was mainly due to recruiting inertia - they would always hire through the same headhunter from mostly the same banks. There's a sense of risk aversion among many of these funds and they just don't feel the need to change what they've done historically if it works. These are also mostly pretty small firms so they don't have the bandwidth to open the aperture too far on recruiting from many different channels.

For credit professionals trying to shift focus to PE, there's probably a couple things you'll want to focus on. I'm guessing they'll want to probe your ability to think like an equity investor. For all of the deals you've worked on, make sure you can elucidate the equity story in addition to the credit story.

I would also want to emphasize your modeling / diligence analysis chops as much as possible. Some credit shops will just start with the sponsor model or diligence materials without doing a lot of original content creation. You'll want to talk about your experience handling these yourself if possible.

There's also a different orientation between equity / credit shops in terms of typical interaction with portcos after closing (equity typically being more involved / hands-on). For the deals you've worked on, try to describe the types of value creation activities that the company worked on post-close. Did they work? If not, why not?

  • Analyst 2 in PE - Other
May 6, 2020 - 11:13am

This is extremely helpful and appreciate the candid advice. Institutionally we like to equity co-invest if there is a compelling equity story so I have some experience thinking like an equity investor which I will definitely look to communicate when recruiting comes around. Thanks again!

  • Incoming Analyst in PE - Other
May 8, 2020 - 1:29am

Thank you for an amazing thread and a bunch of great insights!

Similar but different question. How would an analyst from a secondaries group (GS AIMs, Blackstone Strategic Partners, Hamilton Lane, HarbourVest) be received when interviewing for traditional direct PE shops? Additionally, given the lack of company-specific due diligence / less technical modeling experience, what would you emphasize in direct PE interviews?

  • Intern in IB - Gen
May 6, 2020 - 1:10am

Thanks for doing this!! Maybe more on the MBA side -

how did you manage time studying for the GMAT while working? what was your GMAT score, and what resources did you use in your studies if you don't mind sharing?

May 6, 2020 - 10:24am

No problem, happy to help.

Intern in IB - Gen:

Maybe more on the MBA side -

how did you manage time studying for the GMAT while working? what was your GMAT score, and what resources did you use in your studies if you don't mind sharing?

I actually took the GMAT right before I started my banking job. I wasn't sure if I was definitely going to do B school or not, but I wanted to have it out of the way if so (particularly while I was still in studying / test-taking mode). The score was valid for 5 years, and this was a huge help for me during the B school application process. I have friends / coworkers that took the GMAT while working and they were universally miserable. You'll spend a lot of late nights or weekends studying unfortunately. I scored a 750+. I borrowed some of the Manhattan Prep books from another college student that had just taken the GMAT - if you ask around, you should be able to get a lot of used resources for pretty cheap. I think I studied for around 4-5 weeks.

  • Associate 2 in PE - LBOs
May 6, 2020 - 3:26am

Thank you so much for doing this. Your replies to ccvv intern are so helpful and I'd like to ask a few more questions on PE recruiting during/post MBA

1) Is it possible for an international with PE exp. in Asia to get FT job in U.S.? Also, is there any specific size/sector of PE which is more favorable to internationals?

2) Do you have any idea on PE placement at non-HSW M7 schools? I was admitted to one of them but am not sure how much my B-school help the recruiting process...

3) How long have you been at PE? Is it common for many PE to recruit someone with several years PE exp. as VP post-mba?

May 6, 2020 - 4:45pm
Associate 2 in PE - LBOs:
1) Is it possible for an international with PE exp. in Asia to get FT job in U.S.? Also, is there any specific size/sector of PE which is more favorable to internationals?

I think this is certainly possible but somewhat rare, although it will clearly be easier if it's a name brand fund or an international office of a MF. I generally think MFs with a global presence will be more open to internationals. There may also be visa-related issues with smaller funds but I'm not really qualified to speak on that.

Associate 2 in PE - LBOs:
2) Do you have any idea on PE placement at non-HSW M7 schools? I was admitted to one of them but am not sure how much my B-school help the recruiting process...

I did a bunch of research on this when deciding which B school to go to. There's some post-MBA placements from Booth, Kellogg, Tuck, Columbia (generally in that order). Generally more common closer to their geographies (Chicago for Kellogg / Booth, NYC for Tuck / Columbia). It's relatively easy to just make a spreadsheet with all of your target funds and see where all of the VPs / Principles went to B school, so I would recommend you do that.

Associate 2 in PE - LBOs:
3) How long have you been at PE? Is it common for many PE to recruit someone with several years PE exp. as VP post-mba?

I spent 3 years in PE. Most firms hiring for post-MBA roles want to know that you have a few years of experience and have already done some of the post-MBA workstreams (working with third-parties, managing a younger Associate, etc.).

  • Analyst 1 in IB - Cov
May 6, 2020 - 1:50pm

Where did those people who had pre-MBA PE experience go if they didn't get a post-MBA position? Back to banking? Corp-dev?

I'll be heading to a LMM fund ($500M AUM) in 2021, and am pretty nervous about getting into a good MBA program (thinking I have to go HSW or Booth or Kellogg if I want to get back into PE). Almost all the partners + 2 VPs went to one of the HSW. Would that help me at all? The only other thing that differenciates me is that I was a coder/software engineer before entering banking.

May 6, 2020 - 5:01pm
Analyst 1 in IB - Ind:
Where did those people who had pre-MBA PE experience go if they didn't get a post-MBA position? Back to banking? Corp-dev

This is still playing itself out as we speak. The most common routes for people that didn't want to return to PE were different stages of private investing (VC / growth), public markets (hedge fund / mutual fund), something more entrepreneurial (joining a big tech company or a start-up / working on their own company), or something more ops related (in a product role or chief of staff).

Analyst 1 in IB - Ind:
I'll be heading to a LMM fund ($500M AUM) in 2021, and am pretty nervous about getting into a good MBA program (thinking I have to go HSW or Booth or Kellogg if I want to get back into PE). Almost all the partners + 2 VPs went to one of the HSW. Would that help me at all? The only other thing that differenciates me is that I was a coder/software engineer before entering banking.

That could help if they are willing to go to bat for you. In my opinion, it will be more helpful if your fund has a track record of folks regularly exiting to those B schools in the last few years, as the name will be more familiar to the Admissions Committee.

  • Associate 1 in PE - LBOs
May 7, 2020 - 1:49am

As a follow up on this, from your experience, has there been anyone with pre-MBA experience that wanted to get back into PE post-grad that had seemingly "struck out" entirely? Particularly interested (understandings it's anecdotal and potentially a limited sample size) in regards to those that came from the path everyone seems to shoot for here (target school > top BB/EB > MF/UMM PE).

Separately, you mentioned work life balance was a consideration for you as well in recruiting - could you elaborate on what you expect hours to be like for you? Obviously varies day to day / week to week but on an average week what do you expect your day to look like? Asking as my experience has been that work life balance from an hours perspective has been just as bad as in banking and most of the VPs / Principals seem to be online just as frequently as their banking counterparts. Not sure if that is specific to my firm / team and hoping to get a better sense of what might be realistic for other PE firms

Thanks for doing this - super helpful!

May 6, 2020 - 2:19pm

1) How do salaries in MM PE in the mid to upper levels (VP, D/principal, MD,) compare to the salaries of their banking counterparts?

2) What kind of bank/group did you come from?

3) If you could go back, would you have recruited for megafunds, or are you happy you went for middle market?

4) What are your plans for the future? Making partner at your current firm? Going upstream to a 5b+ firm? Starting your own fund someday?

May 6, 2020 - 5:10pm
mjbanker:
1) How do salaries in MM PE in the mid to upper levels (VP, D/principal, MD,) compare to the salaries of their banking counterparts?

Unfortunately can't really speak to this one as I'm not very familiar with banking comp at higher levels. I'm sure if you ask around you should be able to get a comp survey to compare.

mjbanker:
2) What kind of bank/group did you come from?

I was at an EB doing M&A. Lots of buy-side advisory work which I think helped differentiate me for PE Associate recruiting.

mjbanker:
3) If you could go back, would you have recruited for megafunds, or are you happy you went for middle market?

I interviewed for VP roles at a couple MFs - accepted my actual role and dropped out of the MF processes and a few other MM processes I was active in at the time. A bunch of reasons for this, but when it comes down to it I enjoyed my MM fund from pre-MBA so viewed it as quite likely I would like this one as well. Strong cultural fit with what I was looking for (work / life balance, etc.). Good dynamics around likelihood to make partner based on how they are set up. Good track record with fundraising momentum.

mjbanker:
4) What are your plans for the future? Making partner at your current firm? Going upstream to a 5b+ firm? Starting your own fund someday?

Current plan is to progress as quickly as I can at my current shop. Hopefully I like it but haven't started yet! Ideally I would like to carve out my own niche there and make a call down the line about the cost/benefit of staying as a partner at the fund vs. hanging out my own shingle.

  • Incoming Analyst in IB - Cov
May 6, 2020 - 5:13pm

Did your original fund only hire from EB/Top BB? As someone starting at a Lower BB (UBS/WF/RBC/DB) and wanting to go to a 900mm-3bn shop, how can I best compete with those from better banks/groups?

May 7, 2020 - 10:32am
Incoming Analyst in IB - Ind:

Did your original fund only hire from EB/Top BB? As someone starting at a Lower BB (UBS/WF/RBC/DB) and wanting to go to a 900mm-3bn shop, how can I best compete with those from better banks/groups?

Primarily EB / Top BBs but there were also a couple Associates from what you would describe as Lower BBs.

My advice to you would be two-fold:

  1. Goes without saying but you should try to become the "go to" Analyst at your shop. If you can be the person they turn to for all of the time-sensitive and complex deals, that will be a differentiator. Deal experience can be a bit of an equalizer. It will show through your resume and if an MD at your shop is willing to sing your praises that would go a long way as well.

  2. This is a narrow road to walk, but in my experience it could help someone from your position to be very specific with headhunters. When speaking with them, choose 2-3 firms they represent that realistically could hire you and lean heavily into those. This makes it easier for you to be on the short list when those firms eventually are hiring. This obviously means you might not get every look outside of that opportunity set, but I think it could position you better for what you really want. Just my two cents.

  • Intern in IB - Cov
May 6, 2020 - 6:48pm

Thanks so much for taking the time to do this. As a quick background, currently a sophomore in college interning in PE this summer (last fund $400m - $600m).

  1. What should I try to get exposure to this summer in order to be better prepared for on cycle-recruiting and being a good PE investor in general?
  2. Other than investment clubs/GPA, what do you think I should be doing in college to help me with 1. PE recruiting and 2. B school admissions?
  3. Do you believe there's still opportunity in PE as a career for the next 15-20 years, or will returns and the asset class be driven down through commoditization etc
  4. How should I learn how to develop a mindset for PE investing beyond the basic "high recurring rev, low capex" etc? I see that most books are basically about public equities, so are there also any resources I should dive into to get sharp with buyout type investing?
  5. Given that on cycle recruiting is so early, what recommendations do you have on preparing for PE recruiting? Going off of this, how should I figure out which kind of firm I want to go to(mm vs umm, typical buyout vs distressed, tech vs generalist etc)
  6. What are your thoughts on PE analyst programs vs the typical 2 years of IB?
  7. If you could go back in time, any advice you would give your 20-year-old self?
  8. Any book recommendations? Finance or anything really.
May 7, 2020 - 12:10pm

First of all, congrats on the PE internship! That should be a great opportunity and hope you enjoy it.

Intern in IB - Ind:

1. What should I try to get exposure to this summer in order to be better prepared for on cycle-recruiting and being a good PE investor in general?

A few ideas for your summer:

  1. Try to get exposure to as many elements of the PE industry as possible, including thesis generation / research, new deals, and portfolio work. I would be upfront with a mentor at the firm that you want to gain broad insights into the industry and would like to work on as many aspects as possible. This might not mean you're extremely active in all of them, but you can try to at least sit in on diligence calls or a portco board meeting. Offer to help frequently and remember that your ultimate goal for the summer is learning. I would also ask to be able to work on your own investment thesis for the summer - find a sub-vertical the firm is interested in but just hasn't had a ton of time to work on yet to see if you can build that out for them. Work to develop that investor mindset.
  2. You should also use the summer to talk to a bunch of folks in the firm in a more casual setting to get their advice and to hear what they like and don't like about the industry. This will inform your own views of where you want to go with your career. It will be easier to "adjust your sails" earlier on if you can pick up on things that you want to prioritize in your career, whether it's stage / style of investing, industry sector, etc. Simple things like grabbing a coffee with a VP to chat with them would be a good idea. This is a relationship business and you never know when you will run into them again.
Intern in IB - Ind:
2. Other than investment clubs/GPA, what do you think I should be doing in college to help me with 1. PE recruiting and 2. B school admissions?

To help with PE recruiting, it will mostly be about positioning yourself for that first job and clubs / GPA will go a long way. Try to take a couple accounting and finance classes if your school offers those to set up your technical foundation. I would also try to keep active with industry news -- try to read the WSJ, NYT, PEHub, etc. on a regular basis. Pick a few public companies and follow them regularly - try former sponsor backed companies that recently IPO'd. The sponsors were likely involved in writing the S-1 filing so by reading the investment highlights in that you can see how the sponsor thinks.

For B school admissions, there's not much you need to be doing this early. However, think about potentially taking the GMAT before you graduate undergrad (I think your score is still good for 5 years). That will save you a lot of time and headaches when you're working. I took it right around graduation. I would also think about if there's non-profit involvement or hobbies you can start to develop in these early years, as Admissions Committees like to see that you aren't too one-dimensional in your interests and experiences.

Intern in IB - Ind:
3. Do you believe there's still opportunity in PE as a career for the next 15-20 years, or will returns and the asset class be driven down through commoditization etc

I clearly do since I'm re-entering the industry so take my comments with a grain of salt. Average returns will likely continue to drift down due to over-saturation / competition for assets but I think differentiated funds will continue to have a place in the long-term. To me this means that it is more important than ever to specialize, particularly with respect to industry sector. It's easier to form conviction, source opportunities and executives, and enact operational improvement if you really understand an industry. I would expect that un-differentiated / generalist MM firms could struggle.

Intern in IB - Ind:
4. How should I learn how to develop a mindset for PE investing beyond the basic "high recurring rev, low capex" etc? I see that most books are basically about public equities, so are there also any resources I should dive into to get sharp with buyout type investing?

Your internship this summer will be helpful for that. Try to get your hands on some of their old investment memos to see how they frame their theses. Also the fundamentals of value investing and what makes a compelling difference are universal, so some of the public equities materials will undoubtedly be helpful as well.

Intern in IB - Ind:
5. Given that on cycle recruiting is so early, what recommendations do you have on preparing for PE recruiting? Going off of this, how should I figure out which kind of firm I want to go to(mm vs umm, typical buyout vs distressed, tech vs generalist etc)

Behaviorals are quite important given the lack of deal experience folks have since recruiting happens so early. Therefore make sure you are bulletproof on describing your background and motivations for working in PE.

It's hard to figure out exactly what kind of firm you want to work at, but try to reflect on what you gravitate towards. If you're flipping through the business section of the WSJ, what articles do you read first? Are there certain industries you can read about all day and not get bored?

Intern in IB - Ind:
6. What are your thoughts on PE analyst programs vs the typical 2 years of IB?

This phenomenon emerged after I went through recruiting and I don't really have enough knowledge of what the PE analyst programs are like to speak about this. I personally felt the banking experience was useful for me. I worked on buy-sides, sell-sides, activist defense and these all have their own nuances.

Intern in IB - Ind:
7. If you could go back in time, any advice you would give your 20-year-old self?

I generally was quite focused on work (especially as a banking Analyst) so would tell myself to chill out. It's more important to just be a normal person, make friends with your coworkers, and try to enjoy yourself than to be the last one in the office every night. Also, don't jeopardize your health - you'll feel better and perform better if you exercise, eat right, drink water, and get a reasonable amount of sleep when you can.

Intern in IB - Ind:
8. Any book recommendations? Finance or anything really.

Finance: Howard Marks's books, Irrational Exuberance by Robert Shiller, Fooled by Randomness by Taleb, This Time is Different by Rogoff

Fiction: Hemingway books (Farewell to Arms, Sun Also Rises), Catch 22 by Joseph Heller, Kurt Vonnegut, Virginia Woolf, F Scott Fitzgerald

Non-fiction: Walter Isaacson's biography of Steve Jobs, Snowball biography about Warren Buffett, behavioral economics books by Kahneman / Thaler

  • Analyst 1 in IB-M&A
May 6, 2020 - 6:55pm

One of the things I'm struggling a bit with as I'm preparing to switch over to a PE job at the end of the summer (am a 2nd year IB analyst, need to refresh profile info) is the higher degree of autonomy. I've never really had to perform in a high stakes situation where no one is checking my work / telling me what analysis to run, so I'm afraid I won't hit the ground running here. I also feel like I struggle to make judgement calls and usually just ask the person above me what to do. Do you have any tips on areas to focus on / improve in the coming months to help prepare?

May 7, 2020 - 8:19pm
Analyst 1 in IB-M&A:

One of the things I'm struggling a bit with as I'm preparing to switch over to a PE job at the end of the summer (am a 2nd year IB analyst, need to refresh profile info) is the higher degree of autonomy. I've never really had to perform in a high stakes situation where no one is checking my work / telling me what analysis to run, so I'm afraid I won't hit the ground running here. I also feel like I struggle to make judgement calls and usually just ask the person above me what to do. Do you have any tips on areas to focus on / improve in the coming months to help prepare?

No sweat, this is a very common growing pain moving from banking to PE and is a struggle for basically everyone. One of the big things that worked for me was to try to slow down just even 10-20%. In banking, I always felt like I was running around like a chicken with my head cut off just putting out fires and trying to respond to everything as soon as possible. In PE, at least at my old firm, while people still valued promptness I found it was important to take a little longer to make sure I'm totally confident in my work, thinking through if I'm missing anything that would be helpful, and trying to interpret the result / the implications. Just allowing yourself more time will allow you to be more thoughtful.

Beyond that, ask a lot of questions when you join and keep detailed notes. It's easier to ask stupid questions in your first 4-5 weeks than later on. Ask the older Associates if you are more comfortable doing that than the VPs. It's OK to screw up when you're starting out - just try really hard not to make the same mistake twice. My sense is that most firms have a set of standard operating procedures for the really important things that you will pick up on over time. After you get some reps, you'll be more confident and can start working more autonomously and taking on more responsibility.

Best of luck with the transition to PE!

  • Analyst 1 in IB-M&A
May 7, 2020 - 12:12am

Thank you for doing this Q&A!

Do you have any knowledge on the co-investments side of PE? Maybe you've had co-investors on your deals or have friends in this field? I was wondering what the work was like at those funds (less diligence work, more execution/deals?). If you have any info on the lifestyle and compensation at co-investment funds like Alpinvest/Lexington, or even direct investment arms at LPs like CPPIB, sovereign wealth funds, etc Id really appreciate it!

May 8, 2020 - 11:29am
Analyst 1 in IB-M&A:

Do you have any knowledge on the co-investments side of PE? Maybe you've had co-investors on your deals or have friends in this field? I was wondering what the work was like at those funds (less diligence work, more execution/deals?). If you have any info on the lifestyle and compensation at co-investment funds like Alpinvest/Lexington, or even direct investment arms at LPs like CPPIB, sovereign wealth funds, etc Id really appreciate it!

We took co-invest on most of our deals at my old firm, but almost always from our LPs (think pension funds or folks like Hamilton Lane) rather than from co-invest specific funds. Our interactions with them were pretty limited - a couple diligence calls during the deal and then an update call every quarter or two for monitoring. A couple of times they would have a board observation right if they had a larger co-invest position. I'm not sure how the process would have been different with someone like a Lexington.

Seemed like a pretty plush job to me as you can largely just piggyback off of the sponsor's diligence, but I could be over-simplifying things.

  • Business School in PE - LBOs
May 7, 2020 - 12:21am

What are you doing (if anything) to prep for your upcoming role given the significant shift in responsibility from Assoc to VP? What would you suggest someone should do?

May 8, 2020 - 11:41am
Business School in PE - LBOs:

What are you doing (if anything) to prep for your upcoming role given the significant shift in responsibility from Assoc to VP? What would you suggest someone should do?

Good question and something I've been putting a lot of thought into over the last couple of years during my time at B school. Overall, I've tried not to over-do it as I wanted to re-set a bit mentally as well. That being said...

  1. I tried to be intentional with a couple classes per semester that I thought would make me a better PE professional. Some were more soft schools like communications classes or negotiation classes while others were more technical like valuation classes or tax classes.
  2. Our B school had a club centered around PE that brought in a lot of guest speakers and educational resources. Many of these were focused on VP level skills (legal sessions on SPAs, accountants on DD) so I tried to attend those regularly.
  3. During my summer internship, I took an ops role to try to get some more experience in different functional areas (e.g., supply chain, R&D, marketing) that I thought would help me better understand operational execution.

I also asked my new fund for some reading materials for the sectors I'll be focused on and the portcos I'll be working with so there will be less time needed to get up to speed.

May 12, 2020 - 10:42am

Great post and thanks for doing this. On your ops internship, do you think you learned all that much in a ~12 week time period? I'm - hopefully - going to be a similar situation shortly so curious on how valuable you thought that ops experience was. I've been toying with the idea of trying to get into a portco for 6-12 months before b school and/or VP.

  • Associate 1 in PE - LBOs
May 7, 2020 - 11:13am

For post MBAs trying to lateral due to fund-specific reasons, how long would it usually take to land something solid? Thanks!

May 8, 2020 - 11:45am
Associate 1 in PE - LBOs:

For post MBAs trying to lateral due to fund-specific reasons, how long would it usually take to land something solid? Thanks!

Hard to say in the current environment. At my old fund, we had some Associates lateral out and it took as little as 2 months and as long as 12 months. Depends on the time of year, how picky you are, if you're trying to trade up or get promoted, how well you interview, how good your relationships are with headhunters, and of course a heavy dose of luck.

  • Prospect in IB - Cov
May 7, 2020 - 9:23pm

Thanks for doing this!

1) It seems like you got worked at your EB, did you ever consider going A2A? Were people in your class considering staying?

2) Can you provide a range as to how comp is like at the Pre-MBA level for your former MM PE shop and perhaps as a VP as well?

  • Prospect in Other
May 12, 2020 - 10:10am

Hey XIRR – thanks for doing this. It has been super helpful to read through.
I'm looking to transition to PE post MBA, but my background before MBA is banking and public markets investing. What skills do I need to demonstrate to PE firms? I understand that it's an uphill battle, but is it enough to show that I can create complex LBO models without much guidance? What else would they be really looking to test for someone of my background?

May 12, 2020 - 12:45pm

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  • Analyst 2 in IB - Cov
May 19, 2020 - 5:03am

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