GETTING A JOB IN PRIVATE EQU ITY BEHIND-THE-SCENES INSIGHT INTO HOW PRIVATE EQUITY FIRMS HIRE BRIAN KORB AARON FINKEL AND John Wiley & Sons, Inc. ffffiirrss..iinndddd ii 99//1166//0088 99::4466::0088 AAMM ffttoocc..iinndddd iivv 99//1166//0088 55::3300::0066 PPMM GETTING A JOB IN PRIVATE EQU ITY BEHIND-THE-SCENES INSIGHT INTO HOW PRIVATE EQUITY FIRMS HIRE BRIAN KORB AARON FINKEL AND John Wiley & Sons, Inc. ffffiirrss..iinndddd ii 99//1166//0088 99::4466::0088 AAMM 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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ISBN-13 978-0-470-29262-4 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 ffffiirrss..iinndddd iiii 99//1166//0088 99::4466::0099 AAMM CONTENTS Preface v Acknowledgments viii About the Authors ix Chapter I Getting Started 1 Chapter II Out of Undergrad 19 Chapter III Pre-MBA 25 Chapter IV Out of Business School 59 Chapter V Post Graduate School: Experienced Deal/Advisory Professionals 89 Chapter VI Post Graduate School: Experienced Non-Deal/Advisory Professionals 97 Chapter VII Breaking into Venture Capital 103 Chapter VIII Working at Fund of Funds, Hybrid Funds & Secondary Funds 129 Chapter IX Finding the Right Fit 145 Chapter X The Resume 155 Chapter XI The Interview 161 Chapter XII Compensation 177 Chapter XIII Working with a Recruiter 181 Chapter XIV On the Job: What to Expect 185 Appendix A Resources 193 Appendix B Sample Resumes 199 iii ffttoocc..iinndddd iiiiii 99//1166//0088 55::3300::0055 PPMM ffttoocc..iinndddd iivv 99//1166//0088 55::3300::0066 PPMM PREFACE W hen 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, how- ever, we didn’ t want to give anyone false hopes. For most, fi nding a position in private equity will be diffi cult, as the number of candidates pursuing private equity opportuni- ties has always far outpaced the number of available positions. P erhaps never before has the private equity profession wielded such power or played as important a role in the fi nancial markets as it does at present. The appeal of work- ing in the industry is obvious: Private equity is about investing millions (sometimes billions) of dollars into companies and helping determine their fate by exerting infl u- ence 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 pas- sionate about investing and have the ability to create tremendous value. I f you’ v e 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 fi erce. 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 surefi re, 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 informa- tion from many other sources (some of which are listed in Appendix A). W e 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 i nitial 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 signifi cantly from later - stage private equity funds. There is v ffpprreeff..iinndddd vv 99//1166//0088 99::4499::5511 AAMM vi Preface 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 -s tage private equity and leveraged buyout (LBO) funds. When we use the tra- ditional term private equity (PE), we are referring to the entire spectrum of early - to later - stage investing. When discussing a specifi c 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 fi rm and then two years in business school before securing a career- t rack opportunity. As you read this guide, you will learn that it is increasingly diffi cult to enter the proc- ess 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 diffi cult 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 A s recruiters who specialize in private equity, we are well- p ositioned to offer career advice: We know what the hiring fi rms 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 r eally 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 fi rsthand. For the hiring fi rms, 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 fi rsthand 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. ffpprreeff..iinndddd vvii 99//1166//0088 99::4499::5522 AAMM Preface vii 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 fi nd a position without the traditional back- ground? 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. W e believe the competitiveness, intensity, pace, and even the potential for com- pensation 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 fi nd 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 q uarterback a deal. When targeting junior level staff, the same funds say they want people who can b lock and tackle for their deal teams. Mid- m arket funds often want utility fi elders who can take on many roles, given that they are smaller, less structured organizations. We view the process of fi nding 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 defi cient. 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 c an 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 vari- ety of reasons could still fi nd yourself on the short end of the stick. We hope this guide will also help you reduce the chances of that happening to you. I f 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! ffpprreeff..iinndddd vviiii 99//1166//0088 99::4499::5522 AAMM