How to get targeted by PE firms when you're six months into your banking job

Most first-year investment banking analysts are getting settled into their desk after their summer training, and they are already starting to feel the pressure to start planning their next move - usually private equity.

PE firms are reportedly recruiting earlier than ever, and banking analysts have to secure their two-year exit by starting to interview six months into their jobs. However, this is only true at the mega-funds and some of the big middle-market firms in New York.

Mega-funds are maybe the top 10 PE funds, the KKRs and Carlyles. This accounts for maybe 150 seats from the whole PE universe. Yes, that’s it – 150 roles, at the most, each year.

This is not a panic for most analysts, however. The opportunity may not even come to most IB analysts, as the process is tightly restricted to those at the cream-of-the-crop IB groups and elite boutiques. Recruiters hold a lot of power in these situations, and if you are an analyst that isn’t in one of the target groups – sounds a lot like “target school,” doesn’t it? – then you need to be proactive with setting up calls and getting coffee with recruiters that work with the funds you want to work for.

Most of these firms wrap up recruiting roles in a matter of weeks in January. To prep for these interviews, it comes down to cranking out modeling tests to study, as well as really understanding your fit with the firm and behavioral questions.

As a first-year analyst, it’s early in the game, so you won’t have any meaningful deal experience to talk about and you will rarely have learned any modeling on the job. The behavioral questions will therefore be immensely important, since you won’t have as much to say when talking about your experience.

For all of those sell-side analysts looking to work in PE but not necessarily shooting for a mega-fund role, the off-cycle recruiting process is much less structured. It often starts around the winter of your second year on the desk and can go on for months. Small to mid-sized PE firms start looking to fill roles six months out and consider immediate hires as they have openings.

However, it is a good idea to start building relationships with recruiters and networking at funds after you’re six months in. IB analysts need to approach PE recruiters proactively and keep them abreast of your skills, experience and preferences so they have the most accurate data on you and can help match you with job opportunities.

For the first six months of the job, most analysts won’t get any meaningful work. You typically need to start getting up to speed with your group and they want to see you prove your chops before you get staffed on any deals.

Traditionally, private equity values analysts who have deal experience, can speak to investment philosophy and deal rationale, can prove their financial modeling skills and, most importantly, will be a great cultural fit for the firm. Most of these skills are learned on the job, plus attention to detail and some level of preparation.

Sector-specific PE funds already have specific banks and desks in mind places from which they want to recruit. Also, recruiters will have the analyst's preferences and skills in mind and will try to match PE firms' requirements to analysts.

Very small PE shops will take on undergrads, but these roles will typically be much more heavily focused on sourcing as opposed to deal execution. You can try to go the MBA to PE route, but still, PE firms prefer candidates with IB experience, so many times you'd have to go from MBA to IB to PE. People with experience working in valuation roles at one of the Big Four accounting firms can get consideration from PE firms with heavy networking, but once again IB candidates are preferred. For more senior roles in PE, those with operations experience are also valued.

At the end of the day, making a switch to work in PE isn’t the only option for a banker, nor do you need to start the recruitment process immediately, but it certainly can feel like it once you are at the desk. Concentrate on impressing your current manager first and then think through what you need to do to move to the buy-side.

Anish Patel is a former investment banking analyst at BMO Capital Markets and corporate development consultant at Madison Wells Media. He created Valuation University, a resource for undergraduates interested in investment banking that provides career-development advice, insights into life at the desk, and financial modeling and valuation guides. Patel is the founder of a sparkling wine cocktail startup, Tinto Amorio.

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