The Oxford Saïd Business School’s Finance Lab welcomed PER’s Managing Director, Gail McManus last week to gain an insider’s perspective on the hiring process in private equity and venture capital. Gail didn’t disappoint, busting popular myths about recruitment along the way, she revealed how private equity and venture capital firms really pick their next crop of Analysts and Associates.
Making it through the private equity and venture capital recruitment process is a skill all of its own. No matter how good you are at what you do, you’ve got to get past all of the hurdles that are placed in your way, and this takes hard work. The biggest mistake many people make is failing to prepare; this entails finding out absolutely everything you can about the firm you’re applying for, practicing your first interview at least three times and making sure you can put a financial model together at speed.
Clients come to us with very specific requirements for the role they need to fill. You may be the best financial modeller out there, but you may not tick all a client’s boxes. Occasionally we can recommend candidates who don’t quite fit the profile we’re given, but this can harm our credibility as a search firm. Don’t give up if you’ve been turned down by recruiters for one role, keep searching and keep applying.
Your CV will get you your first interview. That’s about as useful as it gets. Having said that, do not assume that your interviewers have read your CV; they’ve probably done a load of these interviews already, they’re busy and everyone they have met is blurring into one. Learn how to contextualise your education and experience succinctly so that you’ll be prepared for the inevitable first interview instruction, “tell us about yourself”. Also, remember to make this as relevant as possible to the firm – they don’t really care about what you want, they care about what you can do for them.
They may just want to hire themselves ten years ago. That means they might be looking for someone with a similar background. When you’re researching firms and looking for jobs, keep an eye out for someone with whom you’ve got something in common. Even if they’re not hiring, get in contact via LinkedIn, explain what you’ve got in common and say you’d love to meet them for a coffee and hear about how they made it into private equity / venture capital. This could lead to your unofficial first interview.
If you get past the first interview, you’ll usually be given a case study. This is an example investment that you’ll be asked to assess for its strengths and weaknesses. No matter how good it looks, use the language of private equity and talk about the business like a buyer, not a seller. One way to do this is add a caveat to everything positive you say about the business. Crucially, have your own opinion about whether or not to invest and make sure you think about the impact of price on your decision. After all, a good business and a good investment aren’t necessarily the same thing.
Some employers will ask you to create an LBO model in an hour or less, so you’ve got to work intelligently under pressure and prioritise. Read the question and just do as you are asked. Don’t overcomplicate the model; you won’t succeed. If the figures don’t look right when you present your model, the first thing you should question is yourself. Fund managers aren’t necessarily looking for the correct answer, they’re looking for understanding and humility. Explain what you would need to check and what you could add if you were given more time.
There is huge demand for Analyst and Associate roles in traditional private equity funds. It’s not the only way into the industry, though. In particular, secondary funds shouldn’t be seen as a second choice. The market has evolved since the financial crisis and often there’s a quicker route to partner in these funds than in most primary funds. Another route to consider is through Investor Relations. If you’re a great communicator as well as being highly numerate, this role dealing with LPs and fundraising may well be better suited to you.