Can you give a rundown of what a private equity analyst does? A friend in a PE shop said someone he knows is looking for an analyst at a different PE firm. While I have never searched for a job in private equity, it definitely is an interesting field to me. Before I move forward, I simply want to know some details.
Hi, it really depends what type of private equity firm you’re at (could be LBO, growth equity, mezzanne, etc.), as well as whether your role is primarily on the transactional side or the deal sourcing side. Be sure to ask about this, because the responsibilities of someone on the sourcing side are very different compared to the transacting side. In my case, I’m a pre-MBA associate on the transacting side. I don’t do any deal sourcing or origination. My firm focuses on leveraged buyouts; we may have taken some minority interest positions in the past, but I don’t know of any offhand. My role is pretty standard, in that most of the stuff I do revolves around the following: (1) Industry analysis and market research; (2) company-specific due diligence; (3) financial modeling and other types of analysis; and (4) providing opinions on potential investment opportunities. On some level, it’s not too different from what investment banking analysts and associates do, except I don’t have to worry about pitching or fancy presentations, and just focus on the analysis. After all, we’re primarily in the business of buying companies and growing them; and when we do exit the investments after 3-5 years of holding, we hire bankers to do all the stuff that we can’t be bothered with. The work I do tends to be more tactical or analytical in nature - this isn’t all that surprising, since the higher-level stuff and relationship-related work usually goes to the higher-ups and I basically do all the modeling and writing that they don’t want to do. That being said, I do participate actively in committee meetings and discussions about investment opportunities, and I feel that my opinions on potential investments are both welcomed and respected. Ultimately, the most interesting part of the job is to learn how to think about investing from a control perspective, and because our deal teams are so lean (usually 3-4 people), I feel like I’ve definitely become a smarter investor through my experience in looking at companies in a variety of sectors. The biggest difference between buy-side and sell-side is that I feel like I really get to focus on trying to help make good investment decisions and concentrate on helping to devise plans and strategies for growing the companies we own, without having to worry about annoying bureaucracy and other pointless issues that seem so prevalent on the sell-side. Hopefully this provides some insight into what I do. Most of the pre-MBA’s I’ve spoken to have had similar experiences – some of them are more involved in discussions with attorneys, tax advisors and lenders, while others may do more deal sourcing, and so forth. But the core responsibilities that I outlined above seem pretty standard across the board. My personal sentiment is that if you are trying to develop a true financial skill set, being on the transacting side will give you the most hardcore knowledge about doing deals. However, given how bad the job market is right now, most opportunities in private equity are still pretty good. BTW sorry I have not gotten back to your e-mail yet. I’ve been traveling a lot for the last month or so and will reply soon.
Thank you Numi. Let’s just hope I’m qualified to perform the job duties. My experience thus far does not really relate.
Cool…let me know if you have any other questions. If you can provide any additional details, like the name of the firm, job title, or description of responsibilities, I can help decode what it all means for you
numi - how did that building materials opportunity ever end up?
We were pretty interested in the company. It basically manufactured higher-end products for interior design, primarily in the residential real estate market but also some on the commercial side. Our only concern was the potential cycle play, but that coming out of a five-year holding period and assuming a rebound in the residential real estate space starting around mid-2010, we’d be fine. Unfortunately, we didn’t win the bid. We had a lot of enthusiasm for the deal, but given the way the markets have deteriorated since we looked at the opportunity at the beginning of the summer, we don’t feel so bad about it anymore.
would having a charter add any value to your position? i’ve been working on m&a for my company, and find it really interesting. the deals are extremely small, so i’ve been thinking about the opportunities in PE, which would also give me exposure to more sectors.
This is really standard information. What differentiates your firm? I’m very skeptical a private equity analyst can add real value without being somewhat involved in origination. Are you analyzing emerging industries that haven’t been analyzed before? If so, does that involve a lot of time spent on the phone? If you are on the phone a lot, isn’t that de-facto origination disguised as industry research?
Danteshek, if you read the original poster’s question, you would have seen that he was asking a standard question so I gave him a standard answer. What does it matter to you what differentiates my firm from anyone else’s? And please, no need to get snippy – it’s not as if you’d really know the difference between what’s standard and what wasn’t anyway.
Sorry, I’m a bit skeptical when I hear people saying they are only involved on transaction side. How many deals is your firm doing a year??? My understanding is that in most firms you would be pretty bored if all you were doing was getting involved in a few transactions each year.
dspapo Wrote: ------------------------------------------------------- > would having a charter add any value to your > position? i’ve been working on m&a for my > company, and find it really interesting. the > deals are extremely small, so i’ve been thinking > about the opportunities in PE, which would also > give me exposure to more sectors. I don’t think it’s really value-add. I think if you have M&A experience, that’d be the most valuable aspect of your candidate portfolio. You can probably talk about how the charter has helped you develop your financial acumen, but it’s not likely that you’d be asked about it in an interview unless you brought it up yourself. That’s not to take anything away from the charter itself – the fact is, if you have good M&A experience and your knowledge is as good as it looks on your resume, most relevant skills you’d have to the job would have been developed from your job experience already, with the CFA being supplemental in your case.
A lot of these firms have to scratch and claw for proprietary deal flow. The private equity market is saturated in the US.
My friend here just got into PE at One Equity Partners here in the city - it looks so sick. I am very jealous.
projectplatnyc Wrote: ------------------------------------------------------- > My friend here just got into PE at One Equity > Partners here in the city - it looks so sick. I am > very jealous. Interesting. My dad was showing them a deal last week.
Danteshek Wrote: ------------------------------------------------------- > projectplatnyc Wrote: > -------------------------------------------------- > ----- > > My friend here just got into PE at One Equity > > Partners here in the city - it looks so sick. I > am > > very jealous. > > > Interesting. My dad was showing them a deal last > week. Wow - nice
Danteshek – we have a dedicated team to deal sourcing and origination so that the transacting staff can concentrate on getting deals done. It’s true that having a good origination staff is important – our deal sourcing team is essential to our company as they generate a lot of potential leads through their relationships. They allow us to have enough time to focus on doing deals. Like most other large middle-market and mega buyout shops, we do many deals each year because as transactors, we don’t have to preoccupy ourselves with “dialing for dollars.” Of course, that’s no knock on companies like Summit Partners or TA Associates – we just have a different business model. That being said, your question as to how many deals my firm does is far less relevant to the “analyst” or “associate” experience as the original poster asked, compared with how many deals the person gets staffed on. In my case, I’ve worked on two deals that have closed this year (and about ten others in the pre-LOI process that we eventually didn’t like or just got outbid on). Most investment professionals at the mid to large private equity firms do not do any origination, because the process of doing a transaction can be very demanding. You said that your understanding is that “in most firms you would be pretty bored if all you were doing was getting involved in a few transactions each year.” This is definitely a misunderstanding, but one that is more forgivable since you have not worked on deals. I think most people would be happy to on 2-3 closed deals a year; four or more would be a great experience. I don’t think anyone that is working on a deal is “bored” – heck, I don’t think people even have time to be bored when a deal goes live… Anyway, I don’t know if your questions were serious or if you are just wasting my time (it’s pretty obvious you need to tone down your attitude), but that’s my answer.
numi: thanks for the informative write-up.
Cheers to Numi!
Numi, my questions were serious. I think a lot of people who don’t have experience in PE think it is very glamorous when in fact it isn’t. The firm I worked in was more in the Summit mold, so I guess I don’t really understand much about how your firm or similar firms operate. I remain mystified with how someone could add much value by *only* working on transactions, and not bringing in business or getting involved in the operations of existing investments. I would be pretty pissed if I brought in a deal and some guy just waltzed in and took the lead on the transaction.