The 2012 Private Equity Compensation Report mentions that one in three PE companies are in pursuit of investment professionals. In addition, the report noted that almost one in five PE companies are looking to fill operations, portfolio management and accounting positions. The same report also states that in the year before, the industry trend was on the hiring of internal team members with fund raising skills.
The Report further mentions that as fund managers look to widen their investor base because of the movement of private equity money to larger and more established companies, they are on the lookout for professionals with proven experience in raising capital and establishing close relationships with Limited Partners.
These developments indicate that the opportunities are there for anyone looking to break entry into the PE industry.
So, how does one gain entry into the private equity sector? Here is some valuable advice from those who are part of the industry as well as those who follow it closely.
1. Establish a network of contacts in the industry. Job Search Digest notes that the most important method of gaining entry is by private equity networking. Having the right connections will allow an individual to connect with individuals who are already part of a PE firm.
2. Know the entry points. Everyone knows that an MBA degree from a prestigious business school is an advantage, however, there are alternate routes, chief of which is having the right experience. Working in investment banking provides key experience, as will a stint in management consulting. A senior executive in a business in which a private equity firm has interests would have a shot if he handles himself well.
3. Prepare the ideal Curriculum Vitae. Paul Hodkinson of eFinancial News writes: the things that will make a CV standout are:
- Experience in making deals.
- Experience in distressed debt or restructuring. The key here, according to Hodkinson, is to marry deal making with operational experience.
- Skills in speaking a second language especially European.
Other things that should be noted when drafting a CV are:
- Avoid overblown or embellished skills or experience.
- Focus on depth of experience over mere association, having worked for JP Morgan or Goldman Sachs is not enough.
- Experience in dealing with large clients is not a guarantee.
4. During the interview process, one needs to be very prepared. Many things can happen and it is very likely that candidates will be tested on a wide range of subjects from verbal reasoning, to mental arithmetic, to financial modeling, and business judgment skills.
5. One area that will be scrutinized is a candidate’s skill and experience in deal-making. An insider is quoted in “Getting a Job in Private Equity: Behind the Scenes Insight into How Private Equity Funds Hire” as saying: “I would not hire someone without deal experience. I did it once and it was a disaster.”
6. A candidate should also come prepared with a case study that will enable them to highlight their analytic as well as research abilities. Robert Namar of Nasdaq’s Career Center notes that those with actual private equity or investment banking experience should not find it difficult to cite and elaborate cases and they should be able to use these to their advantage. Those who lack the PE background should be able to offer a convincing presentation — one that strongly relates to private equity.
7. Just as in the preparation of a CV, candidates should avoid from inflating their credentials especially mentioning deals that they did not have a hand in.
8. In the process of negotiating compensation, the Private Equity Compensation Report gives the following valuable advice:
- Prior to the interview, the aspirant should research the range of compensation for the job he is applying for and then reckon this with his skills set and experience.
- The compensation package should not be limited to actual pay but should consider bonuses and perks like healthcare insurance, retirement plans, paid vacation, and the like.
- In the interview, any discussion on compensation should be avoided at the onset; instead, this should be taken up last.
- When an offer is made, the candidate should not accept it immediately. He should allow himself time to think the proposal over. That time can be used to establish arguments for a compensation package that the candidate believes he deserves.
- Arguments for hiring may include experience with unusual or high profile deals including citing the skills developed as a result of working on these cases.
- The Report further details the list of compensation items that negotiations can cover: base salary, bonuses, carried interest, severance package, coverage of relocation expenses, training programs, investment in the companies which the firm has interests in, profit sharing plans, etc.
- Lastly, the Report advises that the applicant should secure a written agreement prior to accepting an offer. After this, he should send out a thank you letter to the firm for making the offer and confirming the details of the agreement.
