Ultimate recruiting guide (slight consultant spin) –
Hey guys – with the quarantine going on I’ve had a pretty light work and social schedule. So I decided to write out a guide on PE recruiting. For background, I’m an MBB consultant from a 2nd tier city (think Denver, Dallas, or Nashville). I got an offer during off cycle for an UMM fund (latest fund size $10bn+).
I’ll break down the whole recruiting process into a couple of buckets:
• Background to get in
• Study/Prep
• Interview process
• How to pick an offer
Background to get in
Funds are generally looking for a very specific background. For consultants – you need to have an MBB pedigrees to get looks at upper tier places (Fund size 3bn+). Tier 2 consulting firms can break into some middle market funds and, on occasion, some of the larger funds.
Even if you’re at an MBB firm – you should aim to work on private equity or corporate M&A deals. Frankly, there are a lot of BS cases out there. Things like “change management” or cases that focus on workshops aren’t going to get you many looks. It’s important to advocate for case experience that’s modeling / due diligence heavy especially if you’re at one of those tier 2 shops.
Study/Prep
There are a couple different steps in PE prep. To kick things off – I would suggest investing in some study guides. WSO’s PE study guide is your best bet and definitely worth it. The vault guide is also an OK source though has some errors scattered throughout. Beyond that googling different topics as needed is helpful. I would break down studying in a few portions:
- Figuring out what PE is and basic technicals – I highly recommend everyone take some time to understand PE. This involves chatting with folks currently in the industry and understanding what their day-to-day looks like and how it compares to consulting/banking. E.g. if you hate modeling then you’re gonna hate PE. I would also recommend reading books like Kings of Capital or Barbarians at the Gate – those are as exciting as the industry gets and if they don’t peak your interest, then the job likely won’t. I would also use this time to understand some basic financial technical – 3 statements, valuation, etc. That applies more so to consultants.
- Learn to model – Essentially, this is a matter of practice. Start by doing 10 or so paper lbo models. Then do 10 or so 1hr lbo models. Then 10 or 3 statement models. As a consultant, you can get away with just learning up to the 1hr model. Honestly – everyone freaks out about this part but it’s really just a matter of practice
- Prepping for case studies – In my opinion this is what will really f*ck you. This is where you’ll get tested on your ability to think like an investor. I would suggest grabbing a copy of Case-in-point and understanding the framework for tackling cases. Beyond that I would create a framework for how to answer- “What would you need to know to make X a good investment”. You can basically boil it down to cash flow, industry, and deal economics (e.g. purchase prices). I would just build out the details below each of those.
- Random questions you’ll get asked – PE funds will ask you a ton of random business-related question. E.g. Would you rather invest in copper or a copper mining company if you know the price of copper will 3x in 5 years OR Would you rather invest in a steel mfg company, airplane mfg, airplane leasing business, airline business, or travel booking agency. Folks will say there isn’t a right answer, but there almost definitely is a form of thinking that the fund if looking for. For this – I would recommend just asking people for advice on tricky questions and how they answered them.
Interview process
All interviews hinge on the headhunters. Usually they’ll reach out to you ahead of time and you can set an appointment with them. When you meet you need to have a very clear idea of what you want (e.g. MFs based in NY and ideally focused on Healthcare). If you’re not super clear on what you want, then the HH likely won’t take you seriously. Beyond that – you should understand how your experiences relates to PE and a general understanding of what PE does. Essentially don’t do HH calls until you’ve mastered step 1 in the above. The actual interviews fall into either an on-cycle or off-cycle process
On-cycle
Essentially, on a random date you’ll hear that “on-cycle” has kicked off. Historically, it’s occurred a month before last year – the past year it happened in September. So, I would be ready once you hit the desk. MFs and UMM firms typically go on the off-cycle process, but more and more are reserving spots for offcycle.
Basically, funds will call you into their office for 12+ hr long interviews. A lot of that time is spent waiting around to see if you’ll make it to the next round of interviews or not. At the same, you’ll have multiple funds conducting interviews at the same time. So, you’ll need to pick which funds to prioritize. You may even need to leave in the middle of an interview cause a fund you preferred is kicking off a process
Off-cycle
Any interview outside of the standard process is considered off-cycle. It was traditional just the domain of smaller MM funds. But a good number of MF and UMM spots are holding spots just for offycle. The interview process is broken up into a few days stretching from weeks to months. A lot of funds aren’t that serious about hiring during off cycle so you may see some place drag their feet on giving you the next round of interviews or an offer
How to pick an offer
Usually you end up taking whatever offer you get, so I would only do interviews with places you’re willing to take an offer from. I personally was only willing to take offers in a tier 1 city with a latest fund size of $3+bn or greater. I also had a strong preference for a place with a track record of associate to VP promotes. I probably would’ve gotten an offer much quicker if I loosened my standards up a bit. Let me know in the comments if you have any questions.
