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PE advisory insight

consulting Private Equity
New answer on Feb 15, 2023
4 Answers
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Anonymous A asked on Feb 14, 2023

Hi community,

I'm a senior at college and will be a PE consulting analyst this fall. From the interview, I knew that our typical projects include commercial due diligence, growth strategy, pricing, packaging, etc. I also know that my “main” potential exit is probably the PE industry, and I would like to gain some insights into it to better understand what my future career path might look like.

Could anyone give me some recommendations on things to do(maybe some books to read, YouTubers to follow, or any hands-on projects that are related to PE, etc), as there aren't many things going on in my life right now? I honestly have no idea of what the PE industry might look like besides the most fundamental knowledge. Thanks:)

Regards,

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Hagen
Expert
Content Creator
replied on Feb 15, 2023
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

First of all, congratulations on the upcoming consulting career start!

I think this is an interesting question that may be relevant for many people. I would be happy to share my thoughts on it:

  • While it is great to see that you're thinking ahead, planning your job after the next one already might be far-fetched. Personally, I would advise you to focus on preparing for your upcoming consulting career in the next few months.
  • Still, if you want to learn more about private equity, I would advise you the following materials:
    • First, you may find a lot of great articles about private equity on financial news websites like the Wall Street Journal and Financial Times.
    • Moreover, you can find many experts in the private equity industry on social media platforms, especially LinkedIn and Twitter. Some notable experts you can follow include David Rubenstein (The Carlyle Group) and Scott Kupor (Andreessen Horowitz).
    • Lastly, some books on the private equity industry I like are "The Masters of Private Equity and Venture Capital" by Robert Finkel and "King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone" by David Carey and John Morris.

If you would like a more detailed discussion on how to address your specific situation, please don't hesitate to contact me directly.

Best,

Hagen

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Cristian
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replied on Feb 15, 2023
#1 rated MBB & McKinsey Coach

Hi there, 

Ian has a few great suggestions there already. Beyond that, it might make sense to reach out within your network (or via LinkedIn) to people who already do this job. 

Aim to find some who are also at a junior level and who you have something in common with (e.g., graduated from the same university - this will help increase the probability of them answering). Then have a conversation with them to understand what their job is like, what they enjoy about it and what does a career look like in this field. 

You can read this article I wrote on how to conduct such conversations and potentially get a referral from them. 

Best of luck!
Cristian

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Ian
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replied on Feb 15, 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Congrats on the new role!

Books: "The Masters of Private Equity and Venture Capital" by Robert Finkel and David Greising, "King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone" by David Carey and John Morris, and "Barbarians at the Gate" by Bryan Burrough and John Helyar.

Social media: LinkedIn and Twitter are great places to follow experts in the private equity industry. 
Follow experts like Peter Thiel, Stephen Schwarzman, and David Rubenstein.

Youtube: Just search stuff and watch!

Reading: Financial Times, WSJ, etc.

Remember that the private equity industry is constantly evolving, so it's important to stay up to date on industry news and trends. Good luck in your new role!

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Benjamin
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updated an answer on Feb 15, 2023
Ex-BCG Principal | 8+ years consulting experience in SEA | BCG top interviewer & top performer

Hi,

A couple of thoughts based on my time in BCG - I helped to build and grow the PE practice area in SEA and also considered/interviewed for a few PE exit opportunities.

What is PE consulting like?

Assuming you are mainly serving PE clients, you would probably be doing the following (listed in a very rough approximation of the deal process):

  1. Fund strategy
    • Very rare, and depends on your geography, but I've projects regarding fund strategy (e.g. fund setup, industry/asset allocation etc)
  2. Market/sector scanning or target identification
    • Sometimes PE firms will commission consulting firms to conduct market/industry scanning
    • The purpose of this is either to find/validate investment themes or identify potential targets (including secondary market opportunities, i.e. an existing PE-owned asset trying to exit and be sold)
  3. Commercial Due Diligence
    • In my experience I spent most of the time on this
    • In short, CDD is about providing a POV on a potential target and whether the investment thesis is strong/weak
    • PE firms do multiple types of DDs (CDD is only 1 of them), but it is often a key input into getting approval for the purchase at their Investment Commitees (IC)
  4. PMI
    • Sometimes, if an existing asset makes a bolt-on acquisition, they do approach consulting firms to help them with the Post Merger Integration (PMI)
    • Typically they engage for help especially when the deal size/asset size is larger
  5. Value creation
    • This is another key aspect of PE consulting
    • Value creation is essentially how PE makes money - over the course of owning the investment, they want to unlock/accelerate/create value (additional profit) based on several theses so that they can then exit with high returns
    • Value creation levers are defined/identified and sized during the CDD process
    • Some PE firms have in-house value creation teams, some do not
    • Sometimes PE firms hire consulting firms to help them with value creation - i.e. help to increase revenue or decrease cost

What might your future career path look like in PE?

There are 2 typical paths for consultants to exit to PE firms

  1. Investment team
    • You exit and join the investment team, joining as an analyst/associate
    • As the skillsets and knowledge for investment team is rather different from general consulting, this exist typically only applies for junior level consultants
    • The more senior you get, the harder it is to exit into this role
    • In certain geographies, this is very rare, as the typical profile is ex-IB
  2. PE operations / value creation
    • You exit and join the value creation team / operations team
    • This is something that is more common and ‘accessible' for consultants, because the nature of the work is very similar (e.g. instead of doing strategy/implementation projects for your industry clients, you are doing it now for your firm's portfolio companies)
    • Depending on the firm Ops team setup, you may ‘look after’ one or multiple PortCo's, and may or may not be under direct supervision of a more senior value creation team member

But beyond PE firms, do note that your skillset could also be useful for other opportunities

  1. Corporate strategy
    • You join the in-house strategy team of a corporate
    • This is a very common consulting exit, and as long as you have done some strategy/implementation projects before, this is definitely doable
  2. Corporate M&A
    • Some corporates have a separate team for M&A and investments
    • For these teams, they often prefer consultants with previous M&A experience (e.g. knowledge about the deal process, how to think about an investment etc)

Happy to chat more if needed.

All the best!

(edited)

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Hagen gave the best answer

Hagen

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