Private equity is an extremely competitive industry with difficult barriers to entry. Breaking in requires a combination of technical knowledge, interpersonal skills, and the right career planning early on in the process. If you’re considering a career in private equity, here are some tips that I relied on to help you navigate your career path and hopefully help you get the dream job of being in private equity.
Get the right education and experience
A degree in finance or a related field can be helpful in landing an entry-level position in private equity, but it’s not a requirement. The only thing a finance or accounting degree can really help you with is giving you a jump start on somewhat related material, which allows for early familiarity. However, entry-level finance and consulting jobs are not rocket science and can be learned while on the job.
What’s more important is to have a strong understanding of why you are interested in finance or private equity and align your experiences based on what you want to learn more about. The only way to know if you like private equity is to learn about it and experience it from all angles, so you should have an open mind. Ideally, you should have experience working in related fields such as investment banking or consulting, as these are the biggest feeder industries in private equity. This is unlikely to change in the long term, though we are seeing more firms start private equity analyst programs.
Private equity firms often look for candidates with diverse backgrounds and experiences. Having worked in a different industry or function can give you a unique perspective and set you apart from other candidates. However, it’s still important to have experiences that let you judge whether or not the job is right for you and whether you can deal with the pressure and day-to-day requirements of the role.
Build your network
Networking is critical in private equity, both for finding job opportunities and for building relationships with potential investors and portfolio company executives. If you want to get the best sense of the industry as well as what the role entails, you should ideally attend industry events, join professional organizations, and connect with other professionals on LinkedIn. Be super proactive in reaching out to people and asking for advice or informational interviews. Building a strong network takes time and effort, but it can pay off in the long run, especially during the interview process, where folks are likely to provide really useful information if they view you as a good potential fit for their firm.
Be patient and persistent
The private equity industry is known for its grueling hours and demanding workload. It can take several years of working in related fields before you land a job in private equity. Even then, you may start out in an entry-level position and have to work your way up the ladder.
Don’t get discouraged if you don’t get a job right away or if your career progression is slower than you’d like. Stay focused on building your skills and gaining experience, and keep an eye out for opportunities as they arise. Again, a job in private equity is one of the world’s most coveted positions. To put it into perspective, it is difficult for MBA graduates without prior private equity experience to get a role in private equity so if you are not making career moves as soon as you would like, don’t give up!
Focus on building a holistic set of skills
In addition to technical skills such as financial modeling and analysis, private equity firms also value soft skills like communication, leadership, and relationship-building. Seek opportunities to develop these skills, both through your work and through extracurricular activities. While they won’t be particularly pertinent in your early roles, they continue to grow in importance as you become more senior. They should not be neglected, as a holistic understanding of these competencies can often move the needle far more than being better at modeling quickly.
Choose the right firm
Not all private equity firms are created equal. Some firms focus on early-stage startups, while others specialize in mature companies. Others have a broad mandate and invest across the capital structure. Some invest in specific industries, such as healthcare or technology, while others have a more diversified portfolio.
Before accepting a job offer, do your research on the firm’s investment philosophy, track record, and culture. Look for a firm that aligns with your values and interests and where you feel you can contribute and grow. Private equity is a job you can hypothetically rely on for the long term, both from a career and compensation perspective. So, working at a place with people who push you but are respectful of your boundaries is paramount to having longevity in this field. This is often something I think a lot of private equity hopefuls skim over, often to their detriment. While the on-cycle and off-cycle recruiting processes can be difficult and often very accelerated, this is a really important consideration and can actually have a meaningful impact on career trajectory if not well thought out.
Show what you can do
Getting a private equity job is half the battle. The more difficult part of a landslide is keeping it. To really make quality money in private equity, you need to make it to the point where you are earning a carry or getting a share of the firm’s profits per investment. Getting here means working through many years of fighting it out as an associate and managing deal processes as a VP. This can often mean you are tasked with sourcing the deal, organizing the diligence around a deal, getting senior buy-in to the deal, working with potential lenders, and executing the deal. As it sounds, this means there are many areas for you to potentially slip up and make costly mistakes. On top of this, you need to show senior folks that you can actively manage portfolio company operations on top of new deal workflow.
If this sounds intimidating, I am completely on your side, but this is the reality of the job – given that there are so many qualified people gunning for these jobs. The best way for you to stand out is to excel at everything. A large part of this job revolves around managing expectations just given you are in charge of so much that everything you do requires higher-order thinking and an impeccable level of attention to detail.
Relax and enjoy the job
Although what I have stated above might seem scary, it is important to realize that a lot of pressure from the role melts away if you have a genuine interest in the job. A private equity role is arguably the best way to get a lot of experience in a short period of time and remains a very popular career choice for those who want to break in. Just remember that to have the best shot at an amazing career, you do need to plan far in advance and consider all possible variables. Best of luck!
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