Why Private Equity?

So you’ve made it through your first 6 months in banking alive. Your waist is bigger from all those tiramisu desserts, but luckily your bank account has gotten even fatter than your stomach.

And your bank account is set to get even fatter in the future – if you can successfully break into private equity.

While you know about the case studies and modeling tests you’ll get and the deals you’ll have to discuss, you haven’t put any thought into the “Why private equity?” question.

Which is a problem – because the last thing PE guys want is a banker or consultant who wants to do PE simply because he/she hates banking or consulting or because everyone else doing it.

Private Equity vs. Venture Capital

This question came up in the recent series on venture capital: just how are PE and VC different?

Technically, venture capital is just a subset of private equity.

They both invest in companies, they both recruit former bankers, and they both make money from investments rather than advisory fees.

But if you take a look beneath the surface, you’ll see that they’re significantly different.

How to Break Into Private Equity Right Out of Undergraduate with No Investment Banking or Private Equity Internships

One common question I get is, “Should I start in private equity rather than doing 2-3 years of banking first? And if so, how exactly do I break into private equity or hedge funds right out of undergraduate?”

The first question is actually trickier to answer, and you can read all about the trade-offs right here.

But I have an easy answer for you on the second one: read this interview with a reader who broke into private equity right out of undergraduate, without any prior investment banking or private equity internships.