Though investment banking is a common pathway for entering private equity, it is not the only option. Private equity firms also recruit consultants, operators, lawyers, accountants and other professionals from adjacent industries. With the right experience, networking skills and timing, it is possible to land a private equity job without going through investment banking first. Factors like market conditions and your personal background determine how viable this path is. The keys are tailoring your resume, networking persistently, targeting the right firms and clearly conveying your passion for investing and value creation.
Private equity skills beyond financial modeling
Investment banks prioritize financial modeling, valuation, M&A deal execution and capital markets experience. However most private equity roles involve portfolio management, due diligence, growth strategy and operations oversight once deals close and companies get acquired. Therefore skills like analyzing operational data, developing business plans, understanding customers and industries, assessing management teams and designing key performance metrics also matter. Highlighting such capabilities can help convince private equity firms to take a chance on those coming from non-finance backgrounds.
Previous private equity exposure still helps
Even if you don’t come from banking, having some private equity internship or full-time experience helps significantly with recruiting. This shows genuine interest, validates your potential and abilities, and makes it easier to pass the “airport test” that headhunters and firms screen for. So exploring private equity before re-recruiting full-time or enrolling in business school to re-route your background can improve your candidacy versus trying to break in completely cold.
Targeting middle-market and niche firms broadens options
The mega private equity funds focused on multi-billion dollar leveraged buyouts have the strongest preferences for ex-bankers and consultants. However smaller middle-market private equity shops and sector specialists are often more open-minded in their talent pipelines. Lacking the prestige of larger funds, these firms have more incentive to evaluate applicants on their individual merits rather than just their brand name backgrounds. This expands options for accountants, lawyers, operators and other experienced hires looking to transition over.
Economic conditions influence demand dynamics
When private equity deal-making declines, such as during recessions or financial crises, firms shift focus more toward portfolio management and finding operational efficiencies. This amplifies the need for industry expertise, operating skills and business plan development capabilities rather than just banking financial modeling talent. Therefore, lateral hiring priorities can change within the ebbs and flows of market cycles, impacting the dynamics for non-traditional applicants trying to enter private equity.
Though the path from banking to private equity is well-established, alternatives exist for experienced professionals to make the leap over directly given the right credentials, networking approach and firm targeting strategy.