Just curious about anyone doing the CFA looking to get into private equity. We were talking about this recently at my firm and there were many comments that CFAs just want to become bankers. I tended to disagree, but conceded there’s not much PE talk on here. It even seems private equity is becoming more and more private, which in turn doesn’t help attracting new talent. Some of the most popular PE blogs have all but shut down. VC is the opposite; it’s becoming much more public with a handful of very popular partner blogs.
Hey Mr.T Any recommendation on which VC/PE blogs are good to follow? Thanks! I want to get into PE eventually but i know its a really hard field to break into.
PE is an ultra elite club. If you thought banking is hard to break into… PE is harder
Yea, I thought people get into banking to get into PE. At least that is what the normal progression seems to be. I can’t speak for the CFA community as a whole, if given the opportunity (read as right connections and timing) I would go PE, but that is not my main goal. I would like to get into equity research or portfolio management.
I’ve also been interested in getting into PE (currently at big 4 valuation), but 90%, if not all, of people who transition into PE have IB background…You go to any PE website and check out their bio. I’m talking about associate positions here. Also, CFA doesn’t help that much in PE as opposed to AM or ER. Based on my research, there are a few ways to break into PE. 1) Top undergrad --> PE (heard some of PE firms accept people right out of undergrad) 2) Top (good) undergrad --> IB for 2 years --> PE 3) Finance related work --> Top 10 MBA --> PE or Top 10 MBA --> IB for 2 years as an associate --> PE (I’ve even heard it’s very competitive to get into PE even if you go to Top 10 MBA as most of people who get into PE after an MBA tend to have PE background) 4) Be an expert in a certain industry and transition (it would take some time)… Of course, I’m sure there are many people who get into PE without my approach above, but don’t expect that it will also happen to you…there are definitely the exception rather than the norm. Regarding Blog, I enjoy reading: http://www.theprivateequiteer.com/ - it’s not free anymore, but I had really enjoyed it a lot. If you want to buy the book, be the author’s network in Linkedin, you get a discount for the book. http://www.bothsidesofthetable.com/ - Pretty good VC website. Also, I read a lot of articles from dealbook.com. Good luck to you guys and me.
There are a few PE firms that accept undergrads straight out of college, but not many, and I also had a friend get a PE job in an emerging market straight out of college (connections), but the routes are really through banking, but small firms may not necessarily stick by the same rules.
Ok, i realized 99% of the people here get there info from WSO, Dealbreaker, etc. and just copy whatever they are saying. i’ve seen RFPs from PE firms from all sizes and across many strategies (been doing public searches and been getting 40-50 responses) and got info from buyout, distressed, fund of fund, secondaries, etc. Some stuff I learned: 1) All these guys are more desperate for money (got the big boys responding to a small 2-3mil mandate) 2) A lot of these guys are delaying initial close so they can try to raise more 3) Comp is heavily dependant on carried interest, which might take over 10-15yrs to fully realize, junior people get a small amount while the managing markets get the lion share. For the junior people it is not a lottery ticket. 4) I have read the RFPs and they provide bios of personnel, you def see people with CFAs and non-ivy (but top 40 schools) backgrounds all the time at the smaller shops. At the large shops i.e. Carlye, Blackstone etc. you mostly only see people with blue chip background. Not quite sure if the CFA is helpful but you def see people having the designation in the PE industry EDIT: as an example I just looked at an RFP from a PE arm of a large global IB non-US based. They are raising for a fund of fund, i looked at the investment staff on the product, 4 out of a team of 14 people have there CFA.
I am also trying to break into PE and it has been very tough, especially with not having an MBA or IB background. I have been trying to do it through networking and going to different functions that tend to draw people from those firms (ACG, Venture Club, etc).
there are absoluate rockstars that go straight from undergrad. I know of one douche that went Wharton undergrad—>>>Blackstone---->>>KKR---->>>now co-founded a small private equity firm.
I echo dhyun3’s suggestion: http://www.theprivateequiteer.com/private-equity/ It’s somewhat conversational, but written from inside a PE firm. I enjoyed the anecdotes and what he/she calls the PE “tricks of the trade”. Unlike a textbook, it’s written from a practical perspective. So instead of saying “use this formula if you want to do X” it says “when you’re trying to achieve X, this is how things work in the real world, Y is what you should do, and Z is the formula”. Carried interest is also a good blog, but he posts only a handful of times a year. As for PE as a career path, there’s a big difference between working for a mega fund and working for a smaller mid-market fund. On WSO some people say there’s little difference, but trust me, there’s a huge difference in everything from the prerequisites of landing a job, to the investment philosophy, to the daily duties. There are some mid-market firms that are really so big that they’re just like mega finds. Generally, if the fund is too small to buy public companies, then the work is completely different. As soon as you hit the public company arena, the focus is much more on the deal and less on working with the company. That’s just a rough guide, but it seems to hold true. My suggestion, if you don’t have the background for a top firm, don’t give up on PE. You can have a very rewarding career at a smaller firm. In fact, you can get into a smaller firm without finance experience. We hired a science PhD, previous entrepreneurs, engineers, etc. Domain experience can go a very long way. When you’re trying to close a deal with a science company, and you have someone who can talk the talk, it makes all the difference. That doesn’t matter so much in larger funds and with public deals because you’re mostly just dealing with corporate types. I believe the Ebook suggested (http://www.theprivateequiteer.com/private-equity/) earlier is from someone working at a mid-market firm because they talk a lot about doing their own deals, even at the associate level. That’s another benefit, you can land your own deals within the first year at a smaller fund.
What’s so great about PE? From what I’ve seen you sit around all day and look at bs, no-name, unintersting business to buy and sell.
LBriscoe Wrote: ------------------------------------------------------- > What’s so great about PE? From what I’ve seen you > sit around all day and look at bs, no-name, > unintersting business to buy and sell. Agreed, I have no interest in PE and even less in IB. IB sucks because it’s underpaid and overworked and I don’t feel like sacrificing my life and personality to become some soulless cubicle rat. PE would have been cool 10-20 years ago, but now the field’s become so over saturated (along with HF’s in general) that I just don’t have faith in the long term viability of most firms in the space. I also think the talent requirement has become diluted as well.
Well, I think PE is a great industry for the few people who can do it well. Not only do you need to be able to value illiquid and often distressed investments, you will also need enough business knowledge to have a positive effect on the business management through your meddling. So, if you’re a genius BSD, then you might be able to make a lot of money in PE. However, if you’re a run-of-the-mill random finance guy, you’ll probably end up dicking up everything.
ohai Wrote: ------------------------------------------------------- > Well, I think PE is a great industry for the few > people who can do it well. Not only do you need to > be able to value illiquid and often distressed > investments, you will also need enough business > knowledge to have a positive effect on the > business management through your meddling. > > So, if you’re a genius BSD, then you might be able > to make a lot of money in PE. However, if you’re a > run-of-the-mill random finance guy, you’ll > probably end up dicking up everything. The problem is, in a flooded micro industry like this, a bunch of morons trying to put money to work can make it impossible for good PE managers to do their job. It could be a classic bubble. The good PE managers may try to invest, but be unable to find firms at the right price do to overcrowding.
Black Swan Wrote: ------------------------------------------------------- > The problem is, in a flooded micro industry like > this, a bunch of morons trying to put money to > work can make it impossible for good PE managers > to do their job. It could be a classic bubble. > The good PE managers may try to invest, but be > unable to find firms at the right price do to > overcrowding. This. PE is extremely crowded and even today after the Lehman shock, there is too much money chasing too few deals. A lot of the deals done turn into financial engeineering nightmare scenarios that destroy value. Even the “value added” reorganization work is often little more than cutting a firm to the bone, juicing the numbers, and then puking it out on retail investors during an IPO. Little value is actually created, it’s just redistributed from LPs and existing shareholders to the GPs at the PE firm. Some of the same stuff happens in HFs in terms of mathematically unfavorable fund structures (funds charging 2 and 20 to invest in gold or something stupid like that), but at least the public markets are broad and deep with a nearly endless supply of potential investments to evaluate. During the last cycle, PE was a cheap credit fueled bubble, not a legitimate business model.
i’ve come across a number of fundless PE funds recently, which is a sign of how extremely overcroweded it is out there. a bunch of guys chasing deals without having committed capital, sounds fishy to me
I’m not doing the CFA to specifically to get into anything. I just want to learn more. With that said, I would ultimately like to do PE - with VC or Trading being a close second. I don’t really care much for Portfolio Management, banking, or Research (which is what I’m currently in). Also, just wanted to add that while there may be a large bubble in small PE firms; a good PE firm is still a good PE firm. Furthermore, firms like KKR, Carlyle, Blackstone, etc. are still doing very well and I don’t foresee anything changing that.
Stocks & Blondes Wrote: ------------------------------------------------------- > I am also trying to break into PE and it has been > very tough, especially with not having an MBA or > IB background. I have been trying to do it > through networking and going to different > functions that tend to draw people from those > firms (ACG, Venture Club, etc). Where are you geographically? I attend a fair number of ACG - NYC, ACG - NJ and ACG - Philly events. Will certainly be at M&A East next month in Philly.
higgmond Wrote: ------------------------------------------------------- > Stocks & Blondes Wrote: > -------------------------------------------------- > ----- > > I am also trying to break into PE and it has > been > > very tough, especially with not having an MBA > or > > IB background. I have been trying to do it > > through networking and going to different > > functions that tend to draw people from those > > firms (ACG, Venture Club, etc). > > > Where are you geographically? I attend a fair > number of ACG - NYC, ACG - NJ and ACG - Philly > events. Will certainly be at M&A East next month > in Philly. I’m from Chicago but currently living in Indianapolis. Spend a fair amount of time in both cities though for business.
This discussion so far seems to be focussed entirely on working in PE from the GP side. What about the LP’s? The CFA is primarily geared towards asset management roles as I see it, so a lot of CFA Charterholders who ending up in PE related roles will be working for LPs - pension funds, private wealth management, family offices, sovereign wealth funds etc. Presumably there are thousands of people around the world in asset management roles focussing on the PE industry. Putting together a portfolio of PE investments with a good geographical, sector, vintage, BO/VC mix is not easy I imagine.