Working in private equity is highly attractive for many reasons, and many finance professionals who are not already in the field often look for ways to break in. One of the primary ways to do so is by landing an internship at a private equity firm you might want to work at. Through a private equity internship, you will be exposed to high-stakes, complex financial transactions and gain valuable experience in investment analysis, deal structuring, and portfolio management. The beauty of the industry is that as a junior private equity investor, you work closely with seasoned investors and industry experts and can learn from their experience. Additionally, you are financially incentivized to work in private equity as firms have carried interest in the funds and share in the profits of their investments alongside the firm’s investors. Lastly, as a private equity professional, you can make significant impacts on portfolio companies and drive the growth of not only that specific company but also that industry as a whole.
Securing an internship in private equity can be challenging due to the competitive nature of the industry. Since private equity firms receive many interested candidates but have few spots to offer, crafting a good narrative and preparing adequately for the interview process is essential for success. Here are 5 tips and strategies you can employ to work towards landing an internship in private equity.
Develop a strong foundation of financial knowledge
Private equity firms typically look for candidates with a strong understanding of finance and accounting principles. At the junior level, running the model and valuation analyses will be one of your primary workstreams as a private equity professional. While many firms still require or encourage investment banking experience given the rigorous training candidates will undergo in these programs, if you are able to learn finance, accounting, and investing principles, you can go for an internship in private equity. To do so, you can either get experience at your job or supplement it by taking relevant courses or certifications on LBO modeling, valuation techniques, and general investment analysis. Demonstrating to a private equity firm that you have this knowledge will be key for success in the interview process (as many firms require a modeling test and/or case study at some point in the interview process) and showing your ability to contribute effectively as a member of the team.
Network = Networth
You may have heard the phrase “your network is your net worth;” that phrase could not be more true in this industry. Networking is crucial to breaking into private equity and especially at the internship stage when the position is short-term. While some firms will post open internship positions online, the vast majority of positions are filled by referrals from professionals already working at the firm or through headhunters who can introduce you to the firm. Some ways you can network with firms you want to work for, especially if you don’t have contact with them, are to attend industry events and connect with professionals on LinkedIn. If you have something in common with a professional who works at a firm that you would like to learn more about, messaging them on LinkedIn for a coffee chat is a low-stakes way to get an introduction to the firm. Seeking out alumni who work at funds is also helpful, as they can also refer you to friends at other funds if you’re looking to work at a fund with a specific investment strategy. Building relationships with people in the industry is the best way to get ahead and can get you an initial job as well as open doors for opportunities later on in your career.
Research target firms
Gaining a thorough understanding of the private equity firms you are interested in interning with is essential before you begin to interview, as you don’t want to waste your own time as well as the time of the professionals at the firm. This research will also benefit you long-term; if you intern at one of these firms and enjoy it, you could see yourself accepting a return offer to come back to work full-time. Some of the key features to research include the firm’s investment strategy, sectors of focus, notable portfolio companies, size of team, location, and any other interesting information about the firm (i.e. if it’s a publicly listed firm, take a look at their recent investor presentations and earnings calls). This research will help you tailor your answers to this specific firm during coffee chat conversations and interviews.
Highlight your relevant experience
While prior private equity experience is not expected for internships, highlighting relevant experiences is crucial. Think about what professional or extracurricular experiences you may have that could apply here. You can use professional examples such as past internships or part-time positions in areas such as investment banking, venture capital, or corporate finance, as those roles provide exposure to financial analyses, due diligence, and deal processes. If you were part of a finance or investment club in college, you can definitely highlight that experience to show that you have the investing mindset that it takes to succeed in private equity. Emphasize any transferable skills you may have from experiences that perhaps aren’t directly related to private equity but could be related to financial modeling, valuation, or research capabilities. Lastly, be sure to think about how you can highlight that you work well in teams and enjoy taking on challenges, as an internship in private equity could feel like a crash-course introduction to the field.
Prepare your interview answers
In preparing for interviews, first master the behavioral questions that are typically asked (tell me about yourself, why private equity, why our firm, etc.). Then you should turn your focus to mastering technical questions, as an intern with a strong technical base will be extremely helpful for a private equity firm. This includes questions related to LBO modeling, multiples valuation, and basic accounting / financial statement analysis. You should also be prepared to do a mini case study on a sector that the firm invests in, which may include a modeling test and/or a discussion with an investment professional about whether you think that company or sector would be a good investment or not. Lastly, if you can engage in mock interviews with peers to get feedback, practice as much as possible to refine your responses and build confidence.
Remember, competition for private equity internships can be fierce, so it’s important to start early, be persistent, and continue refining your skills and knowledge throughout the process. Good luck!
Are you preparing for the buyside? Schedule a call now with our top coaches or submit your application directly here and we’ll be in touch! Our experienced coaches will work with you to set and achieve your goals and provide support and guidance along the way.