Breaking Into Private Equity from Business Development, Getting Into Finance from the Military, and More Random Questions… Answered
One question I’ve been seeing a lot lately is how to move into finance if you’re not just out of undergraduate or business school – if you’ve been working for some time and have built up a track record and network.
It’s very difficult to make that type of move these days, simply due to the number of unemployed ex-bankers/consultants/other financiers you’re competing with – but that doesn’t mean it’s impossible.
You just have to target the right types of firms and use the right strategy, as we’ll see below.
Moving Into Private Equity / Investment Banking from Business Development
For some reason, this question just keeps popping up lately…
1. Through my current position in business development at a mid-sized company, I’ve gotten to know lots of bankers that have show us deals over the past year.
If I’m planning to go to business school in the fall, what’s the best way to leverage these contacts so I can gain an advantage when I’m doing finance recruiting?
I would reach out right now and start setting up meetings – just say you’ll be in the area and want to meet up with them for lunch, explain that you’re going to business school and that want to find out more about what they do.
You don’t need to “hide” the fact that you want to change careers, because everyone involved – including your own company – knows you’re going back to school.
I’d start with that and then continue to stay in touch – the key is to start earlier than everyone else, so that they know you didn’t just think “investment banking might be a cool idea” at the last minute.
2. I’m working in corporate development right now but since my company is relatively small, most of my banking contacts are with boutiques. We occasionally speak with middle-market and bulge bracket firms, but not on a consistent basis – what’s the best way to reach out to them and start developing relationships?
You need 2 things: timing and a reason why.
The “timing” part of the equation could be something as simple as heading back to business school and wanting to find out more about their industry before you get there.
The “reason why” part is tricky if you’re trying to make the transition right now. If you don’t want anyone to know, you could just position it as “management wanting to explore larger acquisitions or move into a different market.” No one actually knows what goes on behind closed doors and companies “consider” all types of strategies before actually doing anything.
If you don’t feel comfortable doing that, I’d just go with the “heading to business school in the future” story even if you’re not 100% certain you’ll go through with it, and use that as your reason.
As long as you’ve spoken with your contact at least once before, it won’t come across as odd – if it’s a cold contact though, having a more “official” reason may be a better tactic.
3. I’ve worked in business development in an industry where a lot of companies are now cash-strapped and/or going bankrupt. What’s the best way to apply to PE firms that are specifically targeting these types of opportunities?
You need someone on the inside pushing for you, especially if you’re applying as an “experienced” hire and don’t have the advantage of coming from an MBA or banking background.
So I’d find a way to get in touch with those already working at the firm. In PE this can be difficult since the firms are small, so emailing or calling them via numbers and addresses listed on the site is a good idea.
Recruiters will filter you out because you don’t have banking or PE experience – so the best way to get through that barrier is by going to the private equity guys directly.
4. I’m starting in business development at a large technology company shortly, but I’m interested in moving into PE down the road – how can I maximize my chances?
1) You’ll need to show evidence of understanding the investment process, basic modeling, and how to structure deals – so I’d study all of that independently.
2) As always, networking is key – in your position, focus on smaller and industry-specific firms as opposed to the large buyout funds, because you’d be competing against all the bulge bracket analysts there.
3) For technology specifically, look at hybrid growth equity / PE funds like TCV, TA Associates, and Summit Partners because they tend to value industry expertise much more than the big buyout funds.
4) Leverage the work you do at your technology company, and use it to show the PE firm that you’re capable of due diligence / modeling / presentation skills – just like another reader did.
5. If I’m applying to private equity firms now and haven’t heard back from the ones I’ve submitted my resume to, what should I do to follow-up? Is it appropriate to call them and ask why I got rejected?
I’d always follow-up, because hardly anyone does it – most people just use the “check the box” method of recruiting, even in a highly competitive industry like PE. I would call them the week after you submit your resume and ask about it… then follow-up again the week after if you still haven’t heard back, and so on.
And yes, I would follow up if you get rejected – Kevin mentions this as well, but it’s always a good idea to get direct feedback on what you did right/wrong so you can improve for the next interview.
This is another tactic that the average applicant doesn’t use at all – which means it’s an even better idea.
6. Everyone knows about “The Track” that you’re “supposed” to follow, from banking to PE to starting your own fund to becoming a billionaire. But isn’t it hard to actually advance within PE? What happens to Associates who never advance up the ladder?
Both banking and PE are pretty much “up or out” industries, with the exception of possibly a few small boutiques and investment firms – but even there, they’re not likely to let you stick around unless you can prove yourself and bring in revenue for the firm.
Neither one is “stable” by any stretch of the imagination, especially with the economy these days – so if that’s a deciding factor, don’t go into either one!
If you don’t or can’t advance within a certain firm, the most common options are going to business school, moving into industry (usually in a related field, like going from a tech PE firm to a tech company), or perhaps leaving the market altogether. Sometimes ex-PE guys move into portfolio companies and work in CFO and Finance-type positions and help them prepare for IPOs.
Breaking Into Finance from a Military Background
I’ve also received lots of questions recently on how banks and business schools view those with military experience.
The short answer: it’s a positive since you’ve demonstrated leadership, drive, and ability to work under pressure. But you also have no “business” experience, and finance firms discriminate heavily on the basis of past experience – so you’ll need to make up for that somehow.
7. If I have a low GPA (under 3.3) and am trying to get into business school, will my military experience make up for that? Is there anything else I can do to stand out?
There’s not much you can do about a low GPA – but business schools don’t care about it quite as much as law or medical schools do, especially if you have an “interesting” story to go along with your application.
Your best bet for standing out would be some type of unique activity or skill that not everyone else has – talk about that in your application, ideally integrating it with your overall “story.” And you don’t need to be a world-class expert – just get enough experience to be more knowledgeable than the average person.
There are lots of former military officers in business school and in finance, so both institutions and companies look favorably upon the experience.
But keep in mind that there are many, many military guys trying to get into MBA programs right now – so you will need something different to set yourself apart. Just being able to write, “Served in Navy for 4 years” is not enough.
8. I’m being released from my military duty in a few months and am very interested in moving into investment banking. Is it possible to do that without going back to school first?
These days it would be difficult, unless you have some killer connections and target very specific firms (e.g. really small ones with clusters of ex-military guys).
Your best bet is to go the business school route to re-brand yourself, and combine that with a pre-MBA opportunity in finance to show that you know something about the field.
9. I’m just getting out of a military tour right now – is there any way I can “shadow” bankers or get attached to industry projects to boost my chances of breaking in?
This strategy can work for undergraduates and those with less experience, but it might look a little odd asking for it if you’ve been out of school for years… it’s also very difficult to become involved “informally” at a bank because everything is highly confidential.
You’re either working there (either paid or unpaid), or you’re not – office visits are certainly a possibility, but once again, more appropriate for undergraduates.
Your best bet: network with your former colleagues and use your shared military background to break in. Ultimately, you may have to go to business school but even an unpaid pre-MBA internship would significantly boost your chances when recruiting season begins.
Random, Lifestyle, and Personal Questions
I was actually a bit disappointed with the number and quality of “random” questions recently, but some good ones still came in…
10. What’s the best way of staying awake so you can pull the all-nighters required in banking?
I’ve said it before and I’ll say it again: yerba mate is your best bet. The loose leaf kind that you can import from Argentina is way stronger than Red Bull, espresso, coffee, and other caffeinated drinks. And unlike cocaine, it’s both cheap and legal.
11. Have you thought about doing voice acting before? You seem really poised in all those videos!
I’ve thought about taking classes before, and one of my friends in the entertainment industry keeps telling me to do it – probably just as a fun side project at this point, but who knows.
12. Do you think looks make a big difference in getting into the industry? I was recently at a bulge bracket for an interview and everyone – both males and females – was gorgeous!
WHAT?! What bank did you go to, because I don’t think I’ve ever seen that one before. In fact, most people get horribly out of shape from the long hours and junk food… are you sure you weren’t actually at a fashion model audition?
Attractive people are favored in all walks of life – so you certainly get a leg-up in the interview if you’re good-looking. But most banks are not, in fact, filled with super models…
13. My colleagues and I are planning to start an investment bank soon, do you have any advice for us?
Yeah, make sure you don’t hire AJ as one of your Analysts.
Also, take advantage of the crisis to lure away talent from bulge brackets by offering them higher pay and bonuses that won’t be taxed at 90%… oh, and make it a hybrid bank/consulting firm focused on restructuring and turnaround consulting.
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Brian, let me know if you are going to be in Korea over the summer. I’d like to meet up/grab a drink with the man behind this operation. haha.
Although, finding free time over the summer for me is going to be tough. BB SA life in Korea is rough…
Haha will do. SAs have it easy in Korea what are you talking about…
Based on my experience and on what I’ve heard, Koreans have to work much longer-than-typical hours even if they don’t work in finance. I’d think that banking SAs in Korea would still have to put in a huge chunk of time. Or am I off?
That was a joke, they actually have it rough from what I know
Haha, my fault for not picking up on that.
Face time, lack of resources, ridiculous client demands, along with the fact that most Analysts and SAs spent most of their life outside of Korea while anyone above (especially VPs and on) spent most of their life in Korea provides a rather annoying environment to work in.
But it all depends on the house and the team quite honestly. A small satellite office of a big European firm, they let SAs go at 8pm because Analysts left around 9-10pm.
But if you are in BBs listed in the league table for Korea or Asia ex-JP, it’s pretty much hell (think 110+ hr work weeks) unless you played tennis or golf with your MD before you joined the firm.
Yup sounds accurate
@Brian
Haha… it’s 9 to 5 or sometimes even 10 to 5 to certain “well-to-do” SAs. (Which usually constitutes 90% of the summer class)
Whoa, BB SA in Korea?
How did you pull that off? Family connections?
Is it possible have the option to purchase muliple subscrition at the 147 rate.
What do you mean by “multiple”? You mean making it so multiple people can have access?
Currently a 2nd year undergrad. What other good options are out there in finance if I-banking does not work out?
The reason I ask is because I’ve always thought that accounting could be an easy “backup plan,” but was quickly proven wrong. For instance, I just had an interview, and the interviewer did not look at my finance related internships favorably, and I don’t have time to obtain accounting exp…etc
Thanks.
Think about PWM, small prop trading firms, hybrid finance/consulting (especially turnaround-focused), anything in that line of work… potentially also something like business development, real estate development, even smaller PEs and FoFs. You’re “over-qualified” for accounting which is probably the main issue.
Why dont you pop into hong kong if you have some time? would love to meet up with you!
Yeah, the plan is eternal world travel at this point, so HK certainly seems like a probable destination… only been there once before.
YO M&I,
Do People in Private Equity travel at all if ever? and how much do they travel and where do they usually travel?
Yes, but much less in consulting. They typically travel to visit portfolio companies and to do on-site due diligence… maybe once a month on average but greatly depends on the fund and what you’re doing at the time.
so if i were working at blackstone, and am an associate there… would i be travelling more than once a month?? Would i be travelling to random countries or would i mostly be travelling within the US? And when you say due-diligence…. is it a long process and does the frequency of travel increase as you move up the ranks?
For Blackstone in the US then yes you would mostly be within the US… their US branches don’t do too much international investing too my knowledge. I don’t know the exact frequency of travel, but it is not that often. It might be more than once a month as you move closer toward closing a deal.
Due diligence can take anywhere from weeks to months, but at large firms they look at so many investments that it usually does not extend that long.
And yes, you travel more often as you gain seniority because your responsibility shifts to finding investments (sourcing).
Sorry to bother you again but I just need clarification… What is due diligence in the context of private equity?
Due diligence just means investing a company, looking at its financials, doing your own research, talking to customers, going to experts, etc. to verify that everything’s in order and that they’re not going to pull an Enron or Worldcom on you.
What is everyone so negative about the sourcing model? What are the positives about working at a sourcing firm?
People are negative because cold-calling places for hours each day gets very repetitive and you want to have some variety and other types of work.
The positives: can be good for networking, can lead to better opportunities down the road, still may look good for b-school and elsewhere depending on the firm you worked at and how you can spin it.
Hello! Don’t know if you are answering questions on previous pages or only on page 1?
Anyway, I have a lot of b2b cold calling experience (been doing it since I was 17 to 22 part time while in college and now three years full time at a capital equipment financing company. I’m very good at it. What are my chances of spinning this into a job at a PE firm, and what kind of money would I make? I already kind of hinted to this question in a round about way on another page but I don’t know if you’ve gotten to it yet, so sorry if I am just repeating. I don’t want to take to much of a pay cut so would like to know what could be realistic for me.
Also, if going to business school is a better option for me, I have limited choices since I cannot relocate of go full time, and the only fully employed programs I can do locally are USC.PM, UCI FMBA, or Pepperdine. What are your thoughts on those schools?
I answered on the other thread but your chances are low because PE firms recruit 99% from banking analyst pools – your best bet is to move to a small bank first and if that doesn’t work go to a top business school (check w/ students to see what recruiting is like first)
Thanks for the advice!
Hello. I currently work at McKinsey in NYC, but I would really like to move into private equity. I like using business analysis skills to invest in high performing companies, instead of using business analysis skills to advise people. I would prefer to work at Blackstone.
Is it really true that you make more money in PE? I am currently making in the low six figures, and I ve been with McKinsey for 2 years.
I have an BA from Northwestern and a MBA from Wharton.
I don’t mind travel (I actually sort of like it). But, I have a few questions.
1. What is the pay compared to consulting.
2. Is it easier to be made partner in consulting, or in pe. If it makes more sense, I could stay at McKinsey for 6-9 years, be made partner, and make 1 million a year. And then I could start my own consulting firm.
Or I could switch to private equity, get enough experience, and start my own firm.
Please help me.
Incoming Associates in PE make around $200K all-in, and at the top firms they might make 2x that. So yes, way more money than consulting… and Partners could make tens of millions or more. It’s easier to become a Partner in consulting, but again the pay is lower. VPs in PE and banking will make close to $1MM per year. Also the work hours in PE at large firms are in the 80-100 per week range.
Hi Brian,
I want to know about the exit opportunities within I Banking industry. I am right now working in a boutique investment bank in India. I work on PE & VC deals right now. What are the opportunities to be shifted on M&A or IPO deals? I have experience in PE & VC deals however no experience in M&A or IPO deals (we dont take IPO deals anyways). If i want to join a M&A/IPO desk, what are my chances? BTW i am an analyst now doing financial modeling, IMs & teasers & no client/investor contact.
I’m not sure I understand your question – what does “to be shifted on M&A or IPO deals” mean? You can get into one of those fields but it really depends on what type of bank and group you’re at right now – see the India article for more: http://www.mergersandinquisitions.com/investment-banking-india/
My question is “If i have considerable experience in private equity/ venture capital group, Do I stand a chance in mergers & acquisitions/IPO group after certain point in time?”
Sure.
Hi there,
I am a mid-career (30s) start-up guy (started three companies) who got interested in getting into PE after my first company got acquired by a PE firm. I managed to get into a top business school and, through some networking, got an unconventional internship at a smaller PE firm. In order to get a job in PE after business school, what skills should I be focused on building while doing this internship? My biggest weak point is finance, so I am doing focused modeling tutorials and loading up on finance courses. However, I have a unique opportunity to work on projects during the internship related to newly acquired companies, analyzing the current management team, etc…
Just trying to get an understanding of where I should focus my efforts to best position me for a job in this market after graduation
Thank you for any help here.
Just focus on getting deal/investment experience, due diligence, and financial modeling – make sure you don’t prioritize modeling courses over actual transaction experience as deals weigh more heavily than modeling skills.
I moved from diplomacy to Private Wealth Management and now would like to break into Private Equity as an institutional business developer / capital raiser. How to go about it? What are the unique selling points from the previous professions?
It’s hard with that background – you would have to find some type of PE firm that invests in wealth management or other finance-related companies
Hi there,
Thank you for your comment.
I applied to one PE firm so far and got invited to an interview in the near future. The position involves the acquisition of institutional clients and distribution partners, client events and roadshows, pro-active secondary deal sourcing from various sources. Is this a so-called origination (deal sourcing) job, a fund raising role or both?
Best regards,
Peter
Sounds like a fund-raising role
Hi,
Thank you. Do you know what a typical acquisition target (in USD or EUR) is for such roles in Europe? Are these roles partner-track positions?
Not sure honestly as it varies by the fund. Usually they are not partner-track, you have to be more involved with the investing side to get there
Hello, I am a private banker. I would like to switch to Investment Banking. Someone suggested that I try DCM originations. Is this a feasible option? How to get a job in this field? Many thanks for your advice.
That sort of makes sense assuming that you have a lot of client interaction doing debt right now; network with current and former clients and co-workers and you should be able to find a few bankers like that.
Hi Brian
You were right, the position I mentioned to you above turned out to be a fund-raising role. Let me ask you, if the firm wants me to bring in EUR 100 million annually, what would be a decent compensation? I know that many PE firms use placement agents instead of in-house fund-raisers and that such agents receive 1% (sometimes more) of the amount they raise. I told them I wanted EUR 180,000 – 250,000, which is just 0,18-0,25% of the amount to be raised. They were shocked. Was I too greedy or this is a firm to be avoided because of their below-market compensation? Many thanks.
Honestly I have no idea there, but 0.25% of annual funds raised does not seem that high. I probably would have just framed it as a % of what you bring in instead and let them suggest the first number.
Thank you. They wanted to hear a base salary figure from my side.
Hi Brian,
Currently, I have 2.5 yrs banking experience. So, if I go and work in business development role for a digital media startup then would it help me get a PE job after an yr or so? Considering the fact that digital media is going to be the next big thing don’t you think PE shops’s need guys with exp in this field as well? let me know your thoughts on this.
Yes business development might help… see here: http://www.mergersandinquisitions.com/corporate-development-recruiting/ http://www.mergersandinquisitions.com/corporate-development-on-the-job/