Private equity is an alluring career goal for those drawn to the financial world. These companies pay big salaries, plus incentives and bonuses. The potential is there to make a lot of money, even in your first year. And, the career carries a lot of prestige in the finance world.
However, private equity is challenging to break into. Recent graduates compete with seasoned investment bankers and stockbrokers for a precious few job openings. The field's controversial reputation among many politicians and pundits only serves to heighten its allure for some. The leaders in the field have been painted as corporate raiders or soulless suits who force themselves on companies, eliminate jobs, and cash in for themselves.
Key Takeways
- Though roles are competitive to land, private equity is a challenging, rewarding profession that averages a six-figure salary.
- Get to know the headhunters who recruit for private equity. There aren't many of them.
- Get some experience. Pursue every internship and work in finance for two or three years before trying.
- Be patient. The jobs are few and the interview process is lengthy.
The Allure of Private Equity
People in private equity would argue that their goal is noble. They risk millions buying up troubled companies and they use their ownership stakes to force through changes that can make the companies profitable again. It doesn't always work. The executives who conduct these deals undeniably are compensated handsomely for their efforts.
There's another reason why jobs in private equity are scarce. Unlike the big investment banks, thesefirms do not occupy floors of a New York skyscraper. They are trim organizations and they expect to get the most out of every employee. The number of jobs available in private equity at any given time is tiny compared to those in investment banking and stockbroking. Getting a job in this coveted field requires a combination of diligence and creativity.
If you're able to get in, private equity is known for being one of the better-paid roles in the finance sector. According to ZipRecruiter, the average salary in private equity as of September 2023 was $106,111. Note that this average will vary dramatically across geographical locations and positions; ZipRecruiter also notes that Direct Equity Research roles earn nearly twice as high of a salary, for example.
Tip 1: Get to Know the Headhunters
Most private equity firms are so lean and efficient they do not even handle human resources in-house. Many retain third-party recruiting firms to handle the hiring process which includes screening resumes, conducting initial interviews, background screenings, drug testing, and other minutiae.
At some point during the interview process, you get to meet the firm's executives, and you usually have one shot at making a great impression. Long before you make it to that stage, however, you are likely to be well-acquainted with the headhunting firm
Only a few headhunting firms maintain relationships in private equity. These include the Oxbridge Group, SG Partners, CGI, and Glocap. Do not expect one of these firms to find your resume on Monster.com or LinkedIn. Private equity headhunters are inundated with resumes of hopefuls and have no need to scour the web. To appear on a headhunter's radar, you need to initiate contact. Emailing a resume and waiting to hear back is insufficient. Follow up repeatedly.
There's a fine line between persistence and annoyance, but, honestly, it is better to err on the side of calling too often. The last thing you want is for your name to not be considered for an open position because no one has heard of you. You want to be on a first-name basis with as many decision-makers as possible at each firm.
If you can't score an internship or a first job in private equity, try a related field like venture capital, investment banking, or asset management.
Tip 2: Get Some Related Experience
Private equity firms do not recruit much on college campuses. Even the top business schools such as Princeton, Harvard, Yale, and the Wharton School see very little action from private equity recruiters at their campus job fairs.
These firms also have little interest in hiring inexperienced business school graduates, no matter how bright. Once again, this is a function of supply and demand. Private equity firms can demand experience for every job opening and attract more than enough qualified candidates.
Internships Can Be Your Way in
Internships are vital. During your undergraduate and business school summers, apply for every internship you can find that relates to private equity. If you cannot find an internship at a private equity firm, try venture capital, investment banking, or asset management.
The goal is to show recruiters that you're not just another green kid coming out of college.
If that doesn't work, cut your teeth in investment banking. The field always has jobs for top students from good schools. Excel there, and in two or three years you should find obtaining a job in private equity easier.
Tip 3: Prepare for a Grueling Hiring Process
No matter how qualified you are, private equity is not an industry where you submit a resume on a Tuesday and begin working the following Monday. The biggest firms interview in January to find candidates to start the following summer. A year and a half or more could pass between your first interview and your first day of work.
Even mid-size and small firms usually start interviewing a full year in advance of a hire date. The interview process takes three to six months and includes a half-dozen or more steps.
That's another good reason to start your career elsewhere before approaching private equity firms. You'll need an income for the next year to 18 months even if you make the candidate shortlist.
What Qualifications and Skills Are Required to Break into Private Equity?
To break into private equity, a strong educational background is essential. Most professionals have degrees in finance, business, or related fields. Relevant experience in areas like investment banking or consulting is highly regarded. Skills include financial modeling, valuation, and a deep understanding of investment concepts.
How Can I Best Prepare for Private Equity Interviews and Case Studies?
Preparation for private equity interviews involves practicing both technical questions and behavioral interview questions. You should also be ready for case studies, which evaluate your ability to analyze investment opportunities. Research the firm's investment focus and strategy, and be prepared to demonstrate your critical thinking and problem-solving skills.
How Does the Private Equity Recruitment Process Differ From Other Industries?
The private equity recruitment process is highly competitive. It usually involves multiple rounds of interviews, including technical, behavioral, and case study interviews. Candidates are often required to demonstrate not only their financial acumen but also their ability to think strategically and make investment decisions.
What Networking Strategies Are Effective for Building Contacts in the Industry?
Effective networking strategies include attending industry events and conferences, joining relevant LinkedIn groups, reaching out to alumni or professionals in the field for informational interviews, and maintaining a proactive approach in building relationships. Building a strong network can help you access job opportunities in private equity.
The Bottom Line
Getting a job in private equity typically requires a strong educational background in finance or a related field, relevant experience in areas like investment banking, and proficiency in financial modeling and investment analysis. Networking and effective preparation for rigorous interviews, including case studies, are crucial. Aspiring candidates should also consider the specific focus and culture of the private equity firm they aim to join and begin preparation far before their first interview.
