There is no standard way of entering the Private Equity industry, but this article aims at illuminate the typical characteristics that private equity firms are looking for in a candidate.
What age or level of experience do private equity firms want?
- The large majority of people joining private equity firms do so after 2 to 5 years work experience in relevant field such as investment banking, strategy consulting, corporate development or restructuring.
- It is very unusual for people to join a private equity firms right after graduation from an undergraduate degree. The main reason is that most private equity firms are small and do not have the ability to train people within the firm. Notable exceptions include the very big private equity firms such as Blackstone, who sometime hire from undergraduate degrees - but note that the students will typically have had several internships in banking, strategy consulting, restructuring or at other private equity firms to be considered.
- A common route to enter private equity is right after an MBA (more common in the US). Similarly, this implies 2 to 5 years prior experience in relevant fields.
- Age is always a sensitive topic but most private equity firms like to hire people below 30 for an entry position.
What are the typical educational backgrounds?
- Private equity is notoriously picky about educational backgrounds, are will usually target graduates from top universities. In Europe, there is a strong representation from schools such as Oxford/Cambridge in the UK, HEC/Essec in France, etc. The reasons are that they have a large choice of applicants so the school is an easy first screen, and also because the networking aspect of private equity is quite important (who you know matters). Note that coming from a good school is not enough and is often just a pre-requisite. If you are not from one of those top schools however, it is still possible to break in if you have an oustanding work experience, skills or achievements.
- For holders of MBA degrees, Private Equity is also very picky, even more than for undergraduate degrees. The very large majority of MBAs in private equity in Europe come from 3 schools: Harvard, Wharton and Insead (also Stanford in the US).
- While you don't need to be a finance major, your degree should demonstrate strong analytical ability. Science and finance degrees therefore tend to be popular.
What are the typical professional backgrounds?
On top of a great education (ideally with top grades and lots of extra curricular activities), Private Equity firms like to see prestigious company names and impressive transactions. The most common backgrounds are:
- Investment bankers: usually from 2nd year analyst to 1st year associate levels. Why? Because of the excel modelling training, transaction management skills, ability to work extremely hard and sometimes sector knowledge. Rule of thumb is that the larger the Private Equity firm you apply to, the more demanding they will be in terms of investment bank "prestige". The large majority of ex-bankers in private equity come from Goldman Sachs, Morgan Stanley, ex-Lehman Brothers, ex-Merrill Lynch, Rothschild and Lazard. Some private equity firms will ask for your analyst/associate ranking, and the more deals you have done, the better. You can still break in from smaller banks but you will need some really impressive transactions or other specific skills.
- Junior Strategy consultants. Why? for the strategic thinking ability, ability to work very hard, and sector knowledge. Consultants are a bit less prevalent than bankers in private equity because they usually lack a bit in modelling skills, but people working at firms such as McKinsey, Bain & Co and BCG will have a good shot at private equity jobs, especially if they have worked on private equity due diligence assignements. Some PE firms (like Bain Capital) focus on hiring strategy consultants are opposed to bankers.
- "Others": depending on the firm, private equity companies may hire qualified accountants from the Big 4 (if they worked on private equity deals - very UK specific background), people from restructuring and sometimes you can find people with a bit more unconventional backgrounds (i.e. equity research, ECM, corporate strategy).
What other characteristics are private equity firms looking for?
On top of a great education, a great work experience at a top firm, private equity firms would really like to see:
- Languages. The more you speak fluently, the better. You can significantly increase your chances if you speak 2 or 3 European languages fluently, and in most cases English + another European language is required. Hot languages include Nordic languages and Eastern European languages. German, French, Italian, Spanish and Dutch are also very useful.
- Extracurriculars. To make you stand out from the rest, extracurriculars are very useful, especially if they are impressive. Being an athlete, an artist or anything that shows that you are a well rounded person is often required!
- The entrepreneurial drive and leadership: anything that shows that you are a driven person that like to have initiatives. Being a club president, organising charities, etc.
- previously published at AskIvy.com