A large component of any Private Equity professional’s total compensation is based off of the percentage of carry they receive once the fund has participated in a capital transaction.  Therefore it is very important for professionals and candidates to understand the average time period that it takes for a fund to close on a deal and then experience a capital transaction with that same investment (Timeline) of Private Equity.

The timeline for Private Equity is constantly changing and is determined by many factors and can vary from fund to fund.  It can also be different depending on whether the fund is transactional or operationally oriented.  Over the last ten years we have seen the average Timeline change drastically and it is presently circling somewhere back to where it was in the mid 90’s before the tech boom.

During the mid 90’s the Timeline for Private Equity was considered by many investors to be at least 18 months long on the low end and in many cases 30-48 months if not more.  This was the same Timeline that had been the norm in the Private Equity investing space for the previous 50 years.

It was during this time that Private Equity was truly a rich man’s game; to work in Private Equity meant that for many years your base salary would be the majority of your income.  You had to be financially secure enough to ride out the Timeline. This could be especially tough if you had not yet received carry from a deal. During this time the only individuals who participated in the carry were usually partners or senior individuals.

As the internet boom started in the late 90’s, the Timeline for Private Equity started to shorten drastically by the height of the boom the Timeline had decreased to an average of 18 months. This decrease was due in large part to the fact that many companies which were not saleable a couple of years earlier were now hot commodities and could be sold for a large premium or placed into the IPO marketplace.

With the shortened Timeline came much larger paychecks on a yearly basis. There became a blurring of Private Equity and Venture Capital investing due to this shortened Timeline and because of this, many professionals were eagerly trying to enter this field

With the implosion of the Internet bubble came a lengthening of the Private Equity Timeline.  Although this lengthening was delayed partially by a new payout structure for Private Equity investments, it still occurred.  Add to the fact that 2008 has started off in a credit crisis this lengthening has continued for the most part and we are now back to the more traditional Private Equity Timeline of 30-48 months.

Congratulations, you have landed a coveted Private Equity or Hedge Fund internship.  Now you need to answer the most important question, what should your goal be to accomplish during this internship?  The politically correct answer is to experience a real life investing situation and to obtain a glimpse into how a professional investor invests.

Unless the internship is for the entire school year and summer you will never learn more about investing than some basic investment principals and modeling skills.  What your real goal should be with an internship is to gain enough respect from your employer that you are offered a position with the firm after graduation.  And if your internship employer can not hire you, gain their respect so that they offer to be a reference for you, or better yet refer you to some of their professional associates.

The respect you gain during an internship from your employer can have lasting professional results.  An internship is an on the job interview, this is your time to shine and show your employer what you are capable of accomplishing.  This is a time to show them how well you effectively communicate and how well you handle and more importantly how you work in a stressful environment 

An internship is an opportunity to network and build relationships with numerous individuals who have an opportunity to see and judge in real life how you work and how you interact with others.  These relationships can help you dearly in the future by identifying investment hypotheses, identifying potential investors and recommending potential employers to name a few. 

In today’s investment world professionals move around a fair amount and for this reason you want to always be thinking about how your previous bosses and peers view you.  Furthermore; with this constant moving comes numerous opportunities which may fast track your career or lead to that ideal role.

Yes, you can build up some solid modeling skills with an internship program, especially with one of the major bulge bracket investment banks in NYC, but remember these internships are just as much of an opportunity for you to show them what you are capable of as it is for them to show you why you would want to work for them.  

To achieve this goal and to earn the respect of the boss from your internship employer can mean different things and can be accomplished many different ways but first and foremost it will require hard work, a very stronger work ethic and the ability to effectively communicate with your peers and bosses.  I would also suggest you show your employer that you have a passion and desires for the investment industry.  Realize that you will not always do fun and exciting work on an internship rather you are doing the same type work every other successful intern before you has completed.

Remember: Your name/reputation is extremely important in this close knit community and you do not want to do anything to negatively affect it. 

Next week: Part 3 – Top Ten Tips to Making the Most of Your Internship

Congratulations to all the soon to be College Graduates of 2008. You might be wondering how recent college grads obtain a job in the Alternative Investment space. The first thing to know is if you are graduating this month and are now reading this post with no job lined up – you are unfortunately well behind the rest of your peers in the job search and likely too late – but help is just below.

If you want a position with a Hedge Fund or Private Equity firm upon graduating from undergrad you typically need to start your process two to three years before your graduation date. The summer after your freshman year you need to find an internship ideally with a fund. For the next two summers you will want to have an internship as well. Also working with a fund during the school year is an excellent addition. If you have not had internships your chances just got a lot smaller.

Few College Career Centers inform their students of this but in the alternative investment space, internships are extremely important particularly if you do not want to head to New York City and spend 100+ hours a week working in an analyst program for the next 18-36 months.

To land a job without any internship experience means you must be persistent with the funds and dedicated to working your network and your school’s alumni network; many jobs in the hedge fund space are found through networking. You might also look at working with qualified recruiters who understand the business and can introduce you to strong firms. Look into to acquiring any of the designations which are valued in the Private Equity and Hedge Fund space. Unfortunately some of the designations take years to complete but starting the testing process can make your resume look stronger and show your passion for the industry.

In any case you will need to possess a well written resume and concisely express to those who are interviewing you that you are a driven, intelligent and mature recent grad looking to give your employer 110%. Make sure to discuss any leadership or team building roles you have had during college

If all else fails and you can afford it we recommend offering to work for free or a minimal fee for a month or two. One last thought - As the number of hedge funds grows so will their employment needs. With few hedge funds having a recruiting infrastructure in place a persistent and dedicated recent grad has an opportunity to enter this exciting and rewarding industry. If you want to work in the field and do not already have a position lined up you might want to consider doing some serious research these last few days before your don your cap and gown as opposed to spending it doing the normal senior slacking…

I want to personally welcome everyone to PrivateEquityJobs.com’s new blog. Our hope with this blog is to provide another tool to help educate industry professionals and passionate students about the private equity and hedge fund industries. Furthermore we hope to provide qualified knowledge in regards to the career paths and potential employment opportunities within these specific investment funds and the alternative investment space as a whole.

My hope is that with the help of our community we can become an interactive center of knowledge focused on careers and potential careers within the alternative investment space. I have spent the last 10+ years of my professional life working as an Executive Recruiter and Consultant to Private Equity firm and Hedge Funds.

This area of investing changes quickly and the employment opportunities in the space change on a regular basis as well. To fully understand the changes in the employment landscape you must understand the bigger picture of the alternative investment space; I intend for this blog to provide the solid understanding of the industry that you will need to be successful.

As the blog grows you will see that we have invited guest bloggers to write about certain subjects and provide for us another perspective on issues. We will try to make this blog as interactive as possible and ask that individuals with questions address those questions through our comment section at the bottom of each blog. I will do my best to answer each question either in the comment section or sometimes as another blog entry.

Thank you for your interest in our blog and PrivateEquityJobs.com, I look forward to hearing from our readers and building a dialogue with the community.

Simms Browning Founder & CEO PrivateEquityJobs.com