Careers in Private Equity: What's the attraction and how to get there.
We often speak to candidates who want to move to the buyside – it’s a very common theme. But what exactly is it that attracts candidates to make this career change? And is it right for everyone? In many cases the move is not straightforward and time spent in a stepping-stone role is important to build the required skills and experience. We spoke to members of our network who have successfully made the move to private equity, but who began their careers in a range of different industries including consulting, accounting and banking. Here we speak to them about what attracted them to a career in private equity and how they achieved this career change. Useful info if you want to know more about who suits a career on the buyside, important transferrable skills, and what to expect when you get there.
Associate, large-cap PE fund: (Began their career in consulting before moving to investment banking and subsequently a large-cap PE fund):
"What is it about the PE industry that really attracted you?
I am interested in looking thoroughly and thoughtfully at a business to get comfortable with its business model, competitive positioning, what strategic and operational improvements can be made etc – i.e. aspects that you don’t really deal with in banking, at least not to the same extent. So it was about the intersection between those more “commercial” elements and finance that fascinated me. Also, I'm a curious person and like to ask in-depth questions. In banking you stay quite high level and don’t go into such a great detail. In PE you need to understand the details, where often the devil is. That fits my personality better.
I would describe the interview process I went through as being quite fun. I really enjoyed the lines of questioning and analytical rigour in their interview process, so I knew this was a company I would be suited to. I really enjoy the variety of PE.
How does working on a deal at a PE fund compare to your role at an investment bank?
At the bulge-bracket investment bank that I used to work for, people are very driven. It was a good working experience, even though extremely intense, but overall I'm glad I went there and improved my hard skillset.
Because it is such a large organisation, when you are working on deals you are a small piece of a puzzle of a larger transaction, but the reward is exposure to plenty of high-profile transactions. For example, in just over a year I completed a sell-side, a buy-side, a financing, was involved in preparing one of the largest capital raisings in the UK history as well as numerous pitch books. It was a great experience and I was impressed by the senior people for their knowledge and commitment.
In terms of a comparison, while IBD work at junior level is focused on valuation, financial analysis and process management, private equity involves also getting answers to plenty of why questions, which requires a deeper understanding of the business. It’s an extremely complete job, placed at the intersection of consulting and investment banking, but with a key difference: the investor mindset, rather than an advisory perspective. Putting your money where your mouth is requires a much firmer grasp on the asset, but provides also a greater source of motivation and full alignment of interests.
On a WLB perspective, private equity can also be very intense when you are on a deal, but in banking the fast pace is more constant. Even when there is nothing live, you are working very hard chasing transactions to win mandates, so that puts pressure on"
Investment Manager, Mid-Market PE Fund: (Moved to PE from a leveraged finance background):
“I began my career on a grad rotation in corporate banking. It was a rotational programme and, after spending time in leveraged finance, I joined there permanently. Over five years I completed a large number of PE-backed transactions across all sectors and mainly in the UK mid-market, before moving to PE in 2019. I moved from the debt side to PE because I really enjoyed meeting management teams, analysing businesses and lending money but was keen to see the upside as well as the downside and work more closely with management teams in driving value creation.”
Investment Director, Mid-Market PE Fund: (Qualified ACA (Big 4) who moved into banking before joining a mid-market PE fund):
“I studied science at university but after realising I didn’t want to work in research, the ACA appealed to me as a good all-round qualification that provided a grounding in economics, finance and accountancy and drew on the analytical skills from my degree. I gained an internship at one of the Big Four and started in the Private Equity Group in Transaction Services. I really enjoyed working with PE clients and was interested in how they diligenced businesses, both from a market and financial perspective, and then formulated plans with management teams to help them grow. It looked difficult to move straight into PE without experience in M&A, valuations or detailed modelling, so I joined an investment bank, where I gained some of the bulge bracket experience that put me on that career path.”
Investment Director, Mid-Market PE Fund: (Moved to PE following 10 years in Corporate Finance):
“I started my career on the graduate programme in a mid-market corporate finance advisor. My move to PE was driven by the desire to spend more time with businesses than the 3-6 months you spend with management teams around a transaction. I probably made the move later in my career than the typical Associate level, having spent almost 10 years in corporate finance, largely because I enjoyed the deal environment and teams I worked with.”
Investment Manager, Mid-Market PE Fund: (Moved from a bulge-bracket investment bank into PE):
“Working in the MA investment team at a bulge-bracket investment bank was a great place to start my career because it gave me a good overview of all financial markets. I really enjoyed being involved in the whole investment process; forming an investment thesis, deciding what your portfolio would look like and justifying and defending it to the investment committee, and then on the other side, managing that portfolio.
The reason I stayed for quite a long time was because I enjoyed it so much – it was such a great opportunity to learn. The main thing I wanted from my career was to continue learning – as soon as that stops, it’s the moment I know it’s time to move on. I had realised I wanted to be more on the micro scale but still be on the investment side so the main options were Hedge Funds and Private Equity. For me PE was the obvious answer - with Hedge Funds, in many cases you're still on the public side and you don’t have the same proximity to investment companies as you do with PE. With PE you are working with individual companies and helping them achieve those returns that you are betting on so it’s not just an arms-length decision on whether the company is good based on public information. I knew this from a combination of desktop research and knowing people in the industry who had made similar moves. So I moved into the banking side of the bank where I worked in order to gain the skillset and credentials to get into PE. It wasn’t the only method – there are a number of routes to get into PE for example from accounting or consulting, but this was the best way for me given I was in an investment bank already.”
Analyst, Mid market PE-Fund: (Moved straight into a mid-market PE fund following graduation):
“What attracted me the most to private equity was the way an investor was building conviction around an asset. You are constantly asking questions such as How is the company making money? What makes the opportunity attractive? What are the key risks? Who are we backing? What can we achieve with this business?, etc. and those resonate well with me. It is about the investor mindset versus the advisor perspective."