How to get into private equity, according to Blackstone
They are nothing if not consistent. For the second consecutive year, Blackstone ranked as the top private equity firm to work for in our annual Ideal Employer Survey. Respondents rated the company highly in a number of key areas, including compensation, innovation and the access it provides to key players in the industry.
To get a better idea of what it's like to work at Blackstone, we spoke to Vik Sawhney, a senior managing director and the COO of the private equity business at the Blackstone Group. He details the average day working in private equity and provides some advice to young bankers who want to enter the industry.
What does being a COO in private equity entail?
The COO role in PE involves the running of the business as a business, dealing with hiring and promotions of our people, compensation, capital-raising from our limited partners, interacting with them, financials, budget, strategy and new initiatives.
Can you describe what you’ve been working on today?
Mondays we have a lot of internal meetings to catch up on projects and share status updates. I just walked out of a meeting with a prospect who is interested in our funds, so I spent an hour educating them about what we’re doing here.
We’re rolling out a writing workshop and training for our mid-level investment professionals, so I spent time finalizing that curriculum and the messaging.
A lot of young bankers want to move into PE. What would you say their biggest misconceptions about private equity are? What differentiates a successful PE professional from a successful investment banker?
Young bankers, in particular, underestimate how different the work is in banking. In PE, if you execute one investment a year, that’s a lot. You can work on things for months but they can end up not bearing fruit.
In banking, where I spent years, you won’t spend as much time on one project but the velocity is greater. People who switch from banking are shocked by the higher level of thoroughness and lower velocity of PE, and frankly, it’s not for everyone.
A mid-level person over three years may end up executing two new investments, while as a banker you might execute five or six deals a year. There’s much greater depth in PE, and it requires more patience.
We hire people straight out of college, people who’ve worked at an investment bank for two years, graduate schools and MBA programs. We tend to hire people very young in their careers so they can apprentice and train here.
What are the main routes into Blackstone as a junior? E.g. After a Bachelor’s degree, MBA or a couple of years working in banking? Roughly what proportion of your junior hires come through each route?
In the PE business, a third, a third, a third, but it ebbs and flows, depending on the year.
Some PE funds are putting more emphasis on growing talent in-house. Is this happening at Blackstone? If so, why?
You have to hire some people from the outside, but since the beginning of the firm, at least in our group, it’s always been about growing talent in-house.
Generally you hope they have financial-modeling skills and basic understanding of corporate finance and you build from there. Being able to do due-diligence, knowing what questions to ask, figuring out the best ways to look at downside risk, what’s the right way to interview the customer or key supplier of a company – a lot of it is learning by doing.
What’s your favorite interview question? What are the best and worst answers you’ve had to it?
One of my favorite questions is “What’s the last book that you read?” and that can really throw people off – I don’t know why, but it does.
Another one is “Tell me something that you’re bad at,” but don’t say “I work too hard,” “I don’t delegate enough,” or “I’m too detail-oriented.” Don’t couch an attribute as a weakness. There’s no right answer – it’s about honesty and self-awareness. “Sometimes I get stressed out and I bark at my colleague” – that’s a fine answer.
If you could hire anyone tomorrow, what kind of skills would they have?
They have to be financially literate, and they have to have two other things: One is a sincere passion for the work that we do, not doing it just because it’s the next thing on the resume and prestigious and all that, but they’re really passionate about investing.
In addition, they would have grit and humility and a lack of entitlement – a nice person.
How is technology changing the role of the private equity professional?
It’s a huge enabler – you have access to more data and you can do more with it, so it’s an enormous enabler of due-diligence, what’s going on at companies and to whom they’re selling, which is very powerful.
What’s the most interesting thing about your role? What’s the least?
The most interesting part of the role is always interacting with our customers, thinking about what their needs are, from retirees with benefits that need to be funded to sovereign wealth funds. We hear what their objectives are and figure out what will satisfy their needs.
If you could do any job in the private equity industry, which would it be?
I like my job. I’m grateful for the role I have.
What do you do to relax?
I exercise a lot, and I hang out with my wife and three kids. That’s basically what I do to relax.
Vik Sawhney is a senior managing director and the COO of the private equity business at the Blackstone Group. Before joining Blackstone in 2007, he worked as a Managing Director in the Financial Sponsors Group at Deutsche Bank.
View the complete 2018 eFinancialCareers Ideal Employer Rankings