How to move from banking to private equity, by a former associate at Goldman Sachs
So you want to leave banking and work in private equity instead? Needless to say, it happens a lot - but not to everyone. If you work for a bank and you want to move to the buy-side you'll need to play your hand very carefully indeed.
This is my guide on how to do it, based on personal observation. Good luck.
Step 1: Let the private equity headhunters come to you
Most majority of PE transitions are through headhunters. But, do not try to circumvent this process by cold-calling the PE firms yourself (unless you already know some senior people there personally). Cold-calling is an extremely low-yield and time-consuming process, and it will work against you. If you eventually got shortlisted/hired (even if it's via an introduction by a headhunter months later), the firm that hires you will have no obligation to pay the headhunter once you've cold-called the headhunter first. Therefore, the headhunter will have no commercial motivation to help you and will try to recommend other candidates instead...
Therefore, you need to make it easy for headhunters to find you. Make sure your online CV or profile has more search-friendly keywords. A friend of mine had his title as "IBD Analyst at BAML" for years and wondered why he hardly got any headhunters approaching. On my advice, he changed IBD to 'Investment Banking', and suddenly he had ten times as many people contacting him... You need to let the headhunters come to you.
You also need to be aware of when PE hiring happens. Headhunters will usually approach you around October or November when you're on a January bonus payment cycle, and in May or June when you're on an August bonus cycle. Be ready!
Sometimes, the headhunter will try to find out your work email from the standard email format of the firm you work at e.g. {first}.{last}@{company}.com and reach out to you that way. This is a problem if your work email is weird. For example, if your email has a middle name in it, try to choose the standard email format of the company if you can e.g. adam.smith@company.com instead of adam.j.smith@company.com. If you're unfortunately stuck with a non-conforming email like adam.j.smith@company.com and you're not being contacted, this will be why.
If a headhunter contacts you, do not respond from your work emails. And do not forward it to your personal email. Always assume that all of your emails are read by your boss. At many banks reporting managers have a mandatory obligation to check their supervisee's emails at random. Instead, you should create a separate communication thread with headhunter from your personal email. Similarly, your desk phone is often recorded (depending on the desk); therefore, so you should not take headhunter's calls at work if they call your desk phone number neither.
Step two: Meeting the headhunters
You need to treat the initial headhunter meetings and calls like a first-round interview. Even if it sounds casual ("Let's grab a coffee and chat about how you're getting on"), it's not. You're in the competition with other candidates that the same headhunters are seeing. They have a commercial interest in recommending the people most likely to get hired and earn them a fee. They reserve the best roles in the top funds for the best candidates.
If you know exactly what you're looking for (e.g. The name of the fund, the specific team etc.) and can clearly explain why, it will help you tremendously. For example, you might say that you know someone already at a fund, that you like the particular investment focus/strategy, you worked on a deal with them, or someone from your current firm/team went there. Be consistent - you don't to be saying you're interested in PE one moment and venture capital the next.
Don't expect headhunter interviews to be non-technical. Many headhunters are former bankers and can/will grill you on some deals / technical details that you have on your CV.
Don't be arrogant or act like a douchebag. Plan your work around headhunter's schedule and try not to reschedule multiple times and respect the headhunter's time. You need them more than they need you, and no one will help you once your reputation is ruined. It's also likely that you may encounter the same headhunter several times throughout your careers.
Step 3: Prepare for your private equity interviews
There are three significant components to PE interview preparation: (1) Your deal experiences, (2) Modelling knowledge and skills (LBO) and (3) Investment theses/case studies. I recommend starting the preparation process at least 6-8 months before the date you want to move.
The preparation for private equity interviews is not something you can cram in a few weeks. For (2) and (3), I'd say, a minimum depth of preparation is about 100 hours to study the technicals and develop investment thesis skills in your own time (ie. during downtime at work or weekends).
In around 50% of non-modelling interviews you have will be to talk about your own deal experiences in depth. Therefore, during the deal execution process, you should take a lot of notes and ask your seniors as many strategic questions as you can. Make sure you are not only involved but also understand everything you do and the decisions senior bankers are making make.
Step four: Survive the actual interview process
When you're moving from banking to private equity, the delay from the first interview to offer could last anywhere from three weeks to three months depending on how hotly contested you're as a candidate, with how many firms you're interviewing in parallel and how urgent the vacancies are.
Unforutnately, you're going to need to take a lot of time off and the desk may grow suspicious of your behaviour. Check out my previous article on the kind of excuses you can make to sneak out for interviews.
Remember that you have one chance to be interviewed by each firm; make it count. If you don't know an answer, it's much better to clarify and caveat your guesses. Do not make-up things; they can quickly see it straight through.
The successful PE professionals I know demonstrate an extremely high level of metacognition ("knowing about knowing", "thinking about thinking", becoming "aware of one's awareness"). Try to demonstrate this in your interview.
Once you've landed a few offers and finally select one best firm upon some self-reflection, it's time to leave your current job. Check out my last post on the step by step guide on how to quit properly.
Mai Le was an investment banking associate at Goldman Sachs before she left to work on her own company Automate Loan (automateloan.com). Besides writing on her own blog (lequynhmai.com), she also runs a cover-letter sharing community called Cover Letter Library (coverletterlibrary.com) and a learning and community platform for analysts called Next Analyst (nextanalyst.com).
