If you’re looking for a private equity job straight out of university your options are limited. Most private equity firms circle investment banks’ analysts after they have a few years experience – or less, as competition for talent heats up – but it’s rare for even large buy-side firms to have structured graduate schemes.
Terra Firma Capital Partners, the UK-based private equity firm run by Guy Hands, is one exception. It takes on around six graduates a year for a three-year training programme and, on average, receives a hefty 265 applications for every role.
Terra Firma’s founder and chairman, Guy Hands, gives us an insight into what it takes to get in and succeed in private equity.
What characteristics do you look for in the graduates you take on?
We are looking for individuals who can demonstrate those qualities that reflect our core values of entrepreneurship, passion, creativity and tenacity. We value collaboration and therefore will expect you display a strong sense of teamwork. You will be numerate and analytical, but you will also need to have a clear interest in business and the private equity industry. You should also have an excellent academic track record and should have, or be expecting, a 2:1 (or equivalent) from a leading university.
What three things make you good at your job?
Inexhaustible energy and genuine passion for what I do are important, but I’d also add the ability to see the world in a way that is different to most people, that has been very important to me throughout my life.
What are the central facets of a successful private equity career?
A successful private equity career requires not only mathematical but also inter-personal skills. Numerical ability - the skill to process numbers swiftly and efficiently - is important, but so is relating to people. Businesses ultimately are about individuals and their personalities and to be successful in private equity you need an understanding of the human dimension too.
You started in a trading role, before moving across to Nomura to establish their Principal Finance Group and finally a stand-alone PE firm. What advice would you give to graduates hoping for such a varied finance career?
You have to be lucky, but you have to make your own luck, too. Keep as many options open as you can, try for as many things as you can, ask as many questions as you can, and above all, do what you really enjoy, if you don’t like it, do something else.
What are the best things about working in PE?
I like having the ability to drill into businesses and focus on what to do to make them succeed.
What are the worst things about working in PE?
Being stuck in an office; so much of the work is done sitting down.
What has been the most important lesson in your career?
Be ready when opportunities come. You don’t know when or how they are going to crop up, but when they do arrive, you have to be ready for them and go for it. I got my big break at Goldman because when the opportunity came I really went for it and took advantage of it.
What advice do you give to new graduates starting out at Terra Firma?
My advice to our new analysts is to not be afraid to get involved, to voice their opinion and to ask questions. You will be interacting with senior members of the company on a regular basis and one of the reasons we hire analysts is for the fresh perspective they can bring on deals and projects.
If you have a great idea that you feel would contribute we want to hear it! We don’t expect you to be experts as soon as you join but we want to know that you are keen and want to learn. By asking the right questions you can show us that you are interested in the bigger picture and Terra Firma as a whole.
What are the advantages of hiring new graduates into private equity, rather than the traditional route of recruiting from investment banks or other areas of finance?
Firms that specialise in a particular sector hire sector specialists focused on that industry. Firms that focus on financial engineering hire from investment banks.
However, for a firm like Terra Firma, where our focus is on transforming businesses’ operations from the acquisition to the exit process, we need brilliant generalists. Ours is a distinctive investment approach and it requires looking at things in a particular way.
Recruiting these professionals from the outside can be a challenge. Consultancies often have talented generalist candidates, but most of them are accustomed to playing the role of advisor, rather than principal. At Terra Firma we have discovered that the best way to find the type of people we need is to train them ourselves.
Our organisation is becoming more creative, deal-focused and entrepreneurial in line with our strategy to adapt to the current market. As the firm evolves it is opening up opportunities for younger people who are more entrepreneurial and are more creative and a little bit less institutional in their thinking.
If I walked into an interview with you, how could I impress you?
At Terra Firma we firmly believe our interviews are a two-way conversation and feedback suggests these are one of the most enjoyable parts of our assessment centre.
We really want to get to know ‘you’ during the interview rather than hearing scripted answers, so my advice is to let your personality shine through.
Combine this with a good knowledge of Terra Firma and the financial markets and a clear rationale of why you want to work in private equity, and you will be off to a good start.