Getting a Job in Private Equity E-Book

Brian Korb

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2008

Beschreibung

If you're seriously considering a career in private equity, you have to become familiar with how firms hire. With Getting a Job in Private Equity, you'll gain invaluable insights that will allow you to stay one step ahead of other individuals looking to secure a position in this field. Here, you'll discover what it takes to make it in PE from different entry points, what experience is needed to set yourself up for a position, and what can be done to improve your chances of landing one of these limited opportunities.

Leseprobe

Table of Contents

Title Page

Copyright Page

PREFACE

REAL-LIFE STORIES

Acknowledgements

ABOUT THE AUTHORS

GLOCAP SEARCH

Chapter I - GETTING STARTED

THE MARKET TODAY

PRIVATE EQUITY 101

WHO IS WHO AT THE FUNDS

HIRING TERMS YOU SHOULD KNOW

Chapter II - OUT OF UNDERGRAD

THE TRADITIONAL PATH

POSITIONING YOURSELF FOR AN ANALYST PROGRAM

OTHER OPTIONS

WHAT IF I’M OFFERED A JOB STRAIGHT AFTER GRADUATION?

Chapter III - PRE-MBA

THE ROLE

HIRING

AN ADDITIONAL WORD ON CONSULTANTS

OTHER CANDIDATES

CASE STUDIES

Chapter IV - OUT OF BUSINESS SCHOOL

THE HIRING CYCLE

THE MARKET AND THE COMPETITION

MBAs WITH PRIOR PRIVATE EQUITY EXPERIENCE

MBAs WITHOUT PRIOR PRIVATE EQUITY EXPERIENCE

CASE STUDIES: MBAs WITH PE EXPERIENCE

CASE STUDIES: MBAS WITHOUT PE EXPERIENCE

Chapter V - POSTGRADUATE SCHOOL: EXPERIENCED DEAL/ADVISORY PROFESSIONALS

POSITIONING YOURSELF

Chapter VI - POSTGRADUATE SCHOOL: EXPERIENCED NON-DEAL/ ADVISORY PROFESSIONALS

BREAKING IN

WHAT ABOUT THOSE FROM INDUSTRY?

CASE STUDY

Chapter VII - BREAKING INTO VENTURE CAPITAL

YOUR FIRST ROLE

AN INSIDER’S VIEW OF THE VC MIND-SET

BREAKING IN: THE PROCESS

BREAKING IN: THE SKILL SET

BREAKING IN: HELPING YOUR CAUSE

THE ENTREPRENEUR IN RESIDENCE

THE KAUFFMAN FELLOWS PROGRAM

ARE A FEW YEARS AS A NON-PARTNER WORTH IT?

BECOMING A PARTNER

CASE STUDIES

SAMPLE JOB SEARCHES

Chapter VIII - WORKING AT FUND OF FUNDS, HYBRID FUNDS, AND SECONDARY FUNDS

FUND OF FUNDS

EXPANDING INTO HYBRID STRATEGIES

SKILLS

ROLES

CAREER PATH/HIRING

INTERVIEWS

TRENDS

SAMPLE JOB SEARCHES

CASE STUDIES

Chapter IX - FINDING THE RIGHT FIT

TARGETING THE RIGHT FUNDS

EVALUATING YOUR CHOICES

Chapter X - THE RESUME

ELEMENTS OF AN EFFECTIVE RESUME

SAMPLE RESUMES

Chapter XI - THE INTERVIEW

LATER-STAGE PE/LBO INTERVIEWS

VENTURE CAPITAL INTERVIEWS

GENERAL TIPS

Chapter XII - COMPENSATION

PRIVATE EQUITY VERSUS HEDGE FUNDS

VENTURE CAPITAL

FUND OF FUNDS

COMPENSATION TRENDS

CARRY

Chapter XIII - WORKING WITH A RECRUITER

TIPS FOR WORKING WITH A RECRUITER

Chapter XIV - ON THE JOB: WHAT TO EXPECT

EXPECT MORE RESPONSIBILITY

EXPECT TO THINK LIKE AN INVESTOR

EXPECT LESS MODELING, MORE DUE DILIGENCE

EXPECT MINIMAL TRAINING

EXPECT A LESS STRUCTURED WORK ENVIRONMENT

GENERAL PREPARATION TIPS

Appendix A - RESOURCES

Appendix B - SAMPLE RESUMES

Copyright © 2009 by Glocap Search LLC. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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eISBN : 978-0-470-45688-0

PREFACE

When we sat down to write this guide, our goal was to paint an accurate picture of career prospects in the private equity industry. We wanted to excite candidates about the industry and encourage them to pursue their dream job. At the same time, however, we didn’t want to give anyone false hopes. For most, finding a position in private equity will be difficult, as the number of candidates pursuing private equity opportunities has always far outpaced the number of available positions.

Perhaps never before has the private equity profession wielded such power or played as important a role in the financial markets as it does at present. The appeal of working in the industry is obvious: Private equity is about investing millions (sometimes billions) of dollars into companies and helping determine their fate by exerting influence on operations and strategy, and in today’s market that includes some of the most prominent companies in the world. Private equity investors work with companies from the initial investment to the time they are taken public or sold. They are passionate about investing and have the ability to create tremendous value.

If you’ve already looked into getting a position at a private equity fund, you may have been warned that the challenge could be daunting and the competition fierce. This guide will give you a better understanding of the career path in private equity and how the hiring process works. However, we do not profess to offer surefire, can’t-miss strategies for securing a position, because there simply aren’t any! Remember, too, as in other industries, there can be timing issues and natural business cycles that are out of your control. Instead, our aim is to give you insight into the elements that are in your control so you can put your best foot forward during your pursuit of a job. This guide also does not take a textbook look at private equity, give a detailed history of the industry, or explain how funds are raised and deals are done. You can get that information from many other sources (some of which are listed in Appendix A).

We segment candidates seeking positions in private equity by where they are in their professional careers, and thus we have chapters on the most common entry points: out of undergrad, pre-MBA (which, as you will see, often means being hired out of an investment banking or consulting analyst program as these are typical initial feeders into private equity jobs), from business school and postgraduate school. We devote a separate chapter to venture capital (earlier-stage investing) because the skill sets that venture funds look for, the timing of the opportunities to break in, and the career track can all differ significantly from later-stage private equity funds. There is also a chapter on private equity fund of funds, hybrid funds, and secondary funds, as those run slightly different recruiting processes and hire different types of candidates.

This guide focuses primarily on junior and senior (non-partner) roles at mid- and later-stage private equity and leveraged buyout (LBO) funds. When we use the traditional term private equity (PE), we are referring to the entire spectrum of early- to later-stage investing. When discussing a specific portion of the market, for example venture capital or buyouts, we will note it by name.

Most candidates target a long-term career in private equity by following what we call the traditional path, which starts early in their career. We also call this the 2-2-2 route because it usually involves spending two years in an analyst training program (usually investment banking or consulting), followed by two years in a private equity firm and then two years in business school before securing a career-track opportunity. As you read this guide, you will learn that it is increasingly difficult to enter the process later in your career to make up for missed experiences. If you didn’t land in an investment banking or consulting analyst program after graduating from college, it will be more difficult to secure a pre-MBA position at a PE/LBO fund; and if you wake up one day in business school (or several years later) and have an epiphany that PE investing is your true calling but you lack prior PE experience, the battle is likely to be even more challenging.

We will outline the traditional path and refer to it throughout this guide, but it is not the only way to get into PE. There are those who break in via other ways, and we make certain to give attention to them as well.

REAL-LIFE STORIES

As recruiters who specialize in private equity, we are well-positioned to offer career advice: We know what the hiring firms demand and we are intimately aware of the experiences of candidates who have successfully found positions. Thus, in addition to our own guidance, we believe a great way for you to really get a grasp of the private equity search process is to read insight from those on both sides of the equation who have experienced it firsthand. For the hiring firms, we include insight (Insider Tips) throughout the book from PE professionals, some of whom are in positions where they make hiring decisions.

On the candidate side, we have firsthand accounts (case studies) of 36 individuals who went through the search process, and we have included resumes from 15 of them. The experiences outlined in the case studies run the gamut from those who broke into PE the more traditional way to those who lacked the usual requirements but were still able to secure a position in a less traditional way. We have case studies from pre-MBAs, current MBAs, and professionals up to several years out of graduate school. What the authors of all the case studies have in common is that they were top performers and high achievers both academically and professionally and had a burning desire to succeed.

By reading the case studies you will quickly see that, in most instances, to secure a position in private equity you must be willing to commit early, put in the work, get the best education/training, and do whatever else it takes to excel—and that’s true whether you eventually break in via the traditional or nontraditional path. Are we saying that many of our readers will find a position without the traditional background? No, but if you follow the advice of those who were the exceptions, and if you, too, have a stellar reputation and are willing to work hard, you can improve your chances of being an exception as well.

We believe the competitiveness, intensity, pace, and even the potential for compensation in the private equity industry parallels the sports world; therefore, at times we use professional sports analogies to describe various aspects of the job market. In fact, sports terms are commonly used by private equity professionals, so you may find being familiar with them a useful asset going forward. For example, funds hiring at the more senior level may tell us they are looking for someone who can quarterback a deal. When targeting junior level staff, the same funds say they want people who can block and tackle for their deal teams. Mid-market funds often want utility fielders who can take on many roles, given that they are smaller, less structured organizations.

We view the process of finding a position in private equity as similar to that of reaching the pinnacle of professional sports; thus, as someone striving to make it, we think you should tackle your search in a similar way as someone training to be a pro athlete. Think of working in private equity as the major leagues. To succeed in either athletics or private equity you need to have a high level of natural ability and work overtime to make up for areas in which you are deficient. In baseball, if a pitcher can’t throw a 90-mile-per-hour fastball he will have a tough time making it to the majors. And even if he can throw 90 mph, there is no guarantee he will make it. You may have everything that it takes to eventually work in private equity, but for a variety of reasons could still find yourself on the short end of the stick. We hope this guide will also help you reduce the chances of that happening to you.

If you want to be a big earner and a superstar in this industry, you are going to have to do the work to get there—but you will have to do the right work. Anyone can work hard. Getting ahead in PE is about working smarter and getting on track early. We wish you luck!

ACKNOWLEDGMENTS

The authors would like to acknowledge the following members of Glocap’s Executive Search team who were instrumental in helping put this book together: Joanna Albright, Pamela Harrington, Katherine Sorensen, and Sarah Woods. We would also like to thank the many industry executives whose views (though anonymous) we believe will provide readers with unique insight into the private equity hiring process; and we thank the authors of the case studies, who shared with us their stories of how they secured positions in private equity.

ABOUT THE AUTHORS

Brian Korb is a co-founder of Glocap and is the head of the private equity practice. Brian also oversees several aspects of the Executive Recruiting division and personally focuses on placing experienced principal and partner-level investment professionals into venture capital and LBO funds. From his experience over the past decade covering the private equity industry, Brian has developed a deep insight on emerging compensation and hiring trends, and he is frequently quoted in industry publications and mainstream media. In addition to this book, Brian oversees Glocap’s annual Private Equity Compensation Report.

Before joining Glocap, Brian worked at Deutsche Morgan Grenfell, focusing mainly on corporate finance transactions. He graduated with a B.S. in economics from The Wharton School with concentrations in finance and accounting.

Aaron Finkel is vice president and head of publications at Glocap. In addition to coauthoring this book, Aaron coauthored Glocap’s Guide to Getting a Job in Hedge Funds. He also coordinates the research, analysis, and production of Glocap’s annual Private Equity and Hedge Fund Compensation Reports and handles all media relations. Aaron has over 17 years of experience in financial journalism, 11 years of which were spent at Institutional Investor’s newsletters, where he worked as a reporter, editor, and publisher. Aaron has covered various topics throughout his career, including emerging markets, corporate finance, and asset management. Prior to his time at Institutional Investor, Aaron lived and worked in Venezuela for five years. He is a graduate of Brandeis University.

GLOCAP SEARCH

Glocap Search (www.glocap.com) is an executive search firm focused on the alternative asset industry and has a global practice placing investment professionals at all levels, from general partners to analysts, into private equity funds. It also has substantial practices placing CFOs, controllers, and COOs, as well as admin/support, IT, and marketing professionals, into these same funds.

With over 100 recruiters and offices in the United States and abroad, Glocap is one of the leading search firms serving the alternative asset community. Glocap’s dedicated, specialized teams of search consultants have all worked in the industry into which they place or from which they draw their candidates and have similar educational pedigree. This insider position, and the level of knowledge that comes with it, gives us the ability to work in close partnership with clients to understand in depth their needs, culture, and internal processes. In many cases, in addition to placing professionals for our clients, we act as a trusted adviser on compensation trends, optimal organizational structure, and competitive landscape.

Chapter I

GETTING STARTED

The private equity market has gone through a major transformation over the past two decades, with many of the most dramatic changes occurring over the past few years. As you are likely aware, you are attempting to enter one of the highest profile sectors of the financial markets—one that is wielding significant influence on the economy while at the same time creating great wealth for its investors. The wealth that has been amassed has played a significant role in increasing the attractiveness of the sector and thereby further fueling the competitive environment to enter. This chapter begins with a brief overview of the current state of the private equity market giving particular attention to how recent changes have affected hiring. It also provides a basic introduction to private equity.

THE MARKET TODAY

Notwithstanding the 2008 credit crunch and general market turbulence, it’s safe to say that today’s private equity (PE) industry is still a major force in the financial world and that it bears little resemblance to the fledgling market of nearly 30 years ago when there were just a few practitioners. Perhaps nowhere is the magnitude of the industry more apparent than in the size of today’s buyout funds. In 1980, Kohlberg Kravis Roberts & Co. (KKR) ran the world’s largest buyout fund at $135 million. In today’s buyout world, in which firms compete to one-up each other, $1 billion funds are commonplace and the $20 billion barrier has been broken.