Private equity is an especially difficult industry to break into due to the field's highly networked and competitive state. It can take years to work your way into a private equity career unless you've been specifically on the track to do so, and even then, prepare for a grueling process. But it is possible if you understand the path to follow, including roles, the skills you need to land them, what to know for an interview, and how to progress once you've scored a job.
The PE Career Path
The steps we've laid out below are the most straightforward route for how to get a job in private equity. There is usually little deviation from candidate to candidate, as the highly competitive nature of the industry means firms can be incredibly picky. So, if you've yet to get your undergraduate degree (or are looking to get a second to facilitate a career change), this is where we recommend you start.
Step 1: Get Your Undergraduate Degree
Private equity firms usually seek someone with a strong sense of numbers. As such, the majors they generally look for include Finance, Accounting, Statistics, Mathematics, or Economics. GPA will, of course, be a factor here. It's not enough to just have the degree you must excel at (and ideally like) the work, as it's the basis for what you'll do every day in a PE role.
Step 2: Find an Internship Within PE
While you're getting your degree, apply for any and every internship that is relevant to PE. Just remember, even internships are incredibly competitive. For example, Blackstone received 15,000 unique applicants for 100 available summer internship positions in 2020.
Education, skills, and experience are all important to demonstrate during your search, but be sure to do your research on the specific firm and position you're speaking with as well. If you walk into an interview ready to talk about real estate investment and the firm primarily does tech, you're in trouble!
Step 3: Post-Undergrad, Find an Entry-Level Financial Position
Once you graduate with your Bachelor's degree, it's time to look for a full-time position. However, only very infrequently will you find something in private equity. Usually, you'll end up working as a full-time analyst for another type of financial institution, such as an investment banking firm.
Keep in mind here that while your Bachelor's degree did net you valuable experience, it's your invitation to apply and nothing more. Many recruiters are looking for a more well-rounded candidate with experience and private equity skills in several areas (we'll delve deeper into skills in a later section).
Step 4: Get an MBA or MF
Once you've landed a full-time position as an analyst in an investment banking firm or other financial institution, it's time for your graduate degree. A Master in Business Administration
(MBA) degree is a top choice for many candidates (and firms), but a Master in Finance (MF) degree can also suffice, depending on the role you're looking to have.
However, it is important to note that while an MBA or MF on its own is helpful especially from a notable, finance-focused business university, it's not a free pass. The experience you're gaining in your current analyst role and the other skills you should be picking up along the way are just as important as your graduate degree.
Step 5: Apply to Private Equity Firms
Once you graduate with your Master's, you should have 2-3 years of experience in your current analyst role under your belt. This is the perfect time to begin looking for private equity analyst positions. While you can find openings via online job boards, networking will usually be more fruitful. Tap into the network you've already made in your existing role at your current firm.
Reach out to others in the private equity industry, perhaps even private equity associates to see if there are analyst positions at their firms, and make friends with recruiters. Depending on where you studied, you may be able to find some private equity recruiters there. Still, realistically, even well-networked colleges and universities such as Harvard, Stanford, or Wharton don't get a ton of interaction.
Investment banks usually will have more jobs available for well-qualified graduates from notable schools which will also offer the opportunity to gain more experience and time to network with PE-focused headhunters but be cautious about going too far down the IB path. If you advance into, say, a Senior Associate role, your chances of moving into private equity from there are reduced.
Breaking into PE From an Alternate Route
If you already have your undergraduate degree and it's not in one of the listed majors, or if you're looking to make the switch to PE from another industry entirely, your best bet is to start with an MBA (if you don't have one) and work your way into a financial institution at an entry-level position. Just keep in mind that you are starting over. There are very few to no skips in the PE career path, and the industry is incredibly competitive.
If your goal is getting into private equity after an MBA, you can basically pretend you're at Step 2 in our path above: finding an internship. From there, you'll follow the same steps sans obtaining duplicate degrees to work your way into a PE firm.
Roles in a PE Career Path
As we mentioned in the previous section, once you've followed the path to get a job in private equity, the highly structured nature of the PE career path doesn't stop there. Below we've laid out the path both before and after you break into PE:
Analyst: The majority of an analyst's responsibility falls into research and, unsurprisingly, analysis of potentially interesting private companies in which the firm may invest (or, in the case of PE, sometimes wholly acquire). Analysts can spend a large portion of their day crunching numbers, analyzing financial statements, and working on models for different deals in the firm. As generalists who only see bits and pieces of live deals, analysts may also help with documentation, due diligence, and even post-transaction analysis and reporting.
Associate: While analysts often support all three verticals of a bank mergers & acquisitions, equity capital, and debt capital associates are expected to specialize and then handle deals end-to-end. There is still a lot of math and "grunt work" in an associate or senior associate role, but they are given quite a bit more responsibility, including managing analysts.
VP: Associates handle single deals, while VPs manage multiple deals and are often the "face" of a deal. Vice presidents speak directly with investment opportunity company founders or executives, often leading negotiations. As such, this role is less about crunching the numbers yourself and more about how to represent the firm best to make deals happen.
Director/Principal: Responsibilities for a director or principal can change depending on the firm and your chosen specialization, from being more focused on closing potential deals to overseeing portfolio companies. However, as with the VP role, directors and principals are far less focused on the actual numbers behind deals, leaving that to the analysts and associates.
Partner/Managing Director: The role at the top of the firm, partners/managing directors, are the ones handling the health and direction of the private equity firm at large. They're usually talking directly to the limited partners (LPs) and securing funds, often putting their own money into the firm, as well.
Private Equity Skills
PE is a people business, through and through, and your skills in great communication, persuasion, networking, and building mutually beneficial relationships are increasingly more important as you move up the ranks. Even so, these soft skills are something you need before ever stepping foot in a firm. From initially landing one of the coveted private equity jobs to doing well and working your way up, how you communicate and interact with people will be the difference between success and failure.
On top of "regular" communication skills, you should also be fluent in as many languages as possible, especially English, German, French, and Spanish. When skills fail, charisma picks up the slack, so make yourself as personable as possible, and work on your non-verbal communication.
But being affable isn't everything. As we detailed earlier, the initial roles in private equity are focused on research and math. You'll need analytical skills and knowledge of formulas and financial modeling to work with the software that makes this data-driven culture function.
Private equity firms today are more technical than ever, with many using solutions such as deal sourcing platforms, customer relationship management systems, marketing & sales automation tools, and business intelligence systems especially as direct and outbound deal sourcing methods become the norm:
- Deal sourcing platform: Data service providers offer information that helps firms identify, evaluate, and engage potential investment targets. Firms also use these tools to research particular market segments and discover companies in their networks.
- Customer relationship management (CRM) system: CRMs are purpose-built to track, organize, and centralize all the data firms capture about current and potential portfolio companies throughout the deal flow process.
- Marketing & sales automation tools: Designed to help teams organize, personalize, and automate prospect engagement across channels, these tools ensure the right companies receive the right messages at the right times through channels such as email, direct mail, webpages, ads, or social media.
- Business intelligence system: BI solutions allow firms to analyze massive amounts of historical prospect and portfolio data at once to create custom, complex reports and dashboards that go far beyond the pre-built, out-of-the-box analytics offered by any other components in a firm's tech stack.
It's important to note here that familiarity and technical skills with a firm's tech stack are helpful but certainly not required. As you progress in your career, your knowledge and proficiency with these tools will naturally increase.
Interviewing for a PE Job
To get a job in private equity, you, of course, need to apply and then interview for open positions. Firms will often start interviewing 12 - 18 months ahead of when they expect the chosen candidate to start, so start your search early. Even if you find yourself interviewing or applying for a less prestigious firm, that work will give you the skills and knowledge necessary to be more successful later on. So take opportunities when they arise!
That said, the odds are high that you won't get an interview on your first dozen applications. And, after that, you're not likely to get a job after your first few interviews. But as we've stressed, PE is a people business, so never burn a bridge. If you don't get hired by someone, it's perfectly reasonable to ask for feedback, and that action may even sometimes lead to a job later. Demonstrating interest and energy to grow is attractive to employers.
Organizational fit will be a key concern for interviewers, who will assess how well you fit in culturally with the firm at which you're interviewing. Take some time to research a firm's culture through what it posts about itself via social media and PR. What is the company account talking about? What have they published press releases on recently? Who are their top execs, and what are they saying? An interview or networking event is often an opportunity to demonstrate that you are a good fit for the organization you're interviewing with, so take the time to research what's important to the firm before showing up.
Once you land an interview, some sample questions you might come across include:
- What do you believe are the most important factors in an M&A model?
- How do you tell if a deal is accretive or dilutive?
- How do you decide which companies to invest in?
Answering these questions requires understanding private equity operations, as well as data collection and analysis. You'll get put to the test, so know how to respond and have the necessary knowledge and research backing up different approaches to differentiate yourself from other applicants. Be able to point to the knowledge and experience you have managing and judging transactions, so take time daily to buff up your expertise.
Your Next Steps
Depending on where you are in the PE career path, your next steps may vary. From finishing your degree to finding a role in a firm, one constant is making yourself ever more knowledgeable about the industry. Knowing what constitutes a good firm that is continuing to advance and mature will help you learn more about how to get a job in private equity. After all, your communication skills and knowing how to "talk the talk" are critical. Download our Maturity Model Guide to more easily recognize these types of firms and uplevel your search!
