How to get into private equity according to a managing partner
For many London School of Economics (LSE) students, private equity is the end goal. But as private equity hiring evolves, it can be unclear of the ‘correct’ path to take to get there.
At the school’s Alternative Investments Conference today, a managing partner at a large private equity firm gave some insight into how different paths can lead you to success. Their identity and affiliation is protected by Chatham House rules.
The traditional route into private equity involved two or three years in the analyst program of a major investment bank, followed by a top MBA, followed by a job as a private equity partner. Recently, though, top private equity firms (eg. Blackstone) have begun training their own graduates. Mid-market firms in the UK hire accountants. But the partner in question, said there's a third way into PE: consulting.
Consulting can be a good grounding for private equity careers. It “gives you that invincible confidence as a young person being put in a room with experienced people. You see what real companies do and what the challenges are, rather than the PowerPoint or Excel version of that,” he said.
But the perfect candidate has something extra again. The partner said his ideal recruit is someone who “has worked a few years in consulting, then two years in banking. Maybe McKinsey then Morgan Stanley then left to start a company and failed but learned a hell of a lot.”
Pigeonholing yourself into one pre-PE role can have its drawbacks. Only ever working for an investment bank means “you end up working a lot in the office and don’t get a lot of customer interaction,” he added.
He suggested that if you want to work in private equity, then what you study is less important than how you study it. While studying economics and finance, the partner said, “I didn’t learn any new or valuable stuff. The thing I learned most there was working in teams with a really random set of people.”
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