“Bravo …!!” I second that. Great story, Numi. “Once I realized that, I practiced my interview “speeches” until I came up with a personal story that was succinct and compelling. On top of that, it occurred to me that the skills you learn in equity research, namely analyzing companies from the perspective of an investor, are highly relevant to private equity, and at that point it just became a matter of teaching myself some basic skills that private equity firms tend to look for, such as LBO and M&A modeling skills and the ability to screen offering memorandums and think about how to structure a transaction.” I’m curious about how you pulled this off…what resources and books did you use to teach yourself this?
Why is it that every time I see this thread title, I see Eva Gabor singing 'Goodbye, city life. Green Acres we are there"?
Funny, I hear the Beatles singing “Goodbye, sell side…” to the tune of “Goodbye sunshine”…
Great Advice Numi! I have a question and would def value your opinion as a former sell sider. I am trying to get into sell side from industry(almost 4 years) but w/ very little luck. Have had a couple interviews with BB’s and gotten down to the final few. Problem is, specific industry group openings don’t come around that often and it seems like they “say” they care about industry experience but ive found that they always hire someone with prior research experience. I have a finance major and am a cfa candidate. If you can email (tejonranch@aol.com) or respond that would be great! thanks
Congratulations!!! Yeh, the forum needs people in the “dark” and “private” side of investment to reveal some secret to us. So stay tuned and be a regular visitor.
good luck numi hope you enjoy your new role and make some megabucks.
Great insight. Congratulation with the new role, figure out that you wanted PE for a while and glad you made it. Enjoy the downtime and sure you will have fun.
sternwolf - i learned some LBO and M&A modeling through in-house training, but also had some of my friends in investment banking help me out. i also went over some practice case studies with friends in IB and PE. i realized that i wanted to do PE when each time they would say something, i’d become more and more curious about what they were talking about, and eventually the questions and scenarios i was thinking about became more and more complex and i continued to delve deeper into these topics. generally, i don’t claim to be interested in everything…in fact, most things don’t really grab my attention, but when i realized that i could be thinking about buyouts and stuff like that all the time, i realized that this was what i wanted to pursue as a career at least in the near-term. it definitely helped to have a good network of friends who could mentor me and give me advice, as i probably wouldn’t have made it this far if it hadn’t been for their help. mike1000 - unfortunately for you, people with strong finance backgrounds do tend to be favored over people from industry when it comes to equity research hiring, unless your industry experience really stands out. a lot of it is because senior analysts generally think that they can teach their associates the things about the industry that they actually need to know; but the bigger part of the job *is* the finance stuff like accounting and modeling, and there is a fair amount of “grunt work” that goes along with it too. it’s easier to hire someone with a finance background because they are used to this type of grunt work as well as the long hours, and they sort of know what to expect going into finance. people from industry don’t always have that perspective since they may not have had to deal with that type of lifestyle before. you’re probably a competent candidate but there are definitely others like you that have industry experience. you basically just be persistent about things, because the hiring environment might improve in the coming months as existing headcount begins to turn over (myself being a good example).
Awesome move Numi, I am also on sell-side research. I have been trying the same, Large PE firms have told me that I have good academic credentials MBA + pursuing CFA (level 3) and good performance record but they say I lack industry connections and I will take some time to pick up things, where as they need people who will contribute from day 1. I can get through some tier 2 or tier 3 small size funds but at a lower salary than what I am drawing now, also that would be at associate level, where as in my present job I may move from associate to VP this year? what do u guys suggest? I am keen on PE but not keen to take big salary cut or go in as junior most guy.
Interesting, so you learned most of it from your network…I’ve done simple LBO models myself through excel course providers (deal maven) but it was just a simple intro. I was assuming that you bought books about LBOs and studied them along with getting case studies from your PE network?
Thanks Numi! I completely agree. Although, I am defintely starting to get dejected after being passed up by people with research experience more than once. In the interviews i emphasize how comfortable I am with modeling/accounting and answer all the technical questions fine, but it seems like it is all for nothing. I’m only 3 years out of college and the hours I tell them are not a problem at all. I guess I have to keep trying and crossing my fingers for a lot of turnover in the next couple months. (BTW I’ve been actively looking for almost a year, don’t how much longer i can look w/out giving up and maybe trying Bschool, but people keep telling me ur not guaranteed a spot after Bschool so what’s the point)
Congrats on the switch. If you don’t mind I was wondering if I could get your insight on why you would rather do private equity instead of say a buyside analyst/pm track (this may sound like a dumb question considering the glamour and $$$ of PE, but I would like to know). The reason that I ask is I currently work for a very small, basically "micro"market PE firm, and am still trying to figure out what direction I want to ultimately head in my career. I like PE but have also thought about a more traditional buyside equity analyst/pm career(investment mgmt-IM). Coming from equity research I’m sure moving to the buyside would have been an easy transition and so there is a good reason why you chose to pursue PE instead; could you please review my opinions of the pros and cons of PE vs public equity mkts and then give me your opinions. IM-Easier to enter and exit positions in public markets, and if you believe markets are inefficient and fair value deviates from instrinsic value, there are always opportunities to take advantage of this; however it is very dificult to beat the markets as most fundmanagers do not. PE- typically less investment options available, but the ability to structure transactions in a favorable manner is both exciting and provides opportunities for superior returns. Control- There are positives and negatives of being a control investor in PE…The ability to direct management and strategy lends the opportunity to shape investments to properly unlock value and returns, but at the same time it is no easy task running a company and is very time consuming. I could see being a buyside analyst less stressful in this department, but also frustrating when management teams do not take the right course of action/ make the right strategic decisions to benefit the company/stock and their is nothing that you can do about it owning 2% of the company. PE-more finance based in terms on transaction modeling, but much more operational than IM; requires skill sets of management consultants as well as finance to be successful. IM-completely research and finance focused, probably more time analyzing companies as opposed to being involved with running them. My appologies that this is a long post, but I would appreciate your advice on why you were set on PE…most people obviously would want to pursue a career in PE as it is very exciting and can pay huge $$$, I am basically just looking for YOUR reasoning as to why you would rather do this than IM. I do truly believe that PE is one of the most dynamic careers available. To be successful you need the ability to model and structure transactions like a banker, analyze comapnies from investors perspective like a research analyst, and the strategic and operational skills of mgmt consultants. Once again, congrats and I would truly appreciate your advice.
ngaurh Wrote: ------------------------------------------------------- > Awesome move Numi, > I am also on sell-side research. > I have been trying the same, Large PE firms have > told me that I have good academic credentials MBA > + pursuing CFA (level 3) and good performance > record but they say I lack industry connections > and I will take some time to pick up things, where > as they need people who will contribute from day > 1. that’s correct…i wouldn’t expect them to tell you differently. if you are targeting the big buyout shops, they really don’t care that much about your pursuit of the CFA charter, and having a top MBA should be a given. if you are in research and they *don’t* think you have enough industry connections, my read-through on this is you are probably at a pretty meaningful disadvantage to candidates with transactional experience and your chances of breaking into a big buyout shop are slim. > I can get through some tier 2 or tier 3 small size > funds but at a lower salary than what I am drawing > now, also that would be at associate level, where > as in my present job I may move from associate to > VP this year? there are people coming from banking that are willing to take a cut to get into private equity, because of the prestige/lifestyle/better upward mobility on the buy-side (presumably). if you are intent on moving to PE at some point, what difference does it make whether you will be promoted from associate to VP this year on the research side? i think if you want to get into PE, the sooner you make the move, the better; the more “experienced” you get on the research side, the more costly it will be for other firms to hire you…and on top of that, you’re viewed as someone that’s more entrenched in what you’re doing already. my question is, if you’re on a VP track, then it means you already have coverage responsibilities in research…correct? why did it take you so long to realize you wanted to do PE instead? > what do u guys suggest? I am keen on PE but not > keen to take big salary cut or go in as junior > most guy. you can’t always have your cake and eat it too. if you want to break into PE, you’ll probably have to take a pay cut and go to a smaller shop. not that it’s necessarily a bad thing; getting any type of experience in PE on the deal execution side is much more relevant to future careers in PE than what you’re doing now. your chances of getting into a bigger PE firm down the line from a smaller PE shop are many times better than making the jump from research into PE. another thing i noted is that you say you’ve had the chance to get into “tier 2” PE shops – well, if you’ve done your homework, you ought to know that getting into a “tier 2” PE shop is still much more impressive than what you’re probably doing in research. why didn’t you make the jump yet? have you carefully considered your career trajectory on the sell-side versus what it could be on the buy-side? also, the PE hiring environment is getting increasingly tighter by the day, with very little recruiting going on at the moment. maybe there’s something special you’re holding out for, but i don’t see the point if it’s really true that you were presented with such opportunities in PE already. mike1000 – it’s too bad you are being passed up in favor of other candidates, but i guess that’s a product of the fact that there’ve always been a lot of people wanting to get into sell-side research, and at the moment, there are fewer availabilities than 6-12 months ago. i think you really need to leverage your networks, even reach out to some analysts and associates (cold-calling is acceptable) and show them how badly you want to do it. your industry experience is useful…you just have to come up with a creative pitch and have the person on the other line be receptive to it. if you can’t get into research now, i’d say you’re probably better off getting into a top business school and going for opportunities in research then. going through MBA recruiting to get to research will be much easier than where you are now. plus, again, the job market isn’t so great, so unless you feel like you have a lot of mobility in your current role, you might consider going to business school if you’re intent on making the switch into finance sometime down the line.
sdcfa Wrote: ------------------------------------------------------- > Congrats on the switch. If you don’t mind I was > wondering if I could get your insight on why you > would rather do private equity instead of say a > buyside analyst/pm track (this may sound like a > dumb question considering the glamour and $$$ of > PE, but I would like to know). The reason that I > ask is I currently work for a very small, > basically "micro"market PE firm, and am still > trying to figure out what direction I want to > ultimately head in my career. I like PE but have > also thought about a more traditional buyside > equity analyst/pm career(investment mgmt-IM). > Coming from equity research I’m sure moving to the > buyside would have been an easy transition and so > there is a good reason why you chose to pursue PE > instead; could you please review my opinions of > the pros and cons of PE vs public equity mkts and > then give me your opinions. > > IM-Easier to enter and exit positions in public > markets, and if you believe markets are > inefficient and fair value deviates from > instrinsic value, there are always opportunities > to take advantage of this; however it is very > dificult to beat the markets as most fundmanagers > do not. PE- typically less investment options > available, but the ability to structure > transactions in a favorable manner is both > exciting and provides opportunities for superior > returns. > > Control- There are positives and negatives of > being a control investor in PE…The ability to > direct management and strategy lends the > opportunity to shape investments to properly > unlock value and returns, but at the same time it > is no easy task running a company and is very time > consuming. I could see being a buyside analyst > less stressful in this department, but also > frustrating when management teams do not take the > right course of action/ make the right strategic > decisions to benefit the company/stock and their > is nothing that you can do about it owning 2% of > the company. > > PE-more finance based in terms on transaction > modeling, but much more operational than IM; > requires skill sets of management consultants as > well as finance to be successful. IM-completely > research and finance focused, probably more time > analyzing companies as opposed to being involved > with running them. > > My appologies that this is a long post, but I > would appreciate your advice on why you were set > on PE…most people obviously would want to pursue > a career in PE as it is very exciting and can pay > huge $$$, I am basically just looking for YOUR > reasoning as to why you would rather do this than > IM. sdcfa, based on some astute observations you’ve made, i can only guess that you have given some serious thought to PE as well. i agree with many of the points you mentioned. basically, my rationale for wanting to get into PE encompasses a number of points you mentioned. while it’s true that it would have been a more natural transition for me to move to asset management/hedge fund roles, i just found that i wasn’t as interested in the day-to-day volatility of the stock markets and taking minority positions in companies as i was with control investing, working on transactions, having access to non-public material information, which, once you’ve seen this, really turns a business on its head and gives you exposure to a whole world of information you never thought existed about a business – in fact, it never ceases to amaze me how superficial public investing can be, simply because there is so much information that public investors don’t have access to. at the end of the day, i cared less about what was perceived to be the “easier” transition for me (i.e. asset management/hedge funds) and was more driven by what i thought would excite me most (private equity). in the end, i persevered and got it done, and i feel very fortunate that i was able to get this opportunity. but i also had the foresight to realize that it is very difficult to do well at something that i wasn’t all that passionate about – specifically, so many people think they can just go to a hedge fund and start reeling in millions of dollars, but there is some serious survivorship bias here. specifically, the people that last long enough to talk about the fortunes they’ve amassed are the ones that have done really well at their hedge funds; in comparison, there are multitudes of others who try their hand at hedge fund investing but just can’t hack it, and eventually get fired or leave on their own accord. making money in the stock markets is very difficult as well, and definitely not for the faint of heart. quite frankly, i also didn’t think i was a shoo-in to do well at hedge funds. while i did consider fundamentally-focused and value-oriented funds (since this is more similar to my own personal style of investing), i felt that my investing approach as well as personality and temperament were better suited for private equity. basically, i figured i should try my hand at private equity, since even if i later realize it’s not my cup of tea, i will still have rounded out my finance skill set so that it includes both the analytical side (research) and transactional side (private equity). and with a top undergrad, 2-4 years of experience in sell-side research, and 2-3 years of experience in private equity, i feel like i will have a realistic shot at getting into a top business school, at which point i can further assess my career objectives again if necessary. > I do truly believe that PE is one of the most > dynamic careers available. To be successful you > need the ability to model and structure > transactions like a banker, analyze comapnies from > investors perspective like a research analyst, and > the strategic and operational skills of mgmt > consultants. i agree with you as well – people in PE have told me that they really think PE is the kind of job that has required them to draw upon every skill they’ve ever developed, and that it has given them a very well-rounded perspective of investing as well as a good high-level understanding of how companies actually work. i don’t have any firsthand experience in PE to speak of yet, but as i was going through different case studies and business analysis tasks, i definitely felt like i had to draw upon a variety of skills including all the things i learned in sell-side research, LBO modeling, corporate finance, and just general business sense. what you’ve said above certainly captures what i believe is needed to do well in PE…in fact, if i mentioned during my interviews some of the things you stated above, maybe i would have done even better in the recruiting process and landed more job offers…*smiles* > Once again, congrats and I would truly appreciate > your advice. thanks for the well-wishes, and i hope this helps. thank you for your perspectives as well. i’m happy to continue this dialogue with you…feel free to email me at porcupines AT gmail dot C0M if you wish to discuss further
Thanks for the input Numi; I appreciate the input. I have a few other questions and would definitely like to discuss further so I will send you an email sometime shortly.
you’re welcome…i’m happy to chat or discuss anytime.
Very nice to hear Numi, well done. Just a couple of questions: wasn’t it at all possible to be considered a post-mba level associate for you? Given numerous years in research, and a CFA charter… Will you still be able to become a post-mba associate without doing an MBA, via direct promote?
*sternwolf* – in terms of the LBO modeling you were exposed to through your training courses, I’m pretty sure that the models that I can build aren’t that much more complex than what you may already know. Hopefully in a few months’ time, that’ll be different since I’ll be building LBO models every day, but I consider my knowledge of buyout modeling to be pretty rudimentary at the moment. However, PE firms understood that building LBO’s wasn’t part my every-day job, yet they seemed to appreciate the fact that I had the drive and determination to teach myself the skill, and also acknowledged my recognition that building transactional models was a big part of the job. I never claimed to know more about buyouts than I really did, but I still was able to demonstrate a respectable level of knowledge by being able to talk about how changing a particular assumption in a buyout model could affect future returns and free cash flow, and would also be able to walk through an LBO model in an interview and create a set of reasonable assumptions if the interviewer gave me a particular case to analyze. For example, the interviewer might tell me that they’re looking to buy a manufacturing company with a certain level of sales, D&A, operating margins, etc. that participates in an industry with certain characteristics, and I would have to ask the right questions in order to assess whether or not it was a good buyout opportunity. Interviewers are very keen on understanding your thought process, business savvy, and general facility with numbers. In other instances, I was asked to demonstrate my actual facility with Excel. In a couple cases, I was given 2-3 days and an investment memorandum so that I could build a basic LBO model and write a case analysis of the investment opportunity, which I submitted and presented to the team upon completion. At a couple other firms, I was given anywhere from 1.5-3.0 hours to perform a modeling test, where I was given a sheet of assumptions and other financial information about a company, and had to build an LBO model with some basic sensitivities and D&A schedules from scratch. The firm would have me sit down in a room and just build the model from a blank spreadsheet, and hopefully do a good job in the time allotted. Anyway, I hope this gives you a taste of the stuff I went through in PE interviews. Typically, firms only give you case studies or modeling tests after you’ve passed through the first 2-3 rounds of screening, which tend to be more behavioral in nature but also include a lot of questions that test your “business savvy” and general facility with numbers and financial statements. *Neud* – I think you are giving me more credit for my background than I deserve. I actually only had a few years in sell-side research, and also don’t have a CFA charter. For some reason, a lot of people here seem to think I have the charter, but I actually only passed Level I. With respect to promotion opportunities, a lot of the larger PE firms do have occasional instances where pre-MBA analysts or associates were promoted to a post-MBA role, but most pre-MBA’s end up going to business school after 2-3 years, either by the encouragement of the firm or on their own volition. Nowadays, however, most people in PE do end up getting their MBA’s after 2-3 years, not necessarily because business school equips them with tons of extra “skills,” but because pretty much everyone on the more senior levels has an MBA and the networking opportunities can be very valuable too. Right now, I intend to enroll in business school during the fall of 2010.
I see numi. Well, I just guess it’s all different for various people. I, for one, enrolled into a CFA Program with the main goal to be able to avoid doing an MBA but still pretend for post-MBA level positions in IB. Now, when I already have a charter, I will soon know whether or not it works 
Neud Wrote: ------------------------------------------------------- > I see numi. Well, I just guess it’s all different > for various people. > I, for one, enrolled into a CFA Program with the > main goal to be able to avoid doing an MBA but > still pretend for post-MBA level positions in IB. > Now, when I already have a charter, I will soon > know whether or not it works no offense, but good luck… And congrats Numi if I haven’t already given them…