Moving from consulting to Private Equity

Alumni exit ExperiencedHire operations strategy Private Equity strategy consulting Venture Capital
New answer on May 01, 2020
12 Answers
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Anonymous B asked on Apr 23, 2020

I have recently received an offer from BCG in London to join as a consultant. I have 4 years prior experience as a consultant at innogy consulting in Germany.

I want to ask suggestions on prospects to move into PE after few years. Would you say

  1. Is it feaseabile to move to PE from as project leader in consulting firms?
  2. What skillset would be most relevant amongst doing CFA (if so, till what level), Financial modelling, getting Due dilligence experience at cosulting or somethign else?

Are there any PEs which prefer experienced consultants?

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Anonymous replied on Apr 23, 2020

Hello,

First of all congratulations on the move. Yes, PLs can transition to PE but I would advise on moving within 2 years. As a former BCG and currently working in PE, here are my 2 cents to maximize your chances:

  • Know the whole recruitment process inside-out: role of Headhunters, paper LBOs, multiple rounds of interviews that cover fit, technical aspects & deal Exp. and cases
  • Practice the aforementioned parts until you can answer them during your sleep
  • Network as crazy - most people won't reply to your cold calls so you have to strategic in this approach and work with the sheer numbers
  • Position yourself to do as many DD cases as possible and, if you're lucky, getting into the PE practice area helps quite a lot
  • Firms hire, and increasingly so, people with exp. in consulting and will test you particularly if you are as technically sound as your IB counterparts. This means FInancial Modeling (vs. for IB candidates they'll test on strategic, structured thinking).

If you need any other hint let me know

Best,
Francisco

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Anonymous F on Apr 23, 2020

Thanks for the advice. Does doing CFA add value to CV or help with the role?

Anonymous on Apr 24, 2020

It has predominantly 2 benefits: 1) a signal you're serious about Finance and 2) brush up your skills. It's not a requisite but it helps. The question is: is it the best value-for-effort you can do? I am afraid it's below the tips I wrote in the comment above

Anonymous replied on Apr 24, 2020

Hi there,

On your questions,

(1) It is still possible to move as project leader, but it would be a lot harder compared to if you move at consultant level. And it is almost a given that you have to be focused on doing DDs during your time in BCG

(2) Getting DD experience in BCG and financial modelling would be critical. CFA is not that important (only if you think it helps you to brush up your knowledge/skills).

Sometimes PE look for ppl for their portfolio companies as well. In that case, strategy formulation experience and stakeholder management would be important.

Hope it helps,

Emily

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7
Originally answered question:

Private equity and strategy

Vlad
Expert
Content Creator
replied on Jan 10, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

PE is not a common exit, simply because there are so many MBB alums and a very limited number of PE roles.

To give you some context - at my MBA class at Harvard, we had more ex-PEs looking for a PE job than the final PE job offers. As you can see - the PE world is very very small

Salaries are much higher if you stay long term since PE assumes Carry. Once you are in - the salaries are the same no matter what was your background. However, keep in mind that some PEs have operational roles (typical for ex consultants) where the salaries are lower than with investment roles

In private equity interviews, the cases will be much more detailed in the financial part. Depending on the company you'll need to:

  • Find the relevant information in P&L and Balance sheet
  • Do the simplified valuation using NPV: calculate cash flows and make assumptions about growth rate and discount rate
  • Do the valuation using comps - you'll have to explain which comps you will use and why

Good luck!

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Anonymous E on May 12, 2020

Is PE base salary higher than base salary MBB (if you exclude carry and bonus) and compare same level of seniority (middle-manager/senior associate). In London and NYC

Originally answered question:

Career in PE Operations

Axel
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replied on Aug 02, 2020
Bain Consultant | Interviewer for 3 years at Bain |Passionate about coaching |I will make you a case interview Rockstar

Hi!

1. Yes, there is a path to becoming a partner but typically this would be as an Operating Partner and not on the investment side. If you want to transition you will have to do this earlier in your tenure in the operating team.

2. There is a very strong trend towards building up operating teams and most of the large PE funds are setting these ups. The reason for this is that cheap capital is chasing fewer deals so just using leverage to achieve returns is becoming increasingly difficult.

3. If you consider joining an operating team, make sure to look at the incentive scheme and how it compares with the investment team. This will give you a good idea of the standing of the operating team in the fund. If radically different I would consider my options.

-A

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Clara
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replied on Apr 24, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Congrats on the offer!

Entering PE after a carreer of 2-3 years in MBB is something that many people do, so it´s easy if you follow the right path.

Actually, I know a person who worked with me in DD in 2017 who did precisely this in the US.

What you need to do is to make contacts in the PE practice asap, to ensure to be staffed in as many projects as posible. The way to do this is to find your first project in PE and ensure you rock it, to build a good relationship with the partners. Once you have achieved this, things will be easier, since all you need to need is express your interest in continuing your carreer in the practice and they will staff you.

However, bear in mind that PE and DDs are actually challenging and exhausting cases, you can´t do too many of those in a row without having a burnout.

Hope it helps!

Cheers,

Clara

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Anonymous replied on Apr 27, 2020

Hi A,

Exiting from consulting to PE is pretty common. In general, PE take selected candidates either from the investment banking or from leading consulting companies. I think BCG in that extent is very good address for you potentially to move to PE industry afterward.

It is essential for you as a BCG consultant to develop your valuation and financial modelling skills. Ideally you could become a part of M&A practice focused on Due diligence or become a part of restructuring and performance improvement optimization practice. This will help you to place it either on the “Buy” or on the “Sell Side” of every Private Equity fund.

In general PE is very open to former consultant with relevant background and high number of conducted Due diligence.

Hope it helps you.

Feel free to reach out.

Best,

André

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Anonymous replied on Apr 24, 2020

Hey there,

Congrats!

Hopefully I can help here based on my experience - I worked in Bain London (mainly the PE practice) for two years and am moving to a large-cap PE fund in London in a few months.

Firstly, there's two types of positions consultants exit into PE funds: Portfolio roles and investment roles. For Portfolio roles leaving as a PL is probably the best possible time.

On the other hand, if you want to leave into the investment team, it is definitely still possible although less common. Last year I know the PE fund I am moving to hired a BCG PL, for example. The only thing to keep in mind is that you will join the PE fund as an Investment Associate, the same level as people with ~2 years experience after joining as an BA/Associate/AC (most common route) - some find this hard, especially as you will be again "the lowest rung in the ladder". It also means that while you'll still likey earn more, the pay jump isn't as attractive -part of the reason why I think the move at PL level is more rare.

In terms of skillsets and how to best prepare:

  • Something to consider is keeping your Excel / "analytical" skills fresh (assuming you worked with excel at innogy). Try work on some models if you can (even if not specifically financial models), as these are often owned by an Associate / Senior Associate
  • CFA is a nice to have but probably not worth the time investment, unless you have already put in work and maybe passed level 1 or 2.
  • Definitely try work in the PE practice at BCG and do some DDs, they are great practice to learn about how to diligence and assess a company and will also make you much more attractive to the PE fund. In addition it can be helpful at interview because:
    • you will be able to talk about companies you diligenced as part of the interview
    • It will help you learn how to think about investments (commercially, anyways) as you may need to "pitch" a potential asset as part of an interview, or assess an asset they present (e.g. a case interview).
  • Closer to the time of actual recruiting, invest in some time working on interview prep. A lot of Consultant-friendly PE funds have case interviews as part of their process, very similar to consulting cases. However you will need to practice some financial literacy / accounting (e.g. learn the three statements) and also LBO modelling. Some useful resources I can recommend is the WSO PE prep package you can purchase, and the PE Prep materials from KEA (a major recruiter, more on them in my next bullet).
  • As others have noted, it is key to get in touch with some of the major recruiters. You can do this early and well before your actual interviews, but it is good to be on their radar. The major recruiters in London that work with PE funds that place into investment roles are KEA, Dartmouth Partners, and Walker Hamill (there are a few others for portfolio roles). You can reach out to them on LinkedIn usually if they don’t reach out themselves already.

Hope this is helpful!

Alessandro

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5
Originally answered question:

Career in PE Operations

Anonymous D replied on Aug 02, 2020

I considered similar roles myself and fair warning that operating partner is a very different career path to PE partner. Both in terms of compensation and what you will be doing

It can still be an exciting role but make sure you really get on with your interviewers and try and learn as much as you can about what exactly you will be doing

Final point - check if you are included in carry. If not then why even bother leaving consulting :)

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Antonello
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replied on May 01, 2020
McKinsey | MBA professor for consulting interviews

Hi, yes it is totally feasible, consultant indeed is really appreciated in private equity. I recommend, in order to prepare the interviews, asking material to former colleagues now in PE. Every firm usually have a shared drive with this kind of material

Best

Antonello

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Originally answered question:

Private equity and strategy

Nathaniel
Expert
replied on Jan 20, 2020
McKinsey | BCG | CERN| University of Cambridge

Hello there,

It depends on which 'arms' of PE firms referred to in this case.

  • Generally, the 'consulting arm', such as KKR Capstone, is a common exit option for consultants, as it deals with transformation and turnaround projects similar to what a management consutlant does.
  • The primary 'investing arm' of PE, is a rare exit for a consultant. The typical profile of a PE analysts / associates are going through bulge bracket IB firms in their junior years before getting into a PE firm (which is very limited in terms of number of firms and size of each), this opportunity is still even limited to such IB alumni. Only consultants with adept skillsets in financial valuation, due diligence, investment thesis development, etc, are able to get an opportunity to get in to the team. Getting a headhunter to reeach you out for a role is very doable with a consultant profile, especially from MBB, but to actually excel at it and getting in is quite challenging.

Salary in high-end financial firms such as IB and PE is typically better than management consulting, especially if we consider 'carry'.

Hope it helps.

Kind regards,
Nathan

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Originally answered question:

Private equity and strategy

Luca
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Content Creator
replied on Jan 13, 2020
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached
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