MFE for Private Equity?

[otavio]

I met a private equity VP in the LA area who had a quant background, coming from a MFE at Claremont.

My question is, how common is it to see MFE's venture into the PE world? And how relevant do the skills become once they enter into the PE/VC world?

My understanding is that part of say, and associate's role at a PE firm is simply due diligence and managing deal flows (http://mba.tuck.dartmouth.edu/pages/clubs/peclub/pdfs/Private_Equity_Careers.pdf), and often times ibankers and strategy consultants find their way into PE because of their transactional and operational experience. MFE's don't seem to have any of this, other than pure modeling and number crunching skills.

Why would a PE firm hire a quant, especially with the prospect that senior associates might move on to upper management? Thoughts?

 

[TraderJoe]

For PE, you need either Top 10 MBA or else you need serious connections. Maybe his uncle is a partner.

 

[Joy Pathak]

For PE, you need either Top 10 MBA or else you need serious connections. Maybe his uncle is a partner.

Yeah. I will go with this. All the big PE companies strictly take from Ivies, or if you have some solid connections, usually family.

 

[Ken Abbott]

Not true. I cover PE and sit on MS investment and valuation committees. Plenty of non-Ivy PE people. A quant degree, hwoever, would be wasted in PE. You need corp fin and accounting.

 

[Andy Nguyen]

Can anyone color me on the PE scene and why is it people seem to worship PE like it's a promised land where everyone there is God and once you make it there, you are golden?

Don't you just have to work as hard there as elsewhere? Maybe how PE is portrayed in movies like "Wall Street" make this more myth than truth?

 

[Joy Pathak]

Not true. I cover PE and sit on MS investment and valuation committees. Plenty of non-Ivy PE people. A quant degree, hwoever, would be wasted in PE. You need corp fin and accounting.

I mean't more in terms of whom they target for campus recruitment for entry level or internship positions. There will be a few good public/private schools(LAC) included in there possibly.

Of course, many people might have degrees from other schools and good experience or good networking might have landed them in great positions at a PE firm possibly after 2-3 years of working elsewhere.

 

[Yike Lu]

I've often heard that the goal for many in traditional IBanking Analyst roles is to do their 2 years at the bank and then move on to PE or a hedge fund.

A successful PE firm requires some type of value add. An LBO based firm needs solid management (presumably better than the management of the firms it's buying out). A tech oriented VC firm needs tech oriented people to pick out the best emerging technologies and/or even contribute some of their own ideas.

 

[Ken Abbott]

A successful PE firm requires some type of value add. An LBO based firm needs solid management (presumably better than the management of the firms it's buying out). A tech oriented VC firm needs tech oriented people to pick out the best emerging technologies and/or even contribute some of their own ideas.

That's a bit too simplistic. There are lots of smart people. Success often isn't a function of pure mental horsepower. Rather, it depends on common sense and hard work. You don't need an advanced tech degree to do tech VC. Some backgound is what's really needed - enough to appreciate the subtleties. The head of our PE group was a biochem major, but his strong suit is common sense.

The ability to distinguish between a good deal, a mediocre deal, and and a bad deal is frequently sense of smell. Often the growth projections seem too optimistic of the underlying firm too faddish. You'd all be surprised at what actually gets discussed behind closed doors.

 

[TraderJoe]

Business Week provides a comprehensive listing of the recruiting firms at each of the MBA programs.
The best way is to locate the programs where the firms which you are interested in are recruiting from and then get into those programs. All these PE / VC firms and IBs and MC firms have target schools from which they recruit. If you are not in a target program, it is really tough to get into these firms. If you are in a non-target school, you literally have to struggle to get a single interview whereas the people at schools like Harvard / Stanford / Wharton / Chicago can get 10 on-campus interviews in a single week without too much effort.

http://www.businessweek.com/bschools/rankings/

The PE firms do not recruit from any MBA program ranked below 10. You may be able to join some smaller firm from the lower ranked programs and then get into PE later on.

 

[Yike Lu]

That's a bit too simplistic. There are lots of smart people. Success often isn't a function of pure mental horsepower. Rather, it depends on common sense and hard work. You don't need an advanced tech degree to do tech VC. Some backgound is what's really needed - enough to appreciate the subtleties. The head of our PE group was a biochem major, but his strong suit is common sense.

Ken, I never mentioned pure mental horsepower. "Tech oriented" (my words) doesn't necessarily mean "an advanced tech degree" (your words and inference), although you may have inferred that interpretation from my background.

I agree mine is a simplistic view... but that's all we're discussing here anyways.