Private Equity, Schools and other things

Figure out where you wish to apply
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This may be wildly off topic for this subforum but I figured someone might be able to lend some advice...

I had diner with a friend the other night and he encouraged me to expand my options as far as programs go. I briefly described some of the things I like and he suggested to me to look into private equity, which I knew nothing about. In researching I think what I find interesting specifically would be like LBOs focused on value creation through operational changes. For example I stumbled across this paper and couldn't stop reading.

https://www.scm.ethz.ch/publications/Aca ... eation.pdf

It seems like the umbrella of private equity is quite a bit broader than that though. If you went into the field of private equity would your job function be higher level, like evaluating companies for their value, or would you get to do things like suggest operational improvements in process or management changes at key organization points for the most impact? I like the idea of making operational improvements while being in control of the company. For one it actually gives you the permission to make change when, as a consultant or just an employee you don't have that level of control. And two it puts some skin in the game; your compensation is commensurate with your performance. But I would also enjoy searching for targets (not really sure how they do that...).

Would the private equity path still fit with that? Are there schools that focus in this specific of an area? And are there companies that specialize in LBOs with a focus on operations change?

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by DanaJ » Sun Nov 20, 2011 1:27 am
OK, first things first: going into PE is hard, no matter what. Not sure what your background is, but you should keep in mind that there are very few PE jobs and the competition is huge. Read this article for an admissions consultant's take on it: https://www.beatthegmat.com/mba/2011/09/ ... nger-zones

Also, your safest bet to getting into PE is going to a top notch school, and I'm talking H/S/W and the PE powerhouse that is Booth (their professor, Kaplan, is considered one of the best in the field).

Yes, PE is a broad field and what's interesting is that firms tend to specialize on certain types of deals:
- size
- geography: say Asia or the Midwest
- industry: PE in healthcare or PE in oil & gas
- what type of changes they implement: for instance, some PE houses specialize in partnering with industry leaders and then searching for a target company that the industry leader can then manage. Others are more focused on financial engineering (i.e. finding the right capital structure for the company), while others more on operational improvements (what you want!)

At the higher level in PE, you can do pretty much whatever you want as long as you source the deals first, but of course you must choose the PE firm you want to work for in terms of what they specialize in. I don't know too many details about what you do day to day because I'm not actually in the industry, but I wrote my masters thesis on the topic. But I'd say that yes, you can find firms that fit what you're looking for, but it's going to take some good research on your part to figure them out. Here's a place to start though: to find the PE firms mostly focused on operations, you should check out the backgrounds of the partners. If partners have a mostly finance background, then they'll focus on leveraging and financial engineering. If partners have more of a consulting/industry background, they'll care much more about operations. I don't necessarily recommend this, but if you're interested in this stuff and want to see it scientifically proven, check out the paper by Acharya, Hahn and Kehoe where they explain PE specialization based on backgrounds.

Hope this helps!

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by AbhiJ » Sun Nov 20, 2011 6:08 am
For PE, Harvard, Wharton and Columbia are good. The biggest PE firm - Blackstone has 720 employees. Just look at the TA Associates - people profile - to get an idea of what sort of people get into PE.