How to do an internship in Private Equity ?

Whether you have just entered a school or are at the end of your academic career, if you are interested in finance and more specifically in corporate finance, the term "private equity" should be more or less familiar to you. Often the sector is considered the "holy grail" of corporate finance and for many students it is the final outlet in their professional school experiences.

Private Equity, a popular industry

It is important to understand that the sector is elitist and that every year the funds receive a huge number of applications, whether for internships or permanent positions, and that places are scarce. If the number of funds and the size of the teams are constantly increasing, they remain modest in size and it is not uncommon to be the only intern. Moreover, the applications are often of high quality and you have to give yourself every chance to stand out.

If we exclude the power of the network which will allow some to access it more easily, finding an internship in Private Equity therefore requires a preliminary reflection in the construction of one's academic and professional curriculum.

  
What academic path should I follow to obtain an internship in private equity ?

While there is no royal road, it is clear that the most common profiles come from the best business schools (HEC, ESSEC, ESCP, EM Lyon, EDHEC, etc.) and engineering schools (Polytechnique, Centrale, Mines, etc.), as well as a few other schools (such as SciencesPo Paris and Dauphine).

If your training is different or not among the best schools, it is still possible to do a master's degree (or specialized master's) in finance in these schools. Often at the level of Bac +6, these courses are very expensive but generally allow for a good integration into the financial world.

It is also possible to "reorient" your CV if your training is too far away thanks to appropriate internships (see next point) but, in this case, it may require a good network to find an entry door.

Ideally, you need the most prestigious training possible, as this is still a determining factor for many recruiters, and a specialization in corporate finance. Although the latter is not necessarily a prerequisite, it remains very important if only to succeed in technical interviews (see last point). Other specializations can also be interesting: business law, entrepreneurship/company creation or sector-specific skills if the fund is specialized (for example, engineers can have an advantage in infrastructure or technology funds).

Read more : Focus on a must in maintenance: the sell-side M&A process

The career path to enter the Private Equity sector

After reading the previous point, you have ticked the right boxes. Congratulations, but that's still not enough. While it is not impossible to find an internship in private equity at the beginning of your studies, it is often the end of your career path, the famous "end-of-study internship". You only need to look at the (rare) offers posted by the funds to realize this: they often ask for one or more previous experiences, in specific sectors and they generally ask for students at Master's level.

It is therefore advisable to prepare for this and to organize one's career path quickly enough to put all the chances on one's side. It can be wise to progress by "stages", starting with a less selective internship before looking for the next more selective internship.

Here is a non-exhaustive (but nevertheless very classic) list of highly valued experiences in order of selectivity (non-objective ranking based on the author's observations and the experiences generally requested on the offers):

Step 1:

• Credit analysis (banking)
• Financial audit: give preference to a big 4 (KPMG, Deloitte, PwC, EY) or a recognized player such as Mazars, Grant Thornton etc.
• Corporate M&A management: often in large companies (CAC 40 and large listed or unlisted players)
• Sector experience: if the fund is specialized, it is often very useful to have experience in the sector concerned

Step 2:

• M&A: bank (Goldman Sachs, BNP, Bank of America etc) or boutique (Lazard, Rothschild, Messier Maris, Sycomore Corporate Finance etc)
• Transaction Services (big 4 or "pure players" like Eight Advisory)
• Leveraged Finance: banks like Société Générale or ING
• Strategy Consulting: MBB (McKinsey, Bain, BCG) or boutique like Advancy

Step 3 (optional):

• Private Equity: it may be wise to start with a less prestigious fund before joining a more prestigious fund
• Venture Capital: it is possible to go through Venture Capital before Private Equity but this is not the norm, these are different businesses 

It should be noted that some companies are more prestigious and selective than others, so this hierarchy is not rigid : an M&A experience at Goldman Sachs will certainly open more doors than Private Equity in an unknown fund. Similarly, the more selective the target company, the more prestigious the previous experience should be to maximize the chances: to target the best funds in the market, it is better to have a prestigious and selective previous experience.

It is also important to think about consistency in the type of companies involved : if you are targeting "large cap" private equity (companies of significant size and valuation), it is preferable to have had experience in "large cap" M&A, and vice versa for "small" or "mid cap".

See more : Fit, Brainteasers an Calculus

The process of landing an internship in private equity

Your phone rings: your CV has caught the recruiter's attention! But, once again, you'll need to be patient, as several rounds of interviews await you, usually with technical questions or even a concrete case to solve.

First of all, you will have to talk about your motivations, your background and test the "fit" or compatibility with your interviewers (and therefore your potential future team). It is obviously necessary to prepare a coherent speech beforehand to avoid improvising everything on the big day. The key is to be convincing and coherent and to know how to sell yourself without overdoing it because it is "only" an internship after all.

As for the technical part, it is very common to have to answer technical questions related to the sector : how to count the results, how to explain the working capital, the steps of a deal, the principle of an LBO, etc. Some funds even ask for technical cases, sometimes of a purely financial nature (often an LBO case, with an Excel model or to be carried out succinctly on a blank sheet of paper) but sometimes also strategic (in the same style as for the interviews for consultancy firms). Here again (and even more than before) you need to have prepared these questions. The Trainy.co platform is there to help you prepare these interviews and your school courses will also be precious, as well as your previous professional experiences.

Quel How does a private equity interview work ?

There are two main stages in a private equity interview: the fit interview and the technical interview. The fit interview allows us to get to know your motivations and your personality. The technical interview focuses more on technical questions related to the sector: developing a profit and loss statement, explaining what the WCR is, the stages of a deal, the principle of an LBO, etc.

What are the possible paths to private equity ?

Before entering the private equity sector, it is possible to work in credit analysis, audit, M&A, venture capital, transaction services, strategy consulting or leveraged services.