How do you break into private equity with a nontraditional background (e.g., without any investment banking experience)? Here are the three things I tell people to focus on (short video: TikTok | YouTube).
FIRST: Don’t tell people you’ll do “anything” to get the job. All they will hear is that they’re going to have to train you to do everything. This is probably the most common mistake I hear people making. They assume it will demonstrate a strong desire to work hard, but the reality is that for any position that offers outsized compensation, the hiring decision will favor the candidate that can add the most value. So, learn to communicate how you can add value on day one instead.
Some additional commentary from private equity professionals:
Convey a strong work ethic, but don’t seem desperate. Private equity is a hard-charging industry. If you’ve been through investment banking, you know what it feels like to work in a demanding environment. If you haven’t, then not only is it an unknown, but it may also communicate that you aren’t willing or prepared to commit to the workload required. Be prepared to offer anecdotes describing how you have gone above and beyond to achieve success. Again, this is not communicating that you will do “anything” to secure the job; it is communicating an eagerness to go above and beyond with real-life experience to back it up.
Effectively communicate your skill set. Your goal is to win someone over and arm them with the ability to vouch for you when the hiring decision is made. They will be arguing on your behalf over candidates with a traditional background. So your story needs to be compelling. Come up with 2 or 3 skills that align with the day-to-day responsibilities of a private equity analyst / associate / VP / etc.
For example, if you have worked with large, complex data sets, then you are likely excellent at Excel and data organization. Or perhaps you have industry-specific knowledge (e.g., you worked in energy or healthcare) that is valuable to the firm’s investment thesis. Or perhaps you are excellent at developing relationships with management teams (i.e., the c-suite). Whatever it may be, learn to communicate that you can likely do it better, faster or more creatively than someone with a traditional background given your unique experience. As always, anecdotes help!
SECOND: Network aggressively. Sounds simple but your biggest advantage is that most people will not do this. It’s too difficult or too awkward, and eventually people give up. That’s your advantage.
So, what’s the best way to go about networking? A friend of mine taught a class on securing a senior private equity role at Columbia Business School, and it’s largely about how to network. I interviewed him on the subject and posted the video to ASM’s YouTube channel. The video assumes a traditional background, but the logic still applies. See below:
To echo the video, you are going to hear “no” a lot. So what? There are so many different private equity shops these days. If you get rejected by one (or 100… :), learn from the experience and keep networking. You are looking for a cultural fit and a firm that coincidentally requires your skill set. Take every interview you get as practice and keep at it.
When you are selecting firms to reach out to, it may be helpful to know that the process will get significantly more competitive as you scale up. The larger the firm, the steeper your competition. With no relevant experience, landing a job at a bulge-bracket firm will be extremely difficult.
Note from contributing writer Mary Reed (previously Harvard, McKinsey & Company, American Securities): Breaking into a private equity megafund is definitely possible. I know plenty of people who weren’t investment bankers and now work at KKR, Blackstone, etc. The trick is that it’s somewhat of a U-shaped curve, in that your chances of making that transition are much higher very early or very late in your career and basically zero in the middle (i.e., they’ll hire associates out of consulting, occasionally industry, etc. and they’ll hire super-senior partners who are lawyers or other specialists, but anything in between is basically non-existent).
Quick thoughts to improve your odds of success:
- Identify firms that will appreciate your skill set and your background.
- Focus on firms that have a history of making nontraditional hires (perusing team bios will help identify these).
- Be flexible on job parameters including geography, job title and firm size. You’re looking for your first job in private equity, not your last (definitely don’t say that in the interview, though…).
- If your searches lead you to people with nontraditional backgrounds working in private equity, reach out to them to learn about their process.
People new to the industry often view “getting into private equity” as the same regardless of the firm you work for. This couldn’t be further from the truth. Think about it this way, if you wanted to work in the restaurant industry, do you think the process would be similar for a chain restaurant like McDonald’s and a Michelin-starred restaurant? That may be a bit extreme, but the point is PE firms can be very different. As private equity becomes increasingly specialized, so will the skill sets and backgrounds required to work at each one. Search until you find your match.
THIRD: Train and invest in yourself before you get the job. Private equity firms want to know you can add value when you show up to work. So much so that some will provide numerous training resources to new hires before they start. To be perfectly clear, these resources are provided to people that have already secured the job.
So, learn the skills required to land the job and make sure you can speak to the process of buying a business. Fortunately, the information required to learn about private equity is now available through multiple resources including ASM. In fact, many people that reach out on this topic have enrolled in multiple programs in an attempt to make up for the lack of relevant job experience. Consider taking multiple modeling courses, because your competition has been building models for years.
Taking courses while you are searching can show a level of commitment and drive that helps you stand out against the competition. Be sure to communicate the steps you are taking to prepare yourself for the role in introductory calls and in interviews. Let people know that you are all in on private equity and that you are proactive in your approach.
As it relates to the process of buying a business, you can learn that with the Private Equity Training curriculum available at ASM for as little as $25 / month. I wrote it with friends of mine that are all industry professionals, and I think it’s the best resource on the subject.
To echo, the basic skill set is the absolute prerequisite to land the job. If you have a hard time committing to the content, consider that your competition learned it on the job. You are attempting to substitute investment banking experience with aggressive networking and self-taught coursework. In other words, if you are wondering how consistently you should pursue this coursework, remind yourself that your competition spent years working late nights in a cubicle to get the same job.
Since I have been running ASM I have seen plenty of people pull this off. It’s a challenge. But it can be done. Good luck.
Learn more about private equity transactions with ASM’s Private Equity Training course. The Private Equity Training course at ASimpleModel.com was developed by industry professionals. The content below goes beyond the LBO model to explain how private equity professionals source, structure and close transactions.