The Backgrounds of 77 recent Associates at 8 Top Private Equity Funds

This post is the second in our series focusing on breaking into the Private Equity industry, with the first covering the backgrounds of 41 recent analysts at top 5 Private Equity (PE) funds found here.

In this installment, we took associates at 8 top private equity funds and looked at their educational backgrounds, previous careers and professional interests in an attempt to find a ‘standard’ at this level.

Nationality

Brits are the dominant group at 18%, followed by Germans and Danish at 11% each. The group was made up of more than 16 nationalities overall, which is proof of significant internationalization of the Private Equity workforce. Note that these positions were all in London.

Educational background

The 49% who studied in the UK and the 29% who studied in the U.S. made up the majority of the group.

Note: Many associates studies in more than one country. Each university at which an individual has studied has been counted separately, regardless of the degree type.

In the UK, the Top 8 PE funds tended to recruit from Cambridge, LSE and Oxford. Associates with a U.S. educational background obtained their degrees from Columbia, Harvard and New York Stern. In France, HEC holds the top spot for placing its graduates into PE funds, followed by ESSEC. WHU and EBS are the top tier target schools in Germany, while ESADE leads in Spain. Outside of those five top countries, associates would have studied either in St. Gallen (Switzerland), Bocconi (Italy) or Nova School of Business and Economics (Portugal). These schools also all happen to be target schools for Investment Banking and Consulting.

Master’s, MBA or neither?

Having a master’s degree does not appear obligatory, as 48% of the group had just a bachelor’s vs. 43% who had progressed on to do a master’s. Another interesting finding is that an MBA doesn’t appear to be a must either, as just 9% of the group have one, but a majority of those who did have one had also completed a master’s as well. This doesn’t seem to be related to the fact that many MBAs have previously studied for a graduate degree unrelated to business of finance — out of 6 associates in our sample, only one had previous full-time experience in engineering (two part-time). At the same time, undergraduates who don’t go for a master’s degree tend to not go onto further study — only one person obtained an MBA while having only a bachelor’s degree.

Neither having a Ph.D. nor a charter (either CAIA or CFA) appeared to be necessary to work as an associate in Private Equity.

Internships

All associates in our sample have completed at least one, if not more than three internships prior to getting into their first full-time position.

Note: Most associates had multiple internship positions prior to getting into their first full-time position. Each internship position has been counted separately.

While these were in a broad range of fields, investment banking (61%) and consulting (19%) are the top two. This result is comparable to our findings for analysts , yet the dominance of investment banking is not so pronounced (61% for this group vs. 90% among the analysts). Moreover, many current associates have worked in the industry (e.g. in business development) before joining the finance sector. This is different for analysts, who mostly acquired experiences within financial services.

The implication of this finding is that despite the transferable skills to be gained in IBD and consulting, these industries are not the only paths into PE.

Similar to analysts, most associates have interned at the top five bulge brackets, including Goldman Sachs, J.P. Morgan, Credit Suisse, BAML and Morgan Stanley, and McKinsey appeared to be the place to go for graduates to gather consulting experience.

Only 10% of the current associates have previously interned at PE firms. This implies that, unlike for investment banking, an internship in PE is by no means a prerequisite for a full-time position at a later point.

Full-time

When we look at the prior full-time experience, the picture changes a little. Despite former investment banking analysts and associates still comprise the largest group of private equity industry entrants (66%), many people switch directly from other PE funds (23%). Consulting remains in the top three (22%).

Note: Most associates had multiple full-time positions prior to joining their current firm. Each full-time position has been counted separately.

The top five bulge brackets (see above) are still the largest source for PE associates when it comes to IBD. In our sample, most of the associates with prior consulting background came from either McKinsey or Bain & Co. Most of the associates switching from another PE firm came from Blackstone.

There appears to be an established path from investment banking into PE, whereby a potential entrant would require from two to three years in investment banking (mostly M&A and leveraged finance), before switching into the associate position at a PE fund. A similar pattern applies to consulting. At the same time, the switching between different funds also appears to be a common path towards an associate position.

Conclusion

Here are some of our main findings that we derived by looking at current associates at the top 8 PE funds:

• Going to a target school matters: most associates went to one of the target schools either in the UK, U.S. or Continental Europe. Cambridge, LSE (all UK) as well as HEC (France) were amongst the top picks.
• Master’s degrees or MBA are not a prerequisite: 43% of the sample have only obtained a bachelor’s degree.
• Having experience in IBD and/or consulting is favorable, yet backgrounds are more diverse for PE associates compared to PE analysts.
• Bulge brackets and Big Three consultancies are fostering the most talent for PE, either through internships or via full-time roles.

Written by Pavlo Moshynskyy & Jack Rizvi

Originally published at medium.com.