Q&A: VP in Private Equity (Growth Equity + LBO)...Post-MBA...Formerly IB Analyst

Hi Alexandrei,

My suggestions assume you're a pre-MBA Associate intern in PE.

• PE industry-specific networking events are hard to get invited to unless you are already in the industry...or they cost a mini fortune to attend. However, check with your college/university to see what networking events (or webinars given the current climate) they host. For instance, I attend a lot of those as a way to give back to my undergrad school (Tulane University)...typically if you make a contact with another alum, that contact is more likely to try to help you. Once you start your internship, see if by any chance your coworkers will allow you to join them at networking events (or ask them to forward you webinar invites, as networking events may not happen this summer).

• Here's a list of daily/weekly digest sources that I find useful:

  • Morning Brew
  • PE Hub Wire
  • PE Professional
  • Pitchbook News
  • The Broadsheet
  • The New York Times
  • The Water Coolest
  • theSkimm
  • Wall Street Journal
  • Women's PE Briefs

Impossible to read all of these, but you can skim a lot of them and/or read specific articles that interest you.

• Make sure you know how to use CapitalIQ (see if your university has a subscription).

• The useful book list is endless. There's no specific ones that you have to read...pick books that you find interesting. I've enjoyed How to Win Friends & Influence People...it's a classic. Currently I'm reading Malcolm Gladwell's Talking to Strangers. Next on the docket is The Deficit Myth because I recently attended a webinar by the author and found her 30-minute perspective quite interesting.

• Other tips: practice being organized and juggling multiple tasks; practice speaking succinctly and confidently, especially in nerve-racking settings; I don't like admitting this, but practice Excel keystrokes...it makes you faster with Excel.

• Most importantly, be excited and eager to learn. Securing an internship in this economic environment is a great feat in itself!

Hi RC103007,

Good question...you'll get a variety of valid opinions on this topic, so please take my answer as my personal perspective.

In your instance, I find value in an MBA. But not just any MBA, you really need to go to a Top 15 program (don't shoot me for saying this, but ideally a Top 5 bschool). That is where you'll develop the connections to help you break into the buyside...maybe things will change, but right now it's the path of least resistance.

Your background is fine; IB experience helps to get into buyside, but isn't necessary for all firms, especially once you have the MBA. Maybe you even intern at an IB the summer between 1st and 2nd year so that you briefly check the IB box. Either way, buyside firms that are healthcare-focused will value your background.

If you go the MBA route, see if the bschool offers a buyside lab-type class that combines coursework with a mid-year internship. This will give you the on-the-job experience on the buyside to help you enter full-time post MBA. For instance, I went to University of Chicago (Booth), and they offered the PE/VC Lab, which was a huge help in solidifying my post-MBA job in PE.

Hi Prospect in IB,

Vandy is a great school! I went to Tulane so used to get together with the Vandy students when they'd visit New Orleans over Mardi Gras.

You're already making the right moves by learning the technicals and using resources like WSO so early your college tenure. So first and foremost, keep doing that! Additionally, here's some ideas (they likely won't all be relevant for you):

• Consider majoring in a field tangential to business or finance (i.e. economics)
• Consider taking Training the Street online programs. They are costly, but you could put the certifications on your resume.
• Work as hard as possible to get internships in finance-related fields for every summer before graduation.
• Consider getting a part-time job in the finance industry in Nashville (but make sure grades still come first). Finance competition isn't as strong in Nashville as it is for full-time roles post school, so this could be good internship experience that goes deeper than the standard summertime 3 months. For instance, I worked part-time at an investment bank in New Orleans my entire senior year. That on-the-job experience really helped me land my full-time middle-market IB role (especially as I didn't have a traditional IB summer internship).
• Strive for a 3.8 or higher GPA. If not, then a 3.5 or higher. GPA shouldn't matter as much as it does, but it's the world we live in, and a high GPA will get you in the door for first round interviews. A sub-3.5 GPA unfortunately often gets you excluded immediately.
• Network with your parents contacts or your friend's parents contacts. Not necessarily to ask them for a job, but just to pick their brains and see if they can introduce you to someone who may have an internship or future full-time job down the road. A majority of these networking initiatives come up bare, but you just need 1 to hit to make them all worthwhile. For instance, I got my full-time IB Analyst job through a contact 3-times removed (a contact of a contact of a contact).
• I'm sure you've already done this, but request help from your school career center. Vandy is an excellent school and if they want to remain competitive, they know they need to have connections with finance professionals to help their students entire the finance field.
• Reach out to Vandy alum in finance...there's a bunch of them! Attend Vandy events that introduce alumni to students (I know Tulane does these and I always make sure to attend them).

I'm sure there's even more you could do, but this list should keep you pretty busy! I'll leave you with this: I graduated undergrad with a double major in finance and business and a minor in psychology...and I graduated during the Great Recession without a job. Ya it was embarrassing and sucked to watch all my friends start their careers while I felt "left behind". But I kept at it and found a way to make it happen. Now I look back and am thankful for the tough experience because today's career hurdles feel much more manageable. If you're dedicated and persistent, you'll make it happen too.

You bet, Ruhm. Important to give back and share experiences!

Prospect in IB,

I would say "they're kinda right"! 2+ years IB after college is the path of least resistance into PE. You can still break into PE from a consulting background, but it's much more difficult. And to go straight into PE from undergrad is even more rare. Not to say that this can't happen, but it's a significantly lower probability of occurrence.

The problem is that straight out of undergrad you don't have the skillset or toolbox to provide value to PE firms. Similar to getting an MBA...top MBA programs expect you to have at least 3 years full-time career experience because otherwise you don't bring any value to classroom discussions (because you haven't had any job experience to share!). PE is similar...they want you to get some training and career experience elsewhere first so you can bring those learnings to the fund.

Intern in IB,

1) Comp in IB and PE depends on the size of the firm/fund and location. Obviously larger firms/funds pay more. And if you're located in a major city, the firm has to pay more because cost of living is higher. Often comp gets balanced with quality of life, so it's up to you which is more valuable.

Progression is typically Analyst at IB (you can become Senior Analyst or Associate if you choose to stay greater than 2 years). Then Associate at PE firm. Typically after 2 years you could become Senior Associate. Then VP (typically after 4 years as an Associate). Then the titles get blurred based on your firms naming methodology. Obviously comp increases with title increase.

2) Good question! Think about how different business models work (i.e. what makes a business tick, how does the company make money, how does product/service flow from supplier to end consumer). Understand the 3 financial statements (don't underestimate the value of accounting knowledge for PE). Think about different investment thesis...what industries/companies do you expect to excel in the future?

ArseneWenger,

There are plenty of exit opps out of PE. Common next roles could be: corporate development/business development within a corporation, operations roles within a company (to eventually work your way into COO role), if you're CPA or have CFA certification you could go into finance department/Controller at a company (and work your way to CFO), sales roles, etc...really any business function that doesn't require an separate degree (like lawyer or doctor). You can absolutely go work at a start-up or high growth company...I see this quite often in fact. Associates often go to start-ups to gain more operational experience. Often a VP will go become the President/CEO of one of the fund's portfolio companies (especially at smaller funds). PE skills, just like IB skills, are incredibly transferable and provide for a variety of business job functions if you choose not to stay in buyside. Also, many PE professionals go on to start their own companies!

Analyst 3+,

PE is known to compensate well, so long as your fund performs. As I'm not an MD, I'm not privy to MD compensation. Bbut based on comp surveys, PE professionals (from Associate to MD) tend to get paid well. PE, just like IB, contains long hours. Of course colleagues value life outside the office, but don't expect a 40 hour workweek in either PE or IB. Hours can be very long, especially as an Analyst, Associate, and VP.

I would say if you're worried about the hours in PE/VC or IB, then it's not the industry for you. Also, if you think the work sounds boring, I don't recommend attempting to enter the industry. With long hours, you must enjoy the work. I recommend finding a different industry/job function that you actually enjoy...that way it won't feel like "work".

Hi Analyst 1 in IB,

Here's my perspective, in order of your numbering:

1) The first, and typically hardest, hurdle in MBA prep is taking the GMAT and solidifying a solid score ("solid" can mean different things depending on the level of bschool you wish to attend). For a top tier school, the GMAT really needs to start with a "7". I first took the GMAT the summer after graduating undergrad. My score was not high enough. I then re-took the GMAT while an Analyst in IB. That process of GMAT prep classes/studying/practice tests all while working 90+ hours weeks in IB was terrible! I don't recommend doing that as it's exhausting. Fortunately, my 2nd test score was good enough so I didn't have to take the GMAT a 3rd time. I recommend taking the GMAT early and getting it out of the way before you get too bogged down in work. As you're already an Analyst in IB, maybe you focus on GMAT after your IB role concludes but before your next job (assuming you choose to stay in IB 2-3 years and move on to PE or something else). GMAT scores are good for 5 years, so you have lots of time to decide if you actually want to apply to bschools. Once you have the GMAT handled, applying to schools is just essay writing, which you can do on nights or weekends. I know folks who have banged out bschool applications in a weekend (although I don't recommend it). Good question though...definitely smart to prep early!

2) This is tough. It's really challenging to build rapport with people over email and Zoom calls...especially if you're new at a company. Unfortunately, I don't have a good answer for you. I think it will just take time. The more you work with Associates, the more you'll be able to determine which ones are good vs. not helpful/burnt out. I think a good Associate (from an Analyst's perspective) is someone who explains tasks well, provides constant feedback so you can improve, hits their deadlines, sets appropriate deadlines for Analysts, shares workload fairly, and takes the time to build rapport with his/her team.

For you to perform well remotely, just soak up as much knowledge as possible. Try to be as involved as possible, without overstepping/getting in the way (a difficult balance, I know). Many offices are technically open, although in-office attendance is not required. So maybe (if you feel safe) you choose to go into the office occasionally to see if you can catch another employee in there. I've seen many colleagues and friends do this...but know that you'd be doing it at your own health risk.

3) Diversity in PE has been needed long before the BLM movement. It's needed with PE professionals, as well as PE funds investing in minority-led business. Diversity within the industry is improving, but not nearly at a fast enough pace. There's digest sources out there (like Women's PE Briefs) that literally call out funds for not having any women on their investment teams...it's hilarious, such funds deserve an embarrassing call out!

Also, Cali law SB-826, which was passed, is a great start for requiring women on public Boards...I hope other states follow suit. Same for minorities...Alexis Ohanian (former CEO of Reddit) is a great example of someone in power choosing to step down and requiring the Board fill his seat with a minority (black person in this case). He stepped down specifically to make room for a minority...a great way to lead by example.

The "HOW" for PE to increase diversity needs to start with the leaders of PE funds. If the leaders don't care about diversity within their organization, then they will continue to only hire white men. We need PE leaders who value diversity at the investment table. SoftBank and Andreesen Horowitz's new dedicated funds that only back minority-led companies will help this cause. Also, studies show that diverse funds outperform non-diverse funds (just as diverse Boards outperform non-diverse Boards). Therefore, LPs are starting to require diverse investment teams if the GP wants their dollars. The GPs listen closely to LP desires, so as LPs push for more diversity, that will continue to help.

4) Can't say I've ever felt imposter syndrome. I always try to put forth my best work product, be kind, be honest...overall be a positive add to our industry and the workforce. No reason to feel like an imposter if you work with dedication, ethics, and in good faith. There can definitely be times of unnerving feelings, but I've noticed that dissipates the more I progress in my career.

Hi Intern in IB,

Pre-MBA Associate comp is quite good, especially in comparison to other non-finance industries. Comp will vary based on the size of the fund...obviously larger funds pay more. But keep in mind that they often expect you to work longer hours too! If you go to a smaller fund, it actually could be a pay decrease from your IB days.

I would not go to a fund simply because of the comp. Focus on the firm's investment thesis, the team, the culture, the track record of the fund, the breadth of responsibility you'd have...all of those factors matter much more than comp in the long run.

The MBA definitely gives you a bump in salary. Often it can get you a bump in title too...which of course brings with it a bump in salary. But if you're already on a great career progression in PE, and your firm doesn't require an MBA, why not stay on that progression? It's easier to stay in the industry than come out and go back in later. With that said, if you really want an MBA (like I did) then absolutely get one...you won't regret the experience!

Based on a 2019 Comp study, the average salary + bonus for an Associate ranged $140K - $292K. Obviously the higher end aligns with megafunds (>$1B). The median is $185K. A 1st year Associate would be on the lower end of the spectrum...assuming performance you get a bump every year...and then as post-MBA Senior Associate or VP you'd get an even bigger bump. Associates typically don't get carry.

Thanks namlaera!

Oldtownroad,

I certainly think PE is valuable or else I wouldn't be in the industry. I'm backing fast growing businesses and adding capital to their balance sheets so they can continue to grow. My firm keeps a jobs slide so we track the net jobs we've created across our portfolio...it's great positive number. Also, we always structure deals so that the founders/executives win when we win. I don't have much to say on the topic of folks who disagree with PE...that's their prerogative.

I don't think a PhD is necessary for PE. Can't speak to hedge funds though, my assumption is it's not necessary there either.

Business concentrations (such as finance, accounting, management) are regarded higher than economics. But if next in line is Economics and/or Statistics. Overall, PE employers don't look at degree concentrations as much as GPA, standardized test scores, and most importantly nailing interview questions/models/case studies.

A PhD is useless in any field that is not academia.

I have done one and have been in consulting in London for five years, and I can tell you that a PhD only makes your life more difficult.

Recruiters don’t know what to do with your profile, and companies don’t have a target number of PhDs they want to hire, they just hire you if they really like you. This is very different from hiring graduate students m because at the end they have a target number of bachelor or masters students they have to hire, so they will have to hire someone at the end. PhD hiring is purely discretional, even in places like MBB.

And this applies to getting into Consulting or IB, it makes your life difficult up to nearly impossible. For PE, doing a PhD is like shooting yourself in both feet. Cannot comment on HF, but a quick LinkedIn research should quickly tell you that PhDs are outliers there too.

So, to make it clear: DON’T DO A PHD UNLESS YOU WANT TO WORK IN ACADEMIA.