Insights into Private Equity Recruiting: A Webinar with Bellcast Partners

In a recent webinar addressing the details of private equity recruiting, a panel of experts at Bellcast Partners laid bare the essentials of securing a position in one the most competitive fields in the finance industry. Bellcast Partners is an executive search firm that specializes in recruiting for Private Equity firms and Alternative Asset Managers. They place hundreds of candidates into Associate roles on the buy-side annually. In this webinar, the firm met with students from top universities like Princeton, Yale, Harvard, MIT and more around the nation and discussed how to navigate the complex private equity landscape.

Bellcast started off by discussing the pressing question — what is private equity, and how do people enter this avenue? Private equity firms use their capital to invest in private companies typically with the intention of selling them again when they become more valuable. Most candidates transition into private equity from two primary streams: investment banking and management consulting. Over 90% of hires come from those two sectors. While what path to take does depend on personal preference, it is generally recommended to go through banking or consulting programs as they provide a level of training that may not be provided in other programs. 

The discussion then moved into recruiting timing. It is important to initiate contact when gearing up for interviews with a clear understanding of one’s goals and objectives. There are two main types of  recruiting timelines. There is “on-cycle,” which is the frenetic period of time where firms aggressively scout for talent — typically two years in advance. The interview process is extremely expedited, with interviews lasting 24 to 48 hours total. Then there is “off-cycle” recruiting which is slower and can extend over several months or even possibly years. This allows for more preparation and experience. In recent years, there has been a downgrade in the amount of on-cycle recruiting, so candidates should not feel the need to recruit on-cycle if they are not ready. This is because only about 10% of offers for a given start date were actually accepted during the on-cycle period, so firms feel less pressure to recruit extremely early. This makes it easier for applicants that need more time to prepare.

The discussion then went into preparing for interviews. If an applicant went the investment banking or consulting path first, then they will most likely have much of the technical training and networking opportunities that are needed for interviews, so it is another reason to go that path. Having this experience gives candidates a robust understanding of finance concepts and valuation methods. Technical mastery is very important for these interviews. Candidates are expected to be proficient in financial modeling, from LBO models to DCF analyses. However, the private equity industry values more than just number crunching. It is very important to research the firm one is interviewing for to see that it is a cultural fit and there is passion for the sector one wants to immerse oneself in. Networking before interviews is less emphasized in private equity than other finance industries like investment banking, but its nevertheless still important. According to the experts at Bellcast, it is the recruiting firms rather than the investment professionals that often serve as gatekeepers. Also using alumni networks and leveraging any other connections can be very helpful. While not as important as in some other industries, networking can be a game-changer if one has an advocate within the firm. When reaching out to potential employers, the resume is also extremely important. It is the first point of contact and gives a lasting impression. Simple formatting, clear structuring, and sticking to a one-page limit are paramount. The resume should not only show achievements and experience, but also give a sense of career trajectory and interests. 

There are typically three rounds of interviews. The initial round of interviews involves a series of discussions with mid-tier professionals from the firm, where they will inquire about various aspects of one's personal background such as introduction, reasons for choosing a specific undergraduate institution, and activities during that period. Additionally, they will probe technical knowledge by asking to describe recent transactions one has handled and to answer fundamental accounting and finance queries. Participating in a 'paper LBO' is also a possibility, which is a simplified leverage buyout analysis, along with questions about interests in private equity and, specifically, attraction to this firm. Should one succeed in the first round, one will typically encounter a technical evaluation next. This often includes a modeling test like a three-statement LBO analysis, which may be based on a template or constructed from the ground up in Excel. The length and complexity of this test can vary widely depending on the firm. In some cases, this may be complemented or replaced by a case study where one is given information on a company and required to assess its investment potential for the fund through detailed financial modeling.

If one advances beyond the modeling or case study stage, the final interviews will be with the firm's higher-ranking investment professionals, such as principals and partners. The topics covered will likely mirror those from the first interview. Before any job offer is made, the firm will conduct reference checks to validate performance in one’s current role. The best references are usually group staff from banking or project managers from consulting, as well as vice presidents and directors with whom one has closely and regularly worked. Funds typically check two to three references before making an official job offer.

The experts at Bellcast rounded out the webinar here by answering a few other lingering questions from participants that went more in depth into some of the topics covered. They ended by emphasizing that the path into private equity can be challenging, but with good preparation and fully understanding the process, it is 100% feasible. It is important to know the industry, know yourself, and when you are ready, step forward with confidence. 

This webinar hosted by Bellcast Partners was organized to clarify the complex recruiting landscape of private equity, a sector known for its lucrative opportunities but daunting entry barriers. This session aimed to empower students from top universities with the necessary insights and strategies to navigate this competitive field effectively. By providing such guidance, Bellcast Partners not only aids individual career trajectories but also enriches the private equity industry with well-prepared, knowledgeable candidates, ensuring that both applicants and firms can find mutually beneficial matches.