Breaking Into Private Equity from Business Development, Getting Into Finance from the Military, and More Random Questions… Answered

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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.

Tags: all-nighters, business development, Business School, follow-up, military, private equity jobs, private equity recruiting

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