Investment Banking to Private Equity Template & Tutorial

Okay. In this story template, we're going to be going over what to say in an interview if you’re
moving from investment banking into a private equity. As I say right here at the top, this is most
applicable if you're at a junior level position in banking, so analysis or associate level, and you
want to move into PE.

If you are more senior then that, the problem is that first off, it gets very difficult to move in at
more senior levels, because typically private equity firms focus on recruiting junior level people
from investment banking, mostly at the analyst level. Occasionally, associates will come over as
well.

If however, you are at that more senior level and you do still want to attempt to get in, you can
actually use much of this template. There will be a few differences, which I'll point out as we go
through this. But actually, much of this template will still be applicable.

You can see the differences here versus our standard template. The part in the beginning about
your own background, you can shorten this because you have more full-time work experience if
you've already been working in banking for some time. Then, number two, you need to focus a
lot more on why private equity.

Now, in interviews, a lot of people just give horrible reasons for wanting to go into private
equity. They'll talk about things like doing more meaningful work, or they'll focus a little bit
more on the negatives of investment banking, rather than the positives of private equity.

There are a number of problems with these. Obviously, you should never say anything about
the hours or pay, or being able to control companies, or anything like that in an interview. Most
of the time, you're not going to say anything like that explicitly, but if you start saying other
things, they could indirectly imply that you're thinking about that. For example, if you talk
about wanting to have a better lifestyle, or wanting to do more meaningful work or something
like that, it sort of implies that you don't think very highly of your current job, so you want to
avoid that.

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Also, the other issue with many of these points is that, in private equity, yes, the hours overall
may be better if you're at a smaller firm, for example. But you're still going to have periods
where you're working on weekends, where you're staying there late at night, especially as deals
are closing, so it's never going to be close to a nine to five job. So, don't act like it is, because
otherwise they'll think that you don't know what you're doing.

You can see right here the better reasons to state that you want to do it. These are the ones
that I would recommend stating in an interview, the fact that you want to work with companies
over the long term, and help them with many opportunities down the road. You want more
exposure to operations. It's important to note that at most private equity firms, you are not
really the one driving operational decisions, certainly not at the junior level. But even partners
there are not heavily involved with the operational side for the most part.

So, you do get some more exposure but it's usually limited to that. Then, you want to learn the
deal and investment process inside and out. That's a very good reason to go into the field
because it's exactly what you learn, and then you're also passionate about finding and investing
in great companies. This is probably the best reason to go into private equity or really any type
of investment that involves buying and selling entire companies.

Now, if you're going to a place like KKR, or TPG, or Blackstone, or another mega fund, then this
last point is less applicable, because there it's more about modeling and the process rather the
sourcing, in other words, finding companies. So, if you're at one of those firms, you'd probably
want to focus a little bit more on these other points about working with companies over the
long term, about learning the deal and investment process and so on.

Now, with this story template, as always, the five main parts here are the beginning, the private
equity spark, the growing interest, why you're here, and then you're future. So, basically what
you want to talk about here is the beginning, link it to your educational background and
banking experience. If you have a lot more experience, if you're coming in at a more senior
level, then keep this to your banking experience and don't talk about your educational
background quite as much.

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For the private equity spark, this can be any number of things. But I think one of the best ones
to use here is a deal that you worked on in investment banking. We'll go through an example
and see what types of points you could raise about that as you go through this template.

The growing interest, so you find out more about the industry. You start talking with more
people in the private equity industry. Then, why you're here, well, you want to say that your
own background, whether it's an industry you've worked on or what you've done investment
banking, or anything else, plus private equity will lead to long-term success. Then for your
future, really the only good answer here is that you want to become a serious investor and you
see private equity as the best way of getting there.

With investment banking, especially the entry level, you can be a little more vague with your
future. But here, it's important to have this locked down. You don't want to just say that you
want to be in business or that you’re thinking about joining the operational side of a company.
Because they're going to look at that and say, "Well, should you really be going into the
financial side if your more interesting in working on the operational side?" You need to
convince them that you're very interested in being a long-term serious investor.

So, now let's go through this template, now that we've been through the introduction here. So,
you can see in the beginning, he's just talking about the school name, his major, and then the
name of the investment bank that he worked at. It's important here to state why exactly you
joined the bank and group, and it could be something very simple. It can be the industry focus,
the people. Maybe you had a positive internship there.

It can be any number of other things. But it's good to have some kind of reasoning for why you
decided to join it, because a lot of people just go in and they kind of act like it's a given that, of
course they do banking, so now it's their destiny to do private equity. Well, you want to show
some kind of story and some kind of progression over time, from the time when you join this
bank to why you now want to switch and go into something else.

Then, while working at, investment bank name, so here he is talking about his deal experience,
which is very important because private equity firms want you to be able to hit the ground
running. If you do not have this kind of deal experience, or maybe you've just joined and you're
only a few months into it, it's okay. You can just talk about, rather than live deals that you've

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closed for example, you can just talk about client engagements or potential deals that you're
working on.

It's okay to be extremely aggressive in counting how many deals you've worked on and what
types of deals you've worked on, even if you've only assisted with one part of a deal. If you can
talk about it, and you can explain the rationale in some level of detail, it's fine to list that and to
speak to it in interviews.

It's also good to point out explicitly some of the skills that you've gained from this process of
working on deals. So, teamwork skills, very important in PE, analytical, attention to detail,
leadership skills, those are all important in PE and so it's good to highlight them explicitly here.

Saying you're ranking, whether you're one of the top rated analyst or associates, or anything
like that is also good if it's actually true. Otherwise, if you can just say positive reviews, just
emphasis that you have done will and performed well in this role.

Then here, we get to the private equity spark, on one deal in particular. Basically, the idea here
is your saying you like this deal and investment process, but there's something missing. The
part that's missing is that you don't get to work with the company over the long term and
advise them on other opportunities down the road, since it's just a short-term engagement in
investment banking.

So, that is the spark and that's what makes you interested. You look at this and say, "Well, I
really like this work project. But then, I thought to myself while working on it, hey, there's an
opportunity to something more and I'm not going to be able to get that where I am right now,
but I could get it by going into private equity."

Now, this doesn't have to be your spark necessarily. But I think if you're coming in from an
investment banking background something like this works quite well because it ties directly to
your own work experience. Your spark can be something else, like meeting people in the
industry, or going to a conference and learning more it there, or hearing from friends or
acquaintances or referrals in the industry about what their working on. But, in general, I think
it's better to use personal experience like this if you can.

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Now, if you don't have anything like this it's fine to stretch it a little bit and talk about a deal
that a co-worker was working on. Or perhaps to talk about, not a deal that you worked on that
actually closed, but just a potential client engagement or something like that.

Then here, you see the part about the growing interest, how it peaked his interest in becoming
an investor. How he started meeting with more partners and other professionals, and how he
started networking a lot as a result of this experience, so nothing too dramatic there.

This growing interest section is a little bit shorter than what you would see for an entry level
role in investment banking, telling your story there, mostly because here, there's just not that
much time. There's only maybe a year or two or maybe even less, maybe only a few months in
between starting out in investment banking and then wanting to go into PE. So here, the
growing interest section is a little bit shorter.

Then here, you can see at the end, he's talking about his future and his long-term goals here, so
going back to these two points, why you're here and then also the future. So, he talks about this
and talks about how he has gained these skills in investment banking, modeling valuation, and
due diligence. Then, he wants to combine that with what you do in private equity, work with
companies over the long-term, and add more value and help to grow their businesses over the
long term.

Now, if you have certain industry experience, so if you've worked in telecom, or technology, or
in media or an industry like that in investment banking, or even before that, and the PE firm
happens to specialize in that or does something that's relevant, you definitely want to bring
that up. There are many PE firms that specialize in industries, just like there are investment
banks that specialize in certain industries.

Then, you can see this closing statement here. That he's excited about being a professional
investor, joining the firm and getting to contribute. How that position seems very well for his
particular path.

So, I just have some final notes here at the end about doing some selling of his abilities and
pointing out explicitly that he can actually hit the ground running. That they're not going to
have to spend time training him or teaching him how to do everything.

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Then another note here, I've gotten some questions about the ideal length and we've stated
before that two to three minutes is okay. Over the years I've come to believe that actually
shorter is better here, so if you can tell your story in 60 seconds and make it sound convincing,
keep it to that. If you need a little bit longer because you have more work experience, that's
fine. But generally, as with most elevator pitches and other types of sales pitches in life, the
shorter the better. So, if you can keep it to 60 seconds that would actually be ideal for a story
like this.

So that's it for our review of how to tell your story when going from investment banking to
private equity. Hopefully now you have a much better idea of how to do this. Some of the bad
reasons to avoid, stating that you want to do private equity. Then, some of the better reasons
that you want to focus on when explaining why you want to go into this field.

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