Private equity is an alluring career field. Firms in the industry pay large salaries, and with the incentives and bonuses you can earn on top of your salary, the potential is there to make a lot of money, even in your first year. Moreover, the career carries a lot of prestige in the finance world. One reason private equity is so difficult to break into is these jobs are in such high demand; recent graduates compete with seasoned investment bankers and stockbrokers for precious few job openings in private equity.
The field's controversial reputation among many politicians and pundits only serves to heighten its allure to money-hungry young people. Particularly during the 2012 presidential election, private equity firms, one of which candidate Mitt Romney served as CEO during the 1980s and 1990s, were painted as corporate raiders, or soulless suits who forced themselves on companies eliminated jobs and cashed in for themselves. While not every deal turns out to be successful, the goal of private equity is noble. These firms risk millions of their own dollars on troubled companies and use their ownership stakes to try to make them profitable again. The executives who conduct these deals undeniably are compensated handsomely for their efforts.
Simple supply and demand cause the difficulty experienced by young candidates fresh out of college who try to break into private equity. Unlike the big investment banks, private equity firms do not occupy every floor of a New York skyscraper; these firms are trim, and they expect to get the most possible out of every employee. The number of jobs available in private equity at any given time is tiny compared to investment banking and stockbroking. Therefore, securing a job in this coveted field requires a combination of diligence and creativity.
Most private equity firms are so lean and efficient they do not even handle human resources in-house. They retain third-party recruiting firms to handle 90% of the hiring process, which includes screening resumes, conducting initial interviews, background screenings, drug testing, and other such minutiae. At some point during the interview process, you get to meet actual firm executives, and you usually have one shot to make 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 Monster.com resume or LinkedIn profile. Private equity headhunters remain inundated with resumes of hopefuls, which mostly obviates the need for them to scour the Internet for candidates, most of whom are highly unqualified.
To appear on a headhunter's radar, it is necessary to initiate contact. Emailing a resume and waiting to hear back is insufficient. After submitting your resume, follow up repeatedly. A fine line exists between persistence and annoyance but, honestly, it is better to err on the side of calling too often than calling too seldom. The last thing you want is for your name not to 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.
Make Connections Early
Unlike investment banking firms, private equity firms do not recruit heavily on college campuses. Even the top schools in the country for economics and finance, such as Princeton, Harvard, Yale and the University of Chicago, see very little action from private equity recruiters at campus job fairs.
For one thing, as previously mentioned, private equity firms retain very few in-house recruiters. With so few jobs available at any one time, they simply have no need for them.
Additionally, private equity firms maintain little interest in bringing on board inexperienced college graduates, no matter how bright, and training them to be private equity pros. Once again, this is a function of supply and demand. Investment banking firms have too many openings each year to limit hiring to experienced candidates. Private equity firms, by contrast, can demand experience for every job opening and attract more than enough candidates to fill the positions.
Even having a Master of Business Administration (MBA) rarely helps if you do not have applicable experience. Therefore, 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 rather than being yet another green kid coming out of college, you bring high-level finance experience to the table.
While internships help, they far from guarantee you a private equity job out of college or business school. If unsuccessful, cut your teeth with investment banking, for which jobs always exist for top students at good schools. Excel in that field, and you should find obtaining a private equity job in two to three years an easier undertaking.
No matter how qualified you are, private equity is not an industry where you submit a resume on Tuesday and begin working the following Monday. The largest firms in the industry begin conducting interviews in January to hire candidates for the following summer; this means 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. At private equity firms of all sizes, the interview process takes three to six months and includes a half-dozen or more steps. Again, this is not a field in which an offer is extended after a cursory 30-minute interview. These firms are fastidious in vetting candidates; they take every conceivable precaution to ensure they obtain the best group of employees possible in each hire group.
Therefore, when starting your private equity job search, be sure to have something that provides you an income for the next year to year and a half. No matter how productive your search, it is not likely to bear fruit until the following year.