What Analysts should look for when Recruiting for Private Equity

Believe it or not, the recruiting season is under way. As I have started to take a look at resumes, I wanted to take a minute to reflect on what investment banking analyst should look for in there next home.

In the midst of the cramming for modeling tests, reviewing every detail of every deal that you done, and mastering the paper LBO, it is important to take a second to really think about what you are looking to get out of your experience as an associate in private equity? If I were to go back and do it again, here are some of the things that I would be thinking about.

Its not so much about the work that you do, but the people that you do the work for. Make sure you are going to work for good people. Great private equity professionals understand that they were once an associate and have appreciation for the work. They are humble enough to realize that they didn’t know everything and that someone took the time to teach them along the way. Thus, the pay it forward by taking the time to mentor their associates. They are really smart and good at what they do. You want to surround yourself with great investors. Some of these things you will pick up in interviews but some you will not. If you persist in getting an offer from a firm that you think is a good fit, ask for a list of the last 10 associates that worked there. Ask them some of the following questions:

How was your experience at XYZ capital?
Do you keep in touch regularly with any of the people that you worked with? (if someone took the time to mentor, there will likely still be contact with them)
Did they include you on calls and board meetings? (firms that include associates invest in them and value them as strong player of the deal team)
Did they help you with next steps? (a second level discovery of how much they actually care about their associates, and gives insight into their character)
Did you do anything outside the office with any of your senior investment professionals? (if they invite associates to do things outside the office, they likely take the time to teach and mentor associates)
How often did VPs, Partners, or Managing Partners go to lunch with associates? (another way to tease out the above)

Do they give associates a seat at the table? You want a lot of responsibility. That is how you learn. Don’t worry you will mess up, but that is how you will be a better deal professional. You want a firm that values the associates opinion. You want to be around senior people that want the associate to travel to management presentations, go to board meetings, communicate with lenders, and speak up in investment committee discussions.

You wan to make sure that they are active. Private equity is like anything else, you need to get the reps to get better. If a firm doesn’t do enough deals, then you won’t get the at bats that you need to develop in your role.

Do you fit in with the other associates and VPs. These are the people that you will be eating lunch and dinner with for the next few years. Are these people that you want to eat lunch and dinner with?

Think about next steps. If you have he smallest inclination that you might want to stay in private equity you will want to see some people within the firm that have gone from associate to Partner. If there isn’t an example of that, then there is a very small chance that you will be the first person to do it. If you want to go to business school, get a feel for what schools previous associates have successfully been accepted. (there is usually a strong correlation to where the senior people have their MBAs.

Lastly I would want to be with a firm that has a competitive advantage. This could a certain sector of focus, different style of investing, or experience operating experience. Private equity is getting more and more competitive and it helps to have an angle.

Good luck with the search and remember that it is a two way street.