Switching to Private Equity from Investment Banking

April 18, 2018

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Most experts agree that 2018 will continue to be the golden age of private equity. It is widely known that a large number of private equity professionals have a background in investment banking. PE head-hunters generally tend to hire investment talents early on sometimes after just one year of experience. If you’re looking to switch to private equity, read what follows to learn how you can make a successful transition.

We’ve already discussed career transitions, stressing the importance of networking for a smooth and successful change. This also applies to transitions from banking to private equity. Draw up a list of people you know in private equity and have professional contact with. Reach out to them and arrange a meeting. Contacting recruiters directly is the best way to secure an interview, but holding casual coffee chats with people in the industry, even if they are not decision-makers, is also good for getting started. Naturally, a competitive CV that stresses your transferable skills is something you should be working on.

Once you’re invited to an interview, make sure you know as much as possible about the firm in question: their background, investment portfolio and general policy, notable achievements etc. Far from being just a way of letting your potential employer know that you are interested in them, this will add to the impression that you have good broad knowledge of the industry you’re about to enter.

There is one important point about your skills from the banking world that you don’t need to transfer to private equity, viz. your “banker mindset”. In a typical advisory role in investment banking (where you do not take investment risks yourself), the usual approach is: the more deals, the better. This is clearly not the way it works in PE. Private equity is about generating returns, not fees, so striking as many deals as possible is far from being a viable strategy here. Meticulous investigation of the industry in question, involving detailed modelling, risk assessment and exit strategy planning is a sine qua non for private equity management.

Last but not least, bring out your entrepreneurial spirit and excellent communication skills. While finding deals was not part of your agenda as a junior banker, you cannot become a private equity professional without a nose for valuable deals. This also means that people with better communication skills are much more likely to succeed in PE. Whether you have to speak to companies, persuade your investment committee, or work in concert with the management team, at the end of the day being an appealing communicator is what lets you win.

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