What it takes to get into one of the biggest private equity firms in the world
Blackstone Group has two ways of vetting potential hires. The first is rigorous – expect 10-15 interviews with 15-20 people before the thumbs up is finally given. The second is decidedly more nebulous.
“Our investment team is relatively small and for all the need for technical know-how, we also want to see that we (and, in the future, management teams and business owners we interact with) can go to lunch or for a beer with the person we hire,” says Robert Ramsauer, a senior managing director in Blackstone’s private equity group.
The ‘beer test’ or ‘flight test’ is the real secret to getting into private equity. For all the talk of the glamour of the buy-side, small investment teams spend hours crammed together on a plane or in hotels during frequent business trips. PE firms therefore need to know that you won’t embarrass them in front of clients, and that they’ll get on with you off the clock.
Blackstone has an investment team of around 30 people in London, so it’s a relatively close-knit group, insists Ramsauer. “Culture is important to us. We all work hard, but a lot of us are friends as well,” he says. “We try to ensure there is a strong social aspect in parallel with our day job.”
For the second year running, Blackstone was the top-ranked private equity firm in the eFinancialCareers 2017 Ideal Employer rankings, which received over 17,000 votes globally.
Most people voting for Blackstone (85%) expected a competitive salary and 81% anticipated a big bonus. These, along with the prospect of challenging or interesting work, were the firm’s biggest perceived strengths.
Blackstone has around 2,200 employees across its various divisions globally. It paid out $1.1bn in compensation last year, which works out as an average of $492.3k. By comparison, Goldman Sachs paid out an average of $338.5k in 2016.
At the opposite end of the scale, only 16% of people voting for Blackstone expected manageable working hours. Saleh Panahi, an associate in the private equity group at Blackstone in London who joined from Lazard in 2012, suggests that the hours are “better than investment banking”, but that nights and weekends are required when a deal heats up.
“The key difference to banking is that in between deals, you are more in control of your own schedule and can be more autonomous,” he says.
“There is also more of a sense of duty among team members, so that people are usually on the same page on what needs to be done when, and – importantly – work on it together, rather than the analyst doing everything late at night and everyone else being home for dinner.”
Blackstone declined to tell us how many applications it receives for a typical role, but private equity recruiters suggest that there’s typically a success rate of less than 1% for junior jobs. At the graduate level, Blackstone usually hires “no more than two junior analysts per year” in London, according to Kerry Conning an associate in its HR team.
If you have aspirations to work in private equity, do your research and get used to being rejected, advises Raphael De Botton, a managing director at Blackstone who joined from Lazard in 2006.
“If you’re a 20-something trying to get into private equity, my advice is to intern in as many different firms as possible,” he says. “All the large firms have different philosophies and cultures, so it helps to get to know what you’re getting into. Also, it’s a competitive environment – you may be rejected at some point. Don’t take it personally and know that failure is part of your journey to success.”
This ‘journey’ usually involves stint in investment banking.
“Typically the investment banking profile works well,” says Ramsauer. “They’re very focused, analytical and there’s cross-over in the skills we need, so it makes sense to hire from banks. The big difference is being able to think like an investor – banking/adviser roles don’t always prepare you for that.”
This is something private equity firms cite a lot in potential employees – the need to think like an investor. What this means in practice, Panahi suggests, is some sleepless nights. He says that: “you have a real sense of responsibility for the capital that investors entrust your firm with.”
“So when things go wrong, you realize that this is different from an advisory job, but that real capital is on the line and that it is up to you to protect it,” he says. “That can be a burden at times, and you carry it with you in everything you do.”
In his annual letter this year, Blackstone chairman Stephen Schwarzman said that Brexit allowed its real estate division to acquire assets at an attractive price from “sellers in need of liquidity”. For its London private equity operation, however, Brexit presents a more immediate problem – people.
“We cover Europe from London, so it’s important for us to be able to tap into a talent pool from the EU, and we hope we’ll still be able to after the UK’s exit,” says De Botton.
De Botton comes from France, while both Ramsauer is from Austria and Panahi from Germany. Maintaining easy access to people from the EU is important for Blackstone and private equity firms more generally. 37% of employees at Oaktree Capital in London are from outside the UK, for example.
Ultimately, if you want to break into Blackstone at an entry level, you’ll need some investment banking experience and are likely to have studied finance or business, suggests Conning.
“You should get some exposure to investment banking through an internship. This will provide you with a base knowledge of corporate finance, which is crucial to succeeding as an analyst on the buy-side,” she says.
If you make it in, expect to be thrown in the deep end. Panahi says that you get a lot of exposure to “leaders in the corporate, financial and sometimes the political world” from the get-go.
“You will often be much younger than your counterpart, and you will be outside of your comfort zone, which will definitely challenge you and let you develop both as a professional and a person,” he says.
View the complete 2017 Ideal Employer Rankings
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