The Unconventional path to IB/PE (AMA)

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h3dgehog - Certified Professional
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While taking the time to clean and organize my desk after a hectic 4-6 weeks engaged in a deal, I came across my old WSO IB interview materials I used in the past. Seeing these old packets of paper made me realize how grateful I should be instead of being annoyed about how I put in hours of work on a deal that ultimately fell through the cracks. Fueled by my reminiscing, I wanted to take this time to share my story and open the floor for any Q&A.

I am currently a PE analyst at a fairly well-known industry-specific buyout shop and here is my story...

My Story:

I attended a fairly well known private high school where most of the students ended up in ivy universities. However, due to my own undoing, I ended up at a non-target university in a remote part of the country. There I set myself up to go to med school. But like most students who start off with the dream of being a doctor, I realized that it wasn't my cup of tea. I eventually switched gears and decided to go with a liberal arts degree. Fortunately, the new major I ended up with had a significant quant focus, which helped tremendously in getting me to where I am now. But more importantly, my first full-time summer job was what really change my life.

First full time job:

My first full time job during the summer was nowhere near as glamorous as one might expect from an Ivy League student. My first job was in the pits of a restaurant. I dealt with the grimiest and nastiest things you could ever imagine at a crappy restaurant. Despite being paid minimum wage for working past midnight and smelling like garbage after work, I learned more about myself than I would elsewhere. I realized how much I loved money. Coming from a lower-income family, I never really had the luxury of having nice things. So when I got my tiny paychecks every two weeks, it was the best feeling ever. I also learned that I never wanted to end up working with my hands doing manual labor ever. I wanted to sit in a nice air conditioned room and work an office job. While I didn't realize this then, these two realizations about my own self would propel me into the situation I am in now.

Consulting Internship:

Returning to school after my time at the restaurant, I made it a priority to find an internship in an office. Luckily, I was able to spin off my quant knowledge from my classes to a consulting internship. This was not your MBB but rather a small start up that assisted clients in developing marketing strategies based on data driven science. While the work there was most similar to what I did in school, I realized that real-life application wasn't all that exciting. I was putting together decks to recommend X, Y and Z but the client would never execute it without having a financial or strategic reason to do so. This is where I discovered the career path of finance. Most decisions are never made without a financial reason. So I set off to try and break into some finance role in the hopes to drive the decision making processes at a firm. This was fairly daunting since I was not in the business school at my university and not one of my relatives could provide insight (the closest to finance would be an uncle who is a public accountant).

F500 Internship:

Heading back to school this time around, I tried to put together a strategy on how to get a finance internship. Whenever I tried to apply through my school's careers page or online job sites, I couldn't even apply since most finance internships required that you have a major in a business-related study. Luckily, I was able to close this gap by saying that I was "going to" get a second major in economics (close enough!). I took a few econ classes to back up my claim of grabbing an econ major and started to apply. While most firms rejected me outright, one F500 company hired me on as an intern in their capital planning group. At that point I was so excited that I finally broke in.

Enter the first day of my finance internship. I rode my way up to the top floor of the building where all the finance people worked. I felt like a king going to the top floor. Doors open and what I saw wasn't that glamorous. The office floor was lit by a dim soft yellow fluorescent light and it was so quiet that you could almost hear the guy at the furthest cubicle chew his gum. Not to mention the tall cube walls. To keep thing short, it was fun at first but soon got boring. I wanted something with a faster pace with more interaction between folks.

Networking to PE:

So I networked my way trying to find the job that fit my wants. Enter private equity. I met a guy who worked as a portfolio company manager who worked for a PE shop. He gave me the quick n dirty 30 minute run down of what PE was. Most of what he said blew over my head but when I went back home, I research the shit out of it to get a general understanding of what it was about. After keeping in touch with this guy, I eventually landed an interview with the PE shop in their investment team group. I got the spot along with someone from an M7 B-school. The experience was great. Got to build models from scratch, read CIMS, see how investment professionals screen investments, put together memos and do their diligence. In the end I didn't get a full time offer. Neither did the B-school kid. I was now a senior without a full time job lined up. I panicked. I had to go back out and find a job.

Delayed graduation / Networking:

But with three solid internships on my resume it became fairly easy to land interviews for back/middle-office finance roles. But I wanted something more exciting. So after I got a full time offer at a firm and job I settle for, I went ahead and delayed my graduation my senior year. This way, my expected graduation date would suggest that I was still a junior. With a robust resume in hand, I started to network with all the bankers I interacted with during my PE internship. I'd say 80% responded but it only took one guy at a BB to go out of his way to pull me in the loop. He got my interviews. Since we've worked on a deal together at that point, he just asked me the generic why iBanking questions and after 2-3 phone calls with VPs and Directors, I made it to my superday late December my senior year. After acing the interviews, I was on my way to the coveted summer analyst gig later that summer. At that point, I called HR at the firm I signed a full time gig with and reneged. I then delayed graduation by a semester to make it official (didn't sign up for any classes so didn't have to pay extra in tuition).

Summer Analyst experience:

The summer analyst opportunity was fantastic. I met a bunch of people who I could relate with. Ambitious young folks who just wanted to do their best to be the best. Many of whom I'd consider good friends were met there. We stayed up late, stayed out late, and held our breath together when the day came for full time offers to be handed out. Having had more experience and direct working experience with the IB team from my previous PE internship, I had it a little easier. The work was a bit easier and I caught on quicker but that's really because I had an extra year of practice. I ultimately got the full time offer and was wined and dined by the associates and VPs to get me to sign ASAP. After negotiating an earlier start date, I was ready to sign.

Back to PE...

The day I was ready to sign the paper, I got a call from the PE firm I interned for. They essentially wanted me back as a full time analyst. They knew I had an offer with the BB (they supported me and even pulled a few strings). What was a straight forward answer of "do I want to do IB full time" became more complicated... "IB or PE?" I ultimately chose PE for a variety of reasons - 1) more intellectually challenging, 2) better pay, 3) better work-life balance and 4) personal reasons. So here I am as an analyst at a private equity firm looking back at what got me to where I am now. While I worked hard, thoughtfully planned things out and hustled, many have helped me get to where I am now. So that being said, I am open to answering any questions you fellow monkeys have for me. I'll try to respond as best as I can.

Cheers~

ps - PE interview meterials here

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Comments (20)

Apr 1, 2016

Awesome post! Thanks for sharing. Personally I would've probably taken the IB offer and given PE a look after a couple years, but on the other hand who can blame you for taking a full-time PE offer. Good job and good luck!

    • 1
Apr 13, 2016

Chill bro!

Apr 1, 2016

Now that you're in PE. How big of a pendulum dick swing you have?

    • 2
Apr 1, 2016

Awesome post! Thanks for taking the time to do this.

Out of the people at your shop that didn't do banking, what were their backgrounds?

Apr 3, 2016

The guys on my deal team from analyst to MD have backgrounds in IB, audit, consulting, engineering, and PE. Most of the senior guys on our deal team have had extensive experience in the industry we invest in while the more junior guys come in with just finance-type experience.

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Apr 6, 2016
h3dgehog:

The guys on my deal team from analyst to MD have backgrounds in IB, audit, consulting, engineering, and PE. Most of the senior guys on our deal team have had extensive experience in the industry we invest in while the more junior guys come in with just finance-type experience.

I have spent a lot of time recently checking experience profiles of PE professionals across London-based firms and concur with this statement. The vast majority of professionals up to VP/AD level are a mix of ex-IB/consulting. However, as I checked profiles of increasingly senior professionals, the pre-PE experience broadened dramatically. I tend to think that this is the result of PE being a somewhat new industry, which only recently (10-15 years ago) adjusted its recruiting pool.

Apr 1, 2016

Thanks for sharing! Very impressive story.

I think what strikes me the most is that you weren't afraid to stick up for yourself and do what was best for YOU. I think the fact that you would do whatever it takes (delay graduation, reneg, fake a double major, turn down BB IB offer) but still do it with enough tact that you didn't derail your upward trajectory, is what is most impressive to me (especially since you are so young).

You used each experience as a building block to get the PE role (in my opinion, your decision was a no brainer)...you realized the importance of building up strong internship experience on your resume and this opened a lot of doors :-)

Congrats and I wish you continued success!
Patrick

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Apr 2, 2016

Great post! I might potentially be in the same situation as you were in (senior year without any full-time offers). After reading your post I'm more inclined to delay my graduation and take on a gap year to complete more internships. Just one question, how did you go about networking? Like what are some of the things you did that are critical to networking?

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Best Response
Apr 3, 2016

If you can, I would try to get a full time offer first before looking at internships. That way you always have a fall back in case the internship search doesn't prove fruitful.

In terms of networking, I did the whole gamut of strategies. I cold called, cold emailed, flew out for a networking trip, etc etc. Most of the guys I connected were helpful but never really went out of their way to get me in the door. They gave me feedback on my story. That said, I think having a solid story that explains the decisions you've made and why you want to do IB is critical. Yes networking is a numbers game but quality is important as well.

For me it was: 1) desire to do pre-med led me to school I attend now. 2) realized it wasn't form me so I did a quant heavy study. 3) used it to do consulting. 4) realized consulting doesn't help clients make decisions, it is finance. 5) did corporate finance and loved it but was boring and wanted something more client facing. 6) Ended up in PE and got to work with bankers and was intrigued by all the nuances in running a deal process (e.g. data room management, financial modeling, etc). 7) This is why I want to do IB.

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Apr 3, 2016

Good post. I currently have had a pipe dream of working at a local PE fund (there's only 2 in my area) and this was a great thread on when it is a better decision to do it. Of course, the funds may not be looking for FT hires or interns but I do know that i have to give both of them at least a shot.

Apr 5, 2016

How did you come from a poor family and attend a private high school?

Absolute truths don't exist... celebrated opinions do.

Apr 6, 2016

I received a full ride scholarship to attend. Otherwise you are correct, it would have not been financially possible for me to have attended a private high school.

Apr 6, 2016

Great post! With dedication and proper planning and some calculated risks nothing is impossible...

Debjit Dutta

Apr 11, 2016

Really cool story. Unpopular / bold decisions.. gotta respect that

Aug 27, 2016

Awesome post. But, it seems like you had a lot of luck (i.e. people pulling strings for you etc.). I'm sure it wasn't easy sailing as you have made it sound. Do you have any words of inspiration on how you networked to pull strings (i.e. get the PE firm to help you land BB offer; get that analyst to help pull strings to land offer; et al etc).

Cheers

Aug 28, 2016

What I've learned from networking is that it's a total crap shoot...
1) some people are more willing to help others than others
2) different people define "help" in different ways
3) not all people have the ability to land you a job

I think the success of networking came down to three general components:
1) Volume... this is really a numbers game since there is no way to filter for people who are "helpful" vs not "helpful". Just reach out to as many people as possible.
2) Quality... being able to display your intelligence is important since it will give the counter party some confidence in you as a potential hire. This can be through your achievements but it can also be from the way you present yourself.
3) Personal Connection... there are so many qualified people in the world so it's important to make a more personal connection. Get people to become personal vested in your success (this depends on the personality of the counter party).

I am a huge believer of luck, which is why I am very big on volunteering. But in ways, you can manage your own luck by being proactive and hard working. Since luck is a game of statistics, your hard work may not be rewarded immediately. I could take 6 months, 1 year or 10. The path to success in my opinion is to try hard and never give up (if you are truly passionate about it).

    • 1
Jan 2, 2017

I've been taking the past week off to catch up on my personal life and I came across a handful of personal messages asking for advice/input on how to make the path into PE, both at the analyst and associate level. So I figured I'd post something public to reduce the number of private messages and for the benefit of everyone else here on WSO.

Networking aside, the most common question people ask me is "what do I need to know going into an interview?" or "what are the things that PE firms look for in candidates". To take a fairly loaded question and answer it in a single line would be: "show the interviewers that you can think critically/creatively like an investor".

With interest rates at lows and an increasing number of private equity shops both big and small, the ability to squeeze out huge returns through the use of leverage and financial engineering alone has gone down (this is what I've been seeing and have heard from others). In other words, people need to be evermore creative in finding good deals and extracting value.

So now people are probably asking "what the hell does that mean?...." It means that technical understanding alone won't get you anywhere far. However, it is the foundation for being able to think critically. Some common responses I've gotten from folks at this point have been "well that's great... I have a masters in finance" or "should be pretty easy, I already have [x] years in IB".

The problem with this type of thinking is that most often than not, the kind of experience you've been exposed to thus far is probably not 100% suited for PE. So I would encourage people both inexperience and experienced to grab a study guide that is **actually **PE-focused to get the right kind of technical understanding that can act as the proper foundation for critical/creative thinking like that of a smart investor. One of the study guides I've personally seen and read through was the WSO PE guide, which is an excellent source of technicals. The case studies are a great way to exercise your critical thinking as well.

My advice is obviously biased from my own experience, but it is advice nonetheless. Anyways, good luck to everyone here as we enter the new year!

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Feb 22, 2017

Inspiring story, congratulations! How did you learn the modeling? did they teach you during your internship at the PE firm or did you have to learn that on your own?

"You adapt, evolve, compete, or die." -Paul Tudor Jones

Feb 22, 2017

There was no formal training program beyond a few packets of "excel shortcuts and general finance terminologies".

I had to learn the modeling on my own. I asked a few associates, what each of their "favorite" model was and I spent the first few weeks recreating it over and over until I didn't have to reference the original file and I could quickly recreate the model efficiently. Obviously, this paralleled the need to actually study the industry so that I wasn't being a complete monkey calculator.

    • 1
Feb 22, 2017