A job in private equity is the ultimate goal for many investment bankers. It offers great financial rewards, intellectually stimulating work, and a better work-life balance.
But it’s no surprise that breaking into private equity is challenging. Impressive credentials alone won’t cut it in the on-cycle recruitment process. To succeed, you need to show that you can think like a private equity professional and prove that you’re the right fit for the firm. But how can you do this before even stepping in the door?
I spoke with Sahil Chodhari, VP at H.I.G. Capital, and Neal Monga, Principal at NMS Capital. They shared five insider strategies that can help candidates gain a competitive edge in the recruitment process.
1. Focus on deal depth
While private equity resumes follow a tried-and-true format, candidates often forget that depth trumps breadth. Chodhari points out that a common mistake applicants make is including a deal on their resume to beef up their experience, without having the knowledge to discuss it in detail.
“You shouldn’t include a deal that you don’t have deep knowledge of, otherwise you can be caught out,” he says. “That’s the biggest area we see associates stumble.” The focus should be on demonstrating a solid understanding of your contributions, rather than listing numerous deals you can’t confidently discuss.
You shouldn’t include a deal that you don’t have deep knowledge of, otherwise you can be caught out.
Sahil Chodhari, VP at H.I.G. Capital
“Having two deals covered in detail is perfect,” adds Monga. “Highlight these and mention two other deals with one sentence each. This will encourage the interviewer to call out the ones with the most information.”
By prioritizing quality over quantity, candidates can demonstrate a key skill valued by private equity firms — thorough and thoughtful analysis of data.
2. Think like an investor
Many candidates approach deal discussions in interviews as a formulaic regurgitation of data, walking through the business profile, investment highlights, risks, and diligence areas.
Chodhari notes the importance of being thorough, but urges candidates to flip the script. “You want to explain the background of a deal very quickly,” he says. “Then you should flip it.” That means exploring why you think this would be a good or bad investment for their PE firm.
You want to explain the background of a deal very quickly. Then you should flip it.
Sahil Chodhari, VP at H.I.G. Capital
“This is a way to clearly differentiate yourself from the competition,” Chodhari adds. It shows that you’re already thinking like an investor, which the interviewer will see as a strong indicator of your potential in private equity.
3. Justify your assumptions
Financial modeling tests are a fundamental part of the PE interview process. When it comes to them, “Practice is key,” according to Chodhari. He adds that you should be able to build LBO (leveraged buyout) models from scratch. “That’s going to be your job, so it’s a good barometer on whether the role is right for you.”
While candidates may expect to be tested in this way, Chodhari explains that they must also be ready to back up their assumptions. “You must have a reason for the growth rate you’ve projected or the 12x multiple for the company’s valuation.”
According to Neal, “Showing your reasoning is often more important than being right.” Interviewers want to see how you think through scenarios and respond under pressure, rather than having the perfect answer.
4. Build your story
Having a strong reason for wanting to join the firm is crucial, and Neal suggests a smart approach candidates can take to develop this. “A little trick at the end of each interview is to ask the interviewer why they joined the firm,” he says.
“If you’re doing a Superday, by the end of your third interview, you’ll have all the reasons why different people joined. Then you can use the ones that resonate with you most.” This offers a more compelling angle than pointing to the firm’s deals as your reason for applying.
A little trick at the end of each interview is to ask the interviewer why they joined the firm. Then you can use the ones that resonate with you most.
Neal Monga, Principal at NMS Capital
In addition, Neal recommends tailoring your questions to the interviewer. “You want to ask relevant questions to them based on their role,” he says. “You don’t want to ask an MD what building a LBO model is like. Instead, you can ask them about the process of sourcing new business.”
Doing this shows that you’ve done your homework. It’s also more likely to spark an interesting conversation, which will help you to stand out.
5. Act the part
When it comes to interviewing with senior partners, Chodhari explains it’s all about culture and fit. “They might not even want to dive into a deal,” he says. “So you need to be prepared to carry the conversation.”
Showing that you can do this will help demonstrate your fit for the boardroom. “Senior partners are looking for candidates who they would feel confident bringing to a client meeting,” adds Chodhari.
Senior partners are looking for candidates who they would feel confident bringing to a client meeting.
Sahil Chodhari, VP at H.I.G. Capital
The key to this type of conversation is being prepared to discuss not only deals, but also broader strategic topics. This could include the firm’s place within the market, future growth opportunities, and even how you’ll contribute to the company’s goals. This will show that you’re already thinking about the firm as a whole and you understand what it takes to add value, beyond just crunching numbers.
Ready to stand out?
Breaking into private equity is no easy task, but with the right strategy, you can significantly boost your chances of success. By following these tips, you’ll be better equipped to engage with your interviewers and demonstrate why you’re the right candidate for the role.
For more expert advice, read our article, How to get hired in PE on-cycle recruitment: Five top tips from recruiters and keep an eye out for future M&A Community events.
The APAC funding environment has slowed this year, with venture capital (VC) deals falling by 16.5% in the first half. Challenging macroeconomic conditions and high interest rates have led investment funds to adopt a more cautious approach.
Devashish Rastogi, Principal at Acacia Venture Capital Partners, has experienced these shifts first-hand. This gives him a unique perspective on how to navigate today’s challenging VC landscape while seeking opportunities in emerging technologies and untapped markets.
We spoke to Devashish about the current state of venture capital, including the key trends shaping the industry, the challenges faced by investors and the growth potential in regions like Latin America and Africa.
Q. Please can you give us an overview of your career to date?
I started out on the technology side and moved into credit risk. I then worked in market research for a year, which gave me a deeper insight into how payments are used in consumer-facing sectors. After that, I spent seven years in three different startups.
I then moved to China and provided consulting services to companies expanding in Southeast Asia. Venture capital is something I always wanted to do, because I’ve worked on the startup side, raising capital and understanding what makes a good investment.
At Acacia, I’m focusing on raising a new $50 million fund. We do early stage investing in emerging markets—primarily in Latin America, but also in Africa. And we’re exploring some emerging technology trends in the US.
Q. A recent report highlighted a decline in APAC VC investments in the first half of 2024 vs 2023. What’s your view on the current state of the VC industry in the region?
There’s been a global fundraising slowdown, and the key factor is high interest rates. Another reason is that public markets have slowed down, with M&A and IPOs dropping in 2018. During COVID, they went out of fashion because interest rates were so high.
“There are times when liquidity is available, and times when it’s not. The key is to be consistent in your investment thesis and portfolio management. Really good businesses have a knack of surviving these ups and downs.”
But now, mid-market, sub-billion dollar M&A is slowly coming back. With Trump returning to the White House, we expect the weakening of regulations will open up the IPO market globally.
Fundraising should slowly start improving, because it’s a cyclical business. There are times when liquidity is available, and times when it’s not. The key is to be consistent in your investment thesis and portfolio management. Really good businesses have a knack of surviving these ups and downs.
Q. What unique trends and challenges are you observing in venture capital globally?
In the US, we’re seeing a big focus on deep tech and AI. There are several layers to this. There’s the hardware layer, which is semiconductor companies and those providing services to semiconductors. Then you have language model companies—for example, OpenAI. Finally, you have the application layer—that’s where we invest.
Semiconductor industries are very capital intensive, so only investors with experience stand a chance. Language model companies have become very expensive too; they’re valued in the hundreds of billions of dollars. It’s the application layer, which is going to make AI mainstream, where there are more opportunities. But it’s got harder; valuations are through the roof. We’ve been slow in deploying capital to AI because there are so many companies doing the same thing.
In Europe you have more of a focus on areas like climate tech, and then emerging markets in Latin America or Africa are catching up. They’re not looking at AI yet; they want things like e-commerce access, payment systems, mortgage options. We’re applying the lessons we’ve learned in Asia to these countries and combining them with local knowledge and expertise, which are very important when it comes to understanding the customer’s culture.
“It’s the application layer, which is going to make AI mainstream, where there are more opportunities. But it’s got harder; valuations are through the roof.”
For example, when eBay came to China, they thought they were the world leader in e-commerce. But they didn’t understand the Chinese market, and Taobao wiped the floor with them. Conversely, when Taobao came to Southeast Asia and acquired Lazada, there was huge friction because they decided to bring the Chinese model into this part of the world.
Businesses globally face similar issues. How can we do more marketing? How can we lower the cost of customer acquisition? How do we increase our unit economics? How do we expand into a new market? How do we grow our team?
Q. What criteria do you prioritize when assessing the potential of an emerging company or sector for investment?
First, we look for a team with experience—ideally one that’s created a startup before. Otherwise, we need a team that’s open to learning and is willing to adapt.
Next, we’ll look at things like the size of the market. Our targets usually have a total addressable market of no less than $2 billion. The logic being, if they take 5% of the market, that’s a hundred million in revenue. If you multiply that by 10, you’re looking at a billion dollars in valuation.
“For the last few years ESG was a buzzword. Everyone needed to have an ESG investment, it was the sexy thing to do. Now, a lot of the funds or companies focused on ESG have not provided those returns.”
Then we look at whether their solution solves a problem in the market. Is there a proof of concept? Are they post-revenue? We look for very high-growth companies—25% month on month, whether it’s revenue or user growth. We’ll then write an investment memorandum, speaking to industry experts to understand the market mechanics.
The amount of work we put in for early stage investment is about the same as a large company would for a hundred million dollar deal.
Q. Last question – you mentioned climate tech earlier. Is this still a priority for VCs or is it losing some momentum?
For the last few years ESG was a buzzword. Everyone needed to have an ESG investment, it was the sexy thing to do.
Now, a lot of the funds or companies focused on ESG have not provided those returns, but when you look at markets like Europe, there’s a lot of government funding going into this space.
I believe it’s something we all need to start looking at because with climate change the world is not getting better any time soon.
And when I say climate tech, I’m talking about technologies like EVs, sustainable fuels, and battery technology, which have a meaningful impact across a lot of sectors. This is where you’ll see more focus and where investors stand to see better returns.
Private equity firms are known for making the on-cycle recruitment process tough for candidates. This isn’t surprising, given that PE roles can pay in excess of $300,000. However, the challenges begin even before the first interview.
Candidates are kept in the dark about when the on-cycle process will kick off. Typically, one of the largest firms will initiate interviews with little notice, prompting others to follow suit. Last year, Apollo and KKR led the charge, launching their recruitment process on June 24 — the earliest start date on record.
If you’re planning to apply for a role in private equity this year, you may not have fine-tuned your resume or practiced financial modeling yet. But you’ve likely wondered when the on-cycle process will start. Here are some insights to help you prepare.
What can we learn from previous cycles?
We’re all familiar with the investment disclaimer, “Past performance is no guarantee of future results.” However, when predicting the start of the on-cycle process, looking at previous years can be helpful.
These are the start dates for the last three recruitment cycles:
- 2022: August 29
- 2023: July 21
- 2024: June 24
The on-cycle process has begun earlier each year. Over the past three years, it has moved up by more than two months, with each cycle kicking off approximately a month earlier than the last.
Looking further back, we see the same trend. Peak Frameworks observed that from 2018 to 2021, the on-cycle timeline shifted forward by one or two months each year. Commenting on their research at the time, they said, “It seems like there’s no further it can move forward.” Little did they know.
Can it start any earlier than last year?
Business Insider’s 2023 article explored the drawbacks of private equity’s increasingly early on-cycle process. Junior bankers shared how they were turned off by pressure-cooker tactics, which left little time for preparation and considered decision-making.
How did private equity firms respond? By bringing the on-cycle process forward in 2024.
PE firms seem undeterred by candidate concerns. Last year, Business Insider reported that the on-cycle process started so early that many junior analysts hadn’t even begun their training. This debunked the belief that the process couldn’t move earlier because candidates required investment banking experience.
“Associate hiring in private equity is undergoing a profound transformation.”
Adam Reichow, Founder and CEO of Wayves Talent and former Vice President of Recruiting at Goldman Sachs
Adam Reichow, Founder and CEO of Wayves Talent and former Vice President of Recruiting at Goldman Sachs, notes, “Associate hiring in private equity is undergoing a profound transformation.” While he questions its effectiveness, he says that firms are currently focused on securing top talent early.
Users on Wall Street Oasis (WSO) have noticed the same trend. One suggests that online Zoom interviews might allow the process to start in senior spring, while another predicts that it will continue moving earlier, “Until it gets to the point where enough candidates sit out.”
The early bird catches the worm
While on-cycle recruitment timelines may appear to be nearing their limits, private equity firms continue to surprise. As a candidate, it’s wise to prepare for the possibility that the process could start even earlier this year.
To be on the safe side, you might want to set a reminder: “On-cycle recruitment kickoff.” There’s a space in your calendar on May 23…
For more information about the on-cycle process, read our article, Five tips for success in on-cycle recruitment from PE dealmakers.