Author: Byron Cowan
Landing a Job in Private Equity
Private equity is a highly competitive industry that attracts a large pool of applicants for a limited number of job openings. Candidates need to possess the right combination of skills and experience to stand out in this challenging job market.
Despite Economic Uncertainties, Private Equity Hiring on the Rise:
Private equity hiring has been on the rise over the past few years, with an increasing demand for skilled professionals in the industry. The COVID-19 pandemic did not dampen this trend, as private equity firms continued to hire in 2020.
Private Equity Salaries: Varying Compensation for Different Roles:
Compensation in private equity varies significantly based on the employee’s experience level, job function, firm size, location, and other factors. The average salary for private equity associates is $87,000, while partners and managing directors can earn upwards of $500,000 per year.
Rigorous Hiring Process in Private Equity:
Private equity firms have a lengthy and rigorous hiring process that involves multiple stages of interviews and assessments. They seek to hire the best candidates who can add value to their team and portfolio companies.
Networking Key to Success in Private Equity Job Search:
Networking is crucial in the private equity industry, as referrals from industry professionals or alumni can significantly improve one’s chances of landing a job. Therefore, building a strong network within the industry is essential.
- Build a strong financial background: Private equity firms generally look for candidates who have a strong background in finance. Having a degree in finance, business, economics, or accounting may be beneficial, along with relevant certifications such as the CFA (Chartered Financial Analyst) or CPA (Certified Public Accountant).
- Gain experience in investment banking or consulting: Working in investment banking, corporate finance, or management consulting can provide valuable skills and experience that are highly transferable to a private equity career.
- Network: Networking is crucial in the private equity industry. Attending industry events, connecting with alumni from your university working in the industry, joining private equity associations, and reaching out to recruiters.
- Research and target firms: Research the private equity firms you are interested in and understand their investment focus and culture. Be strategic in your approach and target firms that align with your career goals.
- Be patient: Getting a job in private equity can take time. Be patient and persistent and be willing to start in a lower-level role and work your way up.
- Be prepared for interviews: Prepare for interviews by researching the firm’s portfolio companies, investment strategies, and culture. Be ready to discuss your experience in finance and your understanding of private equity.
- Build a strong track record: Build a strong track record of deal experience, either through internships or in your current job. Demonstrating your ability to add value to portfolio companies can make you stand out as a candidate.
Blackmore and BlackmoreConnects are always looking for talented individuals motivated individuals that want to learn about this space.
Check out the link here: internships
Now that you have educated yourself in this space and started applying for jobs, you should start preparing for the interviews coming your way. Private equity job interviews can be intense and involve a combination of technical questions and behavioral questions. Here are some commonly asked private equities job interview questions:
- Technical Questions:
– Can you walk me through a discounted cash flow analysis?
– How do you value a company using the multiples method?
– What are the factors to consider when selecting an investment to pursue?
– What is LBO and how does it work?
– What are the different sources of financing a Leveraged Buyout?
– What is an accretion/dilution analysis?
- Behavioral Questions:
– Why do you want to work in private equity?
– Can you tell me about a time when you had to make a difficult decision?
– What is your investment philosophy?
– How do you handle challenging teamwork situations?
– Can you tell me about a time when you faced a challenging valuation problem?
- Case Studies:
– Walk me through a pitch on a private equity investment opportunity you would pursue.
– Can you value this company and justify its acquisition price?
– How do you determine the exit timing and the exit route for a portfolio company?
Preparing for private equity job interviews requires a combination of technical knowledge, critical thinking, and behavioral skills. So, it is important to practice your interviewing skills by reviewing these questions and preparing your responses.
A typical day in private equity can vary depending on the role, the firm’s size, and the current stage of investment. However, here is an overview of what a day in private equity might look like:
- Morning Meeting: Private equity firms typically start their day with a morning meeting where they discuss various ongoing investments, potential deals and market trends.
- Investment Analysis: Private equity professionals spend a significant amount of time analyzing potential investments. This may involve reviewing financial statements, modeling cash flows, and conducting market research.
- Deal Sourcing: Private equity firms are always looking for new investment opportunities, so deal sourcing is an important part of their routine. This could involve networking, attending conferences or monitoring industry trends.
- Due Diligence: Once a potential investment is identified, the private equity team conducts rigorous due diligence. This involves a thorough examination of the investment’s financials, market dynamics, company management and other aspects.
- Negotiation & Closing: If the due diligence checks out, the private equity firm will negotiate the terms of the investment, finalize the deal and ensure that all necessary documentation is complete.
- Portfolio Management: Post deal, the private equity team manages the investment in the company, making sure it is on track to achieve expected returns. This could involve monitoring performance, strategic planning and providing operational support.
- Exit Strategy: The goal of most private equity investments is a successful exit. This could happen through an IPO, a strategic sale or a merger. As such, private equity professionals often spend considerable time developing and implementing exit strategies.
Overall, a day in private equity is typically hectic and growth-oriented. The work is challenging and fast-paced, but the rewards can be highly fulfilling. Like anything, consistency is the key to achieving your goals. Doing your research on the firms you target for employment. Practicing interview questions, having the skill set needed for your targets, following up with your targets, and focusing your efforts on what value you bring to the table.
Good luck and happy hunting!
Written by Byron Cowan