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Know your Potential Private Equity Employer
It is very important that you perform your own due diligence before introducing yourself to a Private Equity Employer; this is the case whether you are applying for a position or looking to create a long term business relationship with the firm. If you have correctly performed your own due diligence; the potential for a positive outcome increases significantly and you do not risk losing the initial respect of the Private Equity Employer.
Not all Private Equity firms are created equal, nor do all Private Equity firms follow the same investment strategy. In all honesty, the truth of the matter is that very few Private Equity firms are similar, with the exception of the very large shops which work on deals involving tens of billions of dollars.
Private Equity Employer Focus
As discussed in an earlier article entitled What Candidate’s Need to Know about Private Equity, the basic underlying strategy of Private Equity firms can be very different. These strategies usually fall under two main categories, transactional and operational. This is not the only large difference between Private Equity firms. To remain competitive and in many cases to provide a competitive advantage in today’s investing environment most firms have become very focused in their investing. This focus enables the firm to provide better returns due to the fund’s in depth knowledge, relationships, and network within the predetermined focused area.
The firm’s focus is usually defined by industry, geographically, market cap or even transaction type. Whether or not these focused firms are transactional or operationally focused in their underlying investment strategy is extremely important, but just as important is their specific focus. Leveraging off of this specific focus is where you can bring an added value proposition to the relationship.
Tailor Experience to Firm
For instance if you are interviewing with a Private Equity firm which specializes in the restaurant or family entertainment space, having experience in this space as an Investment Banking Analyst or even on the operational side of the business would be a tremendous value added proposition to the fund. If you interview with a Private Equity firm that specializes in investing in Central America it would most likely be very important/beneficial to be fluent in Spanish, and would probably make you a stronger candidate. Furthermore, if you applied for this role and did not have the fluency, the firm could feel that you wasted their time which is never a good conclusion for someone to have regarding your candidacy.
Over the last couple of quarters it is these focused funds that have been hiring and completing deals. They are hiring because they presently believe that the valuations are more aligned with their opinions and with less credit available they have less competition on deals. In many cases these focused funds are the first investors approached regarding deals especially at the present time when the large multi focused Private Equity Funds do not have the capital on hand, and more importantly due to the significant increase in their asset size are restricted from doing deals that are too small in size. Finally, since these focused funds usually use less leverage they have not been at the mercy of the credit crisis.
This is why it is so important that you perform your own due diligence before you introduce yourself to any potential Private Equity Employer. Knowing these differences enables you to properly position yourself with the firm that you do introduce yourself to, and will usually cause your resume to be placed in the short candidate pile. The goal of submitting any resume is to be placed in the short pile for this is where most of the hires will come from. |
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