Private Equity
Private Equity
Private Equity
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PRIVATE EQUITY
PRIVATE EQUITY
Copyright 2008 by Vault.com Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault.com Inc. Vault, the Vault logo, and The Most Trusted Name in Career InformationTM are trademarks of Vault.com Inc. For information about permission to reproduce selections from this book, contact Vault.com Inc., 150 W. 22nd St., 5th Floor, New York, NY 10011, (212) 366-4212. Library of Congress CIP Data is available. ISBN 10: 1-58131-435-3 ISBN 13: 978-1-58131-435-9 Printed in the United States of America
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Table of Contents
INTRODUCTION What is Private Equity? 1 1
3 5
Who are Private Equity Investors? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 The Role of the Private Equity Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 The Modern Private Equity Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 The Big Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 A Look Inside Kohlberg Kravis Roberts & Co. . . . . . . . . . . . . . . . . . . . . .12
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The Beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Greed is Good: Modern Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 The Summer of 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Going Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Looking to the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
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Creating a Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Finding a Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Making the Deal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Getting Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Unlocking the Companys Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 The Exit Strategy: Return on Investment . . . . . . . . . . . . . . . . . . . . . . . . . .28 The Players in Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 The Top Deal-Makers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Famous Big Deals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
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GETTING HIRED
Chapter 4: What Are Private Equity Firms Looking For?
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41
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Getting in the Door . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 Sample Resumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 The Long Way Around . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Job Hunting and Networking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 How I Got My Job: The Turnaround Specialist . . . . . . . . . . . . . . . . . . . . .58
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Sample Expertise Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60 Sample Knowledge Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60 Sample Personality Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Sample Vision Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Your Turn: Questions You Should Ask . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
ON THE JOB
Chapter 7: Life as a Private Equity Specialist
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Lifestyle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Pay and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Opportunities for Advancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69 Day in the Life: Entry-level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Day in the Life: Researcher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Day in the Life: Fund Raiser and Investor Relations . . . . . . . . . . . . . . . . .72 Day in the Life: Deal-Maker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74 Day in the Life: Portfolio Company Manager . . . . . . . . . . . . . . . . . . . . . .75
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The Typical Career Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77 Within the Private Equity Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Leaving the Private Equity Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 Continuing Education and Improvement . . . . . . . . . . . . . . . . . . . . . . . . . .81
CONCLUSION APPENDIX
83 85
Helpful Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Firm Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
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Introduction
What is Private Equity?
In its broadest sense, private equity is an investment derived from a nonpublic entity. Of course, under that definition, any individual who owns a single share of stock is, indeed, a private equity investor. The kind of private equity were talking about is much bigger; these individuals dont just invest in stockthey buy whole companies. In modern private equity, a pool of capital is created from private investors, ranging from university endowments and pension funds to hedge funds, Wall Street investment banks and high-net-worth individuals. The managers of these private equity pools, or funds, then try to put that capital to work, generally by purchasing private or public companies, fixing them so they generate more revenue, cash and earnings, and then flipping them by selling the improved company to another buyer or taking it public on the equity markets. Private equity investments arent just about buying and selling companies, however. Many private equity firms invest in debt, helping a company salvage itself by loaning it money in exchange for an equity position or another form of return. Some private equity firms target funds at startup companiesthese are called venture capital firms, though a diversified private equity management company will often include venture capital activity alongside acquisitions and debt purchases. Venture capital investments are often made in exchange for equity in the private company that, the firm hopes, will turn into big profits should the startup go public or get sold.
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Still, todays private equity landscape is dominated by the acquisition of oncepublic companies. Since 2001, 2,316 publicly traded companies have been purchased with the backing of private equity firms, a total value of $1.065 trillion, according to the National Venture Capital Association. Over the same amount of time, 384 companies were returned to the market via initial public offering (though initial is a bit of a misnomer since many of these companies were public once before), with the rest either sold to other companies, public or private, or remaining in the hands of private equity firms. Since 2006, the wave of private equity purchases has swallowed even bigger companies16 companies within the Standard & Poors 500 index have been swallowed up by private equity firms in that time period. And even among the 30 stocks comprising the Dow Jones industrial average, those blue-chip stocks said to be representative of the American economy as a whole, private equity takeover rumors swirled around such luminaries as Alcoa and Home Depot in early 2007. The record for a takeover deals value stands at $44 billion in cash and debt, for the 2007 acquisition of utility TXU Corp. For a while, Wall Street was gearing up for the first $100 billion takeover; with the markets turmoil in the latter half of 2007, that milestone may have to waitbut it will come.
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also help obtain credit for any leverage needed for a buyout. Finally, they manage payouts to all involved. Finding a target. Firms employ researchers whose job it is to analyze the operations of thousands of companies, looking for potential investments. Sometimes its easymany companies readily announce theyre looking at strategic options, business-speak for putting themselves up for sale. But there are plenty of opportunities at other companies as well, even ones that seem to be operating just fine. The researchers know the strengths of the private equity firms various management teams, and can identify potential targets based on the firms ability to generate even more profits from their strengths. And in still other cases, a fund may simply see a very conservative company underutilizing its resourcesa chain of casual dining restaurants, for example, that hasnt leveraged the real estate it owns to the degree it could in order to expand. There are plenty of ways to find a target, which well discuss later on. Closing the deal. The fund must then approach the companyor, in some cases, manage a companys approach to itand try to make a deal. This is very much like the merger-and-acquisition dance two publicly traded companies might make. The private equity firm generally hires a Wall Street investment bank for its advisory business, though its own cadre of deal-makers and due-diligence teams are often just as talented as those of the advisory firm. A deal is hammered out that usually gives the companys current shareholders a premium over the stocks current price, while giving the private equity firm enough room to make an even more impressive profit down the road. Running the company. Once a private equity firm buys a company, the deal generally fades from the news, but the hard work is just beginning. The firm, which represents the new owners, has a plan for maximizing profits ready to gothat was part of the targeting and acquisition process. The firm then brings in the individuals it thinks can execute that plan. Such plans often include a wide variety of cost-cutting measures, including new management and production processes as well as layoffs. It also typically includes borrowing quite a bit of moneygenerally far more than investors in a publicly traded company would stand for. As a rule, private equity firms are aggressive managers, and the leverage is put to work immediately. In recent years, that leverage has also served to give the funds investors an early payoutessentially using the companys good name to sell bonds, the proceeds of which are then distributed to the new owners. One of the biggest debates about private equity is whether
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such debt is justified or even ethical, but when a company goes into private hands, theres little regulators can do. The exit strategy. There are a number of ways to unwind an equity investment and collect the profits. One is to sell the company to another entity, generally to an already-established company that was identified as a possible buyer early on in the due-diligence process. The private equity firm has done all of the hard work, after all, making it more attractive for a major corporation to buy. Alternatively, there are some companies that are simply bought for partsthere was speculation that Toys R Us wouldve been a much more profitable investment if its private equity buyers simply closed down the struggling toy retail business and sold all of its properties off. Finally and most notably, the private equity firm flips the company, returning it to the public equity markets through an initial public offering. In general, the company has to be stronger than it was when purchased for the private equity investors to get a good return, though in some cases notably the Hertz IPOthe companies can be overloaded with debt. The private investors generally receive the proceeds of the IPO, though in some cases at least part of the proceeds will go to the company itself. Naturally, when dealing with billions of dollars and major corporations, private equity firms need a wide variety of talented employees. And thats where youll come in. Private equity firms employ some of the most experienced talent in corporate America, and their personnel needs are as broad as they are deep. Whether youre fresh out of undergrad or a seasoned corporate veteran, chances are you can find a home with private equity firms. And in doing so, youll have a hand in making billions for your investors while guiding large corporations, and the thousands of people they employ, through major changes and improvements.
There simply arent any other investments where returns can reasonably be as high. And even with questions arising about the current M&A and LBO environments, private equity funds have proven their worth to investors time and again.
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can boast of an average annual rate of return of 27 percent. It also has one of the most rigid corporate structures in the industry, with 11 industry groups within the company focusing on 100-day operating plans for portfolio companies and dealmaking. And the investment committee meets every Monday for a comprehensive look at the firms operations. KKR is also perhaps the purest pure-play private equity firm out there, with little presence in other forms of investment.
Bain Capital
Bain is perhaps best known for producing Republican presidential candidate Mitt Romney, who was CEO of the company until he left in 1999 to run for governor of Massachusetts. The firm has been without a CEO since, instead relying on its 26 partners for committee-style leadership thats been surprisingly effective. The firms been specializing in club deals, and recently started a $1 billion Asia fund. Many of the Boston-based firms investors are university endowments.
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Apollo Advisors
The prototypical turnaround firm, Apollo can boast that 90 percent of its investments since its founding in 1990 have produced positive returns, and its maintained a 40 percent average rate of return each year. Founder and Chairman Leon Black is said to be a master of arranging creative debt financing, thanks to his days spent as the head of M&A at Drexel Burnham Lambert in the 1980s. Hell need all his skills to navigate the new credit environment brought on by the conditions of summer 2007.
Warburg Pincus
Warburg Pincus is unusual among private equity companies in that it tends to eschew the blockbuster deal. Instead, the firm focuses on fast-growing companies with price tags under $1 billion, which it holds on to, develops and sells years later for big profits. Its also one of the oldest private equity firms on Wall Street, with roots dating back to 1939. Another major Asia player, the firm closed a $1.2 billion real estate fund in 2006of which 60 percent is slated for purchases in Asia.
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Hedge funds have also dipped a toe into the private equity space, much as theyve entered any market or asset class that promises any kind of return. A few, such as Fortress Investment Group, have done well in managing their investments. Others are simply content to put up the cash alongside an established private equity firm and allow the firm to do most of the heavy lifting.
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Lets then say that the companys turnaround takes three years, after which it is sold to a larger enterprise (or goes public) at a value of $3 billion. Heres an admittedly simplified breakdown: Sale price:
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$3 billion $250 million $60 million $500 million $150 million $250 million $1.79 billion
Loan principal: Loan interest: Bond principal: Bond interest: Capital: Profit:
Of course, KKR couldve simply fronted the entire $1 billion and walked away with $2 billion in profit, thus saving $210 million in interest costs. And in the 1960s and 1970s, thats what many private equity firms had been doing. What KKR was expert at doing was using its leverage to put its own capital toward multiple investments. So it couldve had $2 billion in profits from a single $1 billion investment over three yearsor couldve made three other $250 million investments at the same time and, in three years, could theoretically have made $7.16 billion on that same $1 billion in capital.
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As you can imagine, with these kind of returns, KKR quickly ramped up its transactions. It closed six different transactions in 1981, and by 1985 it had purchased the Motel 6 chain, followed a year later by the Safeway grocery stores. By 1987, Kohlberg resigned at age 61, leaving Kravis as senior partner. KKR then started looking for a new dealand found a big one. KKR, and Henry Kravis in particular, came to symbolize the private takeover with its $31.4 billion acquisition of RJR Nabisco in 1988. The takeover was a brutal process, with KKR facing opposition and competing bids from RJRs own management. But the lack of a guaranteed price by management and word of then-CEO F. Ross Johnsons lucrative golden parachute deal in the event of a buyout ultimately tipped the boards vote toward KKRs offer. The back-andforth between KKR, the board and management were ultimately the subject of a best-selling book, Barbarians at the Gate, and even an HBO movie starring James Garner and Jonathan Pryce. Surprisingly, while the deal made KKR the poster child of private equityand, some say, corporate greedthe deal itself wasnt a great one. Many say that, amid the merger boom of the 1980s, KKR simply paid too much for Nabisco. And KKR was the victim of poor timing as well. Increasing tobacco litigation and intense competition among cigarette makers sent RJRs profits tumbling in that division. The economic downturn and recession of 1990-1991 made it more difficult for RJR to raise money in the debt markets, prompting KKR to throw in another $1.7 billion of its own money to prop up RJRs operations. Ultimately, KKR exited the investment in 1995, transferring some of RJR Nabiscos assets to another portfolio companyBorden Foodsand leaving the remnants on the open market. For its total $3.1 billion investment in RJR Nabisco, KKR was said to have barely broken even on the dealif that. And RJR Nabisco itself was broken up and sold off to others. Yet the ultimate failure of the investment was drawn out over at least seven years, and the sheer audacity of the deal made Kravis and Roberts the Wall Street equivalent of rock stars. Banks were perfectly happy to lend KKR increased amounts of leverage, because no matter how the investments did, the fees were worth itinvestment banks and lenders walked away from the RJR Nabisco deal with $1 billion in payments, after all. And the success of KKR prompted other private equity firms, such as The Blackstone Group, Bain Capital and The Carlyle Group to get even more aggressive.
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Leveraged buyouts took a backseat to the technology boom in the 1990s, but KKR remained busy, buying up such diverse names as Spalding Holdings Corp. and Act III Cinemas Inc., and regaining its stride. Investment in its takeover funds slowed from 2000 to 2002 in the stock markets bear market, but KKR was one of the leaders in the private equity boom over the first decade of the 21st century. That said, KKR isnt leading the barbarian hordes at the gate these days. Unlike its 1980s heyday, KKR is far more willing to team up with rival private equity firms for so-called club deals, in which the risk and rewards of acquisitions are shared among a number of private equity funds. And the hot-shot role that Kravis enjoyed in the late 1980s has been taken on by The Blackstone Groups Stephen Schwarzman. Nonetheless, KKR remains one of the leading private equity firms on Wall Street and is certainly the elder statesman of the industry. As of October 2007, the firm has completed some 318 transactions with a aggregate enterprise value of $318 billion. It currently has a portfolio of companies and investments worth $78 billionon invested capital of $31 billion, a 2.5-times multiple.
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The Beginning
The history of private equity can be traced back to 1901, when J.P. Morgan the man, not the institutionpurchased Carnegie Steel Co. from Andrew Carnegie and Henry Phipps for $480 million. Phipps took his share and created, in essence, a private equity fund called the Bessemer Trust. Today the Bessemer Trust is more private bank than private equity firm, but Phipps and his children started a trend of buying exclusive rights to up-and-coming companiesor buying them outright. Yet, although there were pools of private money in existence between the turn of the century and through the 1950s, these were primarily invested in startups, much like todays venture capital firms. The notion of a private buyout of an established public company remained foreign to most investors until 1958, when President Dwight D. Eisenhower signed the Small Business Act of 1958. That provided government loans to private venture capital firms, allowing them to leverage their own holdings to make bigger loans to startupsthe first real leveraged purchases. Soon, other companies started playing with the idea of leverage. Lewis B. Cullman made the first modern leveraged buyout in 1964 through the purchase of the Orkin Exterminating Co. Others followed, but the trend quickly died by the early 1970s. For one, the government raised capital gains taxes, making it more difficult for KKR and other nascent firms to attract capital. Pension funds were restricted by Congress in 1974 from making risky investmentsand that included private equity funds.
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This was a time of growing pains for private equity as well as intense success. Many firms realized that they couldnt act in a bubble, as KKR found out with a ton of negative publicity surrounding the RJR Nabisco deal. Tom Wolfes The Bonfire of the Vanities gave all of Wall Street a black eye, and Gordon Geckos Greed is good mantra from Wall Street was pinned on private equity firms as a whole. By the time the 1990-1991 recession took hold, private equity firms resumed a low profile, waiting for the next boom.
A maturing industry
The dot-com bust of 2000-2001 brought the markets back to reality and unearthed new opportunities for private equity firms. Some firms swept in to buy good companies on the cheap, waiting for the bust mentality to pass before returning them to market. Others simply enjoyed the fire sale, and bought technology and patents for resale, dismantling the failed companies in the process. By 2003, the market had returned to a bull cycle, but with some notable changes. Congress had enacted the Sarbanes-Oxley Act, which tightened regulations on public companies and what they could say and do. The new bull market was very much focused on companies hitting their numbers instead of long-term investment in new business. Those pressures combined to make private buyouts seem attractive to potential target companies. Furthermore, the rise of hedge funds created a great deal of wealth that needed new homes, and broadened the number of potential investors in private equity. Soon, newly wealthy individuals, hedge funds and major Wall Street institutions were all piling into private equity, and the firms enjoyed
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even more success, leveraging their newfound capital into major multibilliondollar deals. The record RJR Nabisco buyout was eclipsed twice in 2007 alone.
Where it began
Ever since the dot-com crash and subsequent recession of 2000-2002, investors disillusioned with high-flying stocks started investing in tangible assets, mostly real estate. By 2004, the condo-flipping craze was in full swing. Prices had soared considerably in just three to four yearsthreefold in places like Los Angeles, Las Vegas and Miami. The national banking system helped fuel the craze with mortgages supported by historically low interest rates and relatively easy terms. But in June 2004, the Federal Reserve started raising interest rates, which went from 1 percent at the start of 2004 to 5.25 percent in July of 2006, where they remained. Yet housing prices continued to climb as speculators jumped in and out of house purchases. That left the average homeowner struggling to afford a home. In response, mortgage lenders started pushing unusual mortgage productseverything from 50-year mortgages to interest-only, adjustable-rate loans. And because home prices had been on such a strong trajectory, many banks relaxed their lending requirements for subprime mortgagesloans to high-risk, poor-credit borrowers. The reasoning was that even these borrowers could refinance once their home prices appreciated substantially.
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The fall
The irrational exuberance in housing started falling apart in spring and summer 2006, when prices leveled off and luxury homebuilders, responsible for half-filled communities of McMansions around the country, started lowering the profit forecasts. Housing prices evened out, then started falling in the majority of cities around the country. And all of those adjustable-rate mortgages began adjusting higher. Without the expected jump in home value, many borrowers, especially those with subprime mortgages, couldnt refinance and were stuck with payments they could no longer afford. The effect of all of the late payments, loan defaults and home foreclosures wasnt limited to mortgage brokers and banks. Many mortgage lenders packaged their loans into mortgage-backed securitiesbonds backed by the expected inflow of payments from borrowers as well as the value of the homes mortgaged. But with borrowers defaulting and home prices falling, the value of these bonds dried up. And the big banks and hedge funds holding this paper found themselves hit hard. Bear Stearns had to close two billiondollar hedge funds in June because of the hit these bonds took, and Goldman Sachs spent $2 billion of its own money in August to prop up another fund. And, of course, both hedge funds and major banks were hit not only with depreciating mortgage-backed securities, but also a severe correction in the equity markets and bond yields that finally normalized after nearly two years of inversion.
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Squeeze down
The result of all of this was a general tightening of credit. Nearly all major investment banks had mortgage-backed investments, and those with consumer arms also felt the pinch from mortgage defaults. Hedge funds, the other major source of leverage, faced the bond and equity problems, along with increased redemptions from worried investors. The effects were seen as early as June, as Cerberus Capital Partners had difficulty borrowing the $12 billion needed to buy the Chrysler Group. It got the financing, but at less beneficial terms than it had thought. And its unlikely that the new ownership will find underwriters to help lever Chryslers dwindling assets for investor payoffs, let alone the capital the struggling automaker needs to keep making cars. The lack of credit for buyouts has hurt other deals. The Home Depot Inc., once considered a prime buyout candidate itself, ended up accepting $8.5
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billion to sell off its HD Supply wholesale/contractor chain to private equity buyersthe original bid was $10.5 billion. Thats less money Home Depot can use for stock buybacks and dividends, further pressuring stocks and, potentially, prompting banks and hedge funds to decrease cash output. As of the end of August 2007, there were 51 private equity deals pending, including TXUs and other notables: a consortiums $27.3 billion deal for Alltel Corp., KKRs $27 billion offer for First Data Corp. and Blackstones $26.7 billion bid for Hilton Hotels. There is, of course, no way these deals can get done without borrowing. And if the private equity firms cant get the money on terms to their liking, theyll walk away. We cant borrow at unreasonable rates, but at the same time, we dont want to see too many deals fall through, says one insider at a top-three firm, who didnt want his name to be used. If you see a bunch of us drop these megadeals, the people who have given us money are going to be really disappointed, and theyre not going to give us any more. So even fewer deals will get done. Its probably the touchiest situation weve faced as an industry.
Going Public
Fortress Investment Group Inc. (FIG) was the first major company with a private equity component to go public. Fortress is very much a hybrid of hedge fund and private equity, and is widely seen as more the former than the latter. Nonetheless, Fortress raised $643 million in its February 12, 2007 initial public offering. But the worries that plagued the financial sector have taken their toll on Fortress stockas of late October 2007, it was down 35 percent from its April 19, 2007, high of $33.07. Yet Fortress didnt get nearly as much attention with its IPO as did The Blackstone Group. The hottest private equity firm on Wall Street went public on June 25, 2007, trading under the ticker BX. Sadly, the timing couldnt have been worsethe market hit its peak July 19 before falling on credit concerns. Given Blackstones reliance on easy credit, this hurt the stockit was down 27 percent from its first day of trading as of late October. The troubled trading environment led KKR to postpone its own public offering plans.
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Creating a Fund
Private equity firms can have multiple funds running at the same time. Some are specialized, say in distressed debt or venture capital, while others are simply giant pools of cash the firm can use for any investment it sees fit. To create a fund, of course, the firm has to find cash.
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Why invest?
The funds operate much like a mutual fund, in that each participant or entity receives a return on its investment commensurate with the performance of the fund and how much each institution put in. Yet there are notable differences. Private equity firms require major commitments of time for each investmentyou cant get your money back for anywhere from three to five years, for starters. Thats roughly the same lifespan of a major private equity investment, and the private equity firm wont be able to execute on its strategy without assurance that the money will be there. Depending on the kind of fund, there may be regular payouts for its investors, but in many cases, investors may have to wait the full term before getting their returns. Its because of this wait, in part, that private equity investors start levering up their new acquisitions almost immediately upon purchase. Yes, some of the capital is used to expand the business and make the changes that will bring about greater profitsbut some is used simply to give investors a chunk of their money back shortly after the investment is made.
Finding a Target
Research
Once a fund is created, the private equity firm then needs to find appropriate investments. Depending on the market environment, the time this takes can vary between weeks and years. Until a target is found, the funds resources are generally put into relatively safe investments, such as high-grade corporate bonds, blue-chip equities or Treasuries. Private equity firms are constantly researching possible investments, even before the funds are created. These possibilities, in part, are major selling points for potential investors, who need to be reassured that the fund can put their capital into action as efficiently as possible. Few private equity firms have the kind of massive staff of analysts on hand to do research on the bulk of publicly traded companies around the globe. Instead, they depend on the major investment banks for basic research, then go through daily reports with a fine-toothed comb for signs of possible investment. Some potential targets are easy to spotthe companies that put themselves up for sale, will attract interest, though these are by no means certain. Some companies may simply not be worth the time and money
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needed to turn them around. Even among publicly traded companies, theres such a thing as a bad company. There are also companies that privately court private equity bidders. Generally, these contacts arent made via press release, but are done quietly, with the head of M&A for a major Wall Street firm making a call to a private equity firms managing director. Often, the companys books are laid open to the private equity firms researchers, who can then determine if there are enough efficiencies to be gleaned to make an acquisition worthwhile.
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Getting Financing
You may have already noted that the major deals announced in 2007 are far greater in value than the total value of a typical private equity fund. Welcome to the world of private equity financing, which puts the leverage back in leveraged buyout.
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Its rare that a private equity firm will simply buy a company outright with its own money. For one, even the biggest private equity fund could only manage to buy a company on the small end of the large-cap scale. And as any fund manager will tell you, its never wise to put all your money into a single investment. So instead, the money that private equity firms raise is, essentially, seed money. To get the rest, private equity firms enlist banks and hedge funds.
Loans
There are plenty of different ways to raise leverage. The first is a simple bank loansimple, of course, if you consider $10 billion a simple sum of money. But, in essence, the private equity firm promises to repay the bank the money borrowed with a certain amount of interest. This is generally backed by either the private equity firms own resources or, more likely, the value of the enterprise to be purchased. In theory, if the firm defaults on the loan, the bank can go after the purchased company and/or the firm itself. In reality, this rarely happens; if theres a problem, the two sides iron out a solution that, sometimes, can even involve the bank pouring more money into the target company or private equity firm to affect a greater turnaround. Sometimes these loans are simply that: loans from a bank. In many other cases, the private equity firm will float a corporate bond, based on the perceived value of the enterprise to be purchased. In fact, over the past few years, private equity firms have sought to lever up their new companies as much as possible. Thats not simply because they want as much capital as they can get to expand the companies. At least some of that leverage goes back to the private equity fund as a special dividend for the people who just bought the company. Much of that new debt stays on the target companys books throughout the private takeover period and on through the exit strategy. Heres an example, admittedly somewhat extreme, of how financing works. The Ford Motor Co. sold car rental chain Hertz Inc. to Clayton, Dubilier & Rice, The Carlyle Group and Merrill Lynch Global Private Equity for $5.6 billion in September 2005. The three private equity funds put up $2.3 billionthe rest came from debt that ended up on Hertz balance sheet. Indeed, shortly after the sale, the private equity firms got $1 billion back in dividends. Ten months later, Hertz Global Holdings was re-introduced to the marketplace in an initial public offering that raised roughly $5 billion. The three private equity firms logged a $4 billion paper profit on the deal through more special dividends and, it should be noted, about $100 million in fees
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charged by the private equity firms! Hertz is still paying off the debt used by the private equity firms to buy the company in the first place.
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Pulling it off
There are, of course, an infinite number of ways to unlock value in a given company. Retail chains are popular targets of late because underperforming outlets can be closed and the real estate sold. (There was talk that Toys R Us would be shuttered entirely by private equity owners since the companys real estate was actually worth more than the toy business. The Times Square property alone wouldve been a billion-dollar parcel.) Industrial companies can be improved with new machinery and tighter supply chains. Payrolls can be reduced, debt can be restructured and a variety of expenses can be cut through using different vendors or items. New customers and contracts are pursued. Alternatively, the fix may involve disbanding the company, either in part or altogether. Smaller conglomerates tend to be unwieldyso why not focus on the core business and sell off the other divisions? Perhaps there just arent enough synergies within the company, so the divisions can be sold off to rivals. So long as it generates capital or the potential of higher profit down the road, the private equity firm will do whatever it takes.
IPOs
The IPO route is quite similar to that of any other company seeking to go public. The private equity firm hires an investment bank (or walks across the hall, in the case of a private equity division of an investment bank) to underwrite the offering. The investment bank does an assessment of what it
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thinks the enterprise is now worth; ideally, the private equity firm has brought enough value to the company to make it worth more than the initial purchase price. The private equity owners and investment bank come to a consensus of value, and then the company goes on a junket with the investment bank, giving institutional investors and Wall Street analysts a road show to discuss how much the company has improved and what its worth nowand, of course, what it will be worth in the years to come. Ultimately, the company sets an offering price and a date, and stock is floated. Generally, the private equity firms will retain large chunks of equity in the company, floating anywhere from 20 to 90 percent of the stock on the open market. The proceeds of the IPO generally go to the private equity firms. Sometimes, the firms will float only a minority of the outstanding shares, leaving them with effective control of the company. The private equity firm may unwind its position in time, of course. Other times, the firm is simply interested in getting out with as much money as possible. It may hold on to a stake to see how much it appreciates, however, building even more value for its own stakeholders. Private equity firms are partial to IPOs because they bring about returns in several stages. When the firm releases stock to the public, it receives the returns. It then gets to see its remaining stake appreciate, and can participate in dividend and stock buyback programs as well. And, as we saw from the Hertz example previously, it can find whatever additional fees it wants to end the relationship between it and the newly public company.
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solely for the purpose of merging part of it with another portfolio company to strengthen the latter, and then sell off the rest of the former company. This is, of course, a necessarily broad overview of how private equity deals work. As previously mentioned, there are many private equity funds that specialize in distressed debt, early-stage venture capital investing and other wrinkles. But ultimately, the roles and the process are generally the same. Well look at some important deals later on in this book.
A private equity firm wont get anywhere without money. To that end, private equity firms employ fund raisers to help attract the capital needed. These roles are quite similar to investor relations positions at public companies, institutional banks and mutual funds. Their job is to sell the ideas behind the firms latest private equity fund, convincing major institutionshedge funds, banks, pension funds and the liketo give the firm hundreds of millions of dollars to manage. These people also serve as investors point of contact. They help manage investors accounts, let them know when they can expect returns and assuage any fears they may have. For major accounts, they also bring in some of the firms top leadership as needed to help close major investments. Naturally, those in these roles are exceptional salespeople with experience in dealing with major financial institutions.
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The researchers
The key to unlocking value is knowing where to look, and that falls to the researchers at the private equity firm. These are the people who comb through volumes of analyst reports, news releases and articles, looking for opportunity. They investigate potential targets thoroughly for signs of possible value. Theyre tenacious and determined, with the ability not only to crunch numbers but also to get a feel for a company in admittedly subjective ways. First, researchers identify targets. Again, some companies make it easy by putting themselves on the block or having a proxy, like an investment bank, contact the private equity firm. Other times, an article or research report on a company highlights a potential problem that the firms experts are known for fixing, or an analyst may simply note that a companys share price has been flat for a long time. That can trigger an intensive and somewhat covert investigation into the companys fortunes. The firms researchers gather and collate all existing Wall Street research and media reports on the company. Theyll contact the companys suppliers and clients. They may even reach out to a handful of key people within the company on an informal basis. Then, the researchers coordinate with the deal makers to agree on whether the company is a potential target. Once the company is approached and enters into negotiations, theres a whole new set of data that needs to be explored. The would-be target opens its books and operations to the firms researchers. At that point, the firms overall investment thesis is tested and, hopefully, proven. Some avenues of potential value are discovered, and others are abandoned. Finally, the researchers come up with a final investment thesis for the company that serves as not only the basis for negotiations, but the agenda for the companys entire ownership. This thesis outlines areas of savings, costcutting plans, new ventures, the state of the companys balance sheet and how much debt it can take oneverything. The researchers come up with the plan that will ultimately be executed. Needless to say, it takes someone with an incredible depth of knowledge to engage in this kind of work. Most have a strong financial bent, and some have spent time in corporate finance, Wall Street buy-side or sell-side research shops, or both. A few actuaries have found themselves crunching numbers for private equity firms as well.
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The deal-makers
Once a target has been identified and the investment thesis proven, the dealmakers go to work. Theyre the ones responsible for obtaining the company at the best possible terms. In many cases, they work not only with the target company, but also with sources of financing, including investment banks and hedge funds, to obtain the necessary leverage at low enough rates to make the deal work. They are the old-school Masters of the Universe, making deals worth billions that can affect the lives of thousands. This is heady stuff, to be sure. In most firms, the chief deal-maker and the head of the firm are often one and the same. Deals dont get done, after all, until the top guy signs off on them, and men like KKRs Henry Kravis and Blackstones Steven Schwarzman are renowned deal-makers. Thats not to say that theyre the ones sitting at the tablethough sometimes they are if the deals big enough. But theyre directing the firms negotiations and making sure that the deal jives with the overall investment thesis. Some firms employ their own negotiators who answer to the companys top leadership. Other firms dont; like any other would-be buyer, many simply hire an investment bank to do the negotiating. But at most private equity firms, at least one of the firms top managers, if not the founder, is really calling the shots at the table, while the I-bankers are there in more of a research and advisory role.
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Bonderman is of the Schwarzman mold or, rather, he would say Schwarzman is from his mold. Hes an old-school, leveraged buyout guy whose assistants handle his e-mail for himhe even dictates the responsesand hes also had a few headlines for his lavish lifestyle. But the hard-charging demeanor belies careful preparation and canny negotiating skills. Steve Pagliuca, Bain Capital Ever since Mitt Romney left Bain in 1999 to launch his political career, Pagliuca has been one of Bains top deal-makers, leading the firms takeover of HCA. Hes quieter than most deal-makers, and prefers the intellectual approach to his colleagues occasional bluster. And while there arent any reports of major birthday sprees, he is part owner of the Boston Celtics.
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Leon Black, Apollo Advisors Black, the firms founder and chairman, is considered a master of debt financing and willing to take on multiple projects at once. Hes among the most experienced deal-makers outside of Kravis and Schwarzman, having been in investment banking in the 1980s with Drexel Burnham Lambert.
The operators
Once a deal is done and the target becomes a portfolio company, the firms operators go to work. Few are actually full-time employees of the private equity firm, though each portfolio company is supervised by one or more managing directors and their accompanying staffs. The private equity firms staff acts as both top-level managers and consultants, making sure the portfolio company meets its targets, as outlined by the investment thesis, and offering advice on how to get there. Theres also a whole other level of operators that firms use: Established corporate executives who go from company to company on behalf of the private equity firm. They take on top leadership roles at the newly acquired company and get things done. These hired guns are generally successful Clevel executives noted for their turnaround expertise and willingness to do whatever it takes to get the company where the private equity firm wants it to be.
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To put it in another perspective, the private equity firms representatives are the portfolio companys board of directors, and the hired guns take over the top-level positions and get the job done. The in-house operators and hired guns must work together, though there have been times when the CEO installed by the private equity firm sees things differently than the researchers who came up with the investment thesis or the firms assigned in-house operator. This is particularly true if the hired gun has more experience than the firms assigned supervisor. This can generally be ironed out, though only after a managing director or a member of the firms executive committee gets involved.
their thesis with input from operators on the ground, and the deal-makers are often pulled in to iron out the investments exit strategy, especially if it involves a direct sale. Investor relations personnel answer questions, provide updates on investments, assuage disgruntled stakeholders and make sure everyone gets their money in the endand can often assist in IPO road shows, too. And of course, these are positions in firms that, generally, have fewer than 500 full-time employees around the globe. Each person at your typical private equity firm can fit into one of these roles, but theyre handling multiple funds, targets, deals and/or portfolio companies. And the top managers are often shuttling between different rolesapproving the investment thesis, sealing the deal, ensuring operations go smoothly and gladhanding the firms fund investors.
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companys marketing was revamped with its core 18- to 34-year-old male superfan in mind. To be fair, the new ownership piled on debt; Burger King had $1.35 billion in outstanding debt in 2006. Thats since been reduced to $872 million as of March 31, 2007 and continues to dwindle. Some of the debt the company took on went into revamping itand some went to the private equity funds. By 2006, Burger King re-entered the market via an IPO and was valued at $2.2 billion$700 million better than what the private equity firms paid for it. Today its market cap is $3.5 billion. Nearly three-fourths of the company is still owned by institutional holders, including the three private equity firms. Burger King is an example of a fairly typical private equity turnaround about four years from purchase to IPO, added debt, better operations and solid prospects for long-term growth.
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for cost cutting and streamlining. The company seemed to be in good fiscal shape. Perhaps some businesses would be sold off to rivals, others would form the core of a revamped companyor companiesand then a stock offering or two later, and Clayton would be out with a tidy profit. It was to be the quick flipshuffle through the holdings, find what works, fire-sale the rest and exit within three to five years. It started off well. Clayton brought in a new chairman, Jack Welch disciple Charles P. Pieper. Tyco International CEO Dennis Kozlowskiknown at the time for his merger and acquisition acumen, rather than his tasteless parties and expensive housewaresjoined the board. The company stopped its acquisition tear and started cutting costs. Pieper, however, was the prototypical private equity operator, sitting on multiple Clayton-owned company boards. When U.S. Office Products CEO went to a dot-com startup in 1999, Pieper took on that role as well. Many people close to the deal told reporters that Pieper was spread too thin to lead such a diverse company. The problem Pieper and others discovered was that acquisitions had inflated the companys earnings, so the remnant of the company that was still publicly traded was hammered on Wall Street. Top employees started leaving for better jobs. Clayton had to rush in with another $51 million in 1999 to stop the losses from harming the companys debt. It didnt matter: By March 2001, U.S. Office Products filed for bankruptcy, and Clayton had lost $320 million.
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In retrospect, Clayton didnt see how U.S. Offices acquisition spree had juiced its earnings. Cost-cutting wasnt the answerstopping the acquisitions exposed the flaw. Debt piled up, and the component companies just werent producing enough cash flow to cover it. Combined with a stretched-thin leadership and the distraction of the imploding dot-com bubble, the exit strategy went from cutting and flipping to Chapter 11.
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Education
To MBA or not to MBA?
Again, with only a handful of exceptions, such as The Blackstone Groups analyst program for undergraduates, an MBA is about as close to a prerequisite for most private equity positions as you can get. And unless youre coming on board with top-notch experience at a big-name Wall Street firm, that MBA needs to be from a high-ranked school. Higher degrees, however, are seen as a luxury, so you wont find too many doctorates among private equity employees. But in addition to the MBA, youll be expected to
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Vault Career Guide to Private Equity What Are Private Equity Firms Looking For?
keep up with the latest news in the field as well as some of the academic work being produced that has an impact on private equity activity. It should be worth noting that, for many young professionals involved in trading, obtaining an MBA has been seen as a waste of time. A recent headline in The New York Times trumpeted Bye, Bye B-School. And for those in hedge funds and other heavy-trading environments, this can certainly be true. Math and engineering backgrounds have become far more valued than traditional MBAs by some hedge funds and investment banks. Yet among the deal-makers, theres a lot more to identifying, acquiring, streamlining and exiting a strong investment. The MBA remains an important part of the makeup of a private equity employee. Yes, in some instances, your undergraduate work and some extensive deal making and/or operational experience will help you get a job with a private equity firm. Certainly, some of the smaller and more aggressive firms are willing to overlook a masters-level degree. Most arent, however. So if you want to work in private equity and have yet to gain your MBA, you will have to make a very compelling case based on your experience or start taking classes.
Experience
When youre managing funds worth $5 billion and can lever up as much as six times that amount, you can afford the best. And no matter what the role, private equity firms want experienced minds, even at levels that other Wall Street firms might call entry level. For typical associate-level positions, youll need an MBA and anywhere from two to five years of experience at a top-notch employer working directly in your specialty, whether its dealmaking, research, corporate operations, accounting, etc.
Personality Type
Private equity firms may have lost a touch of their cachet on Wall Street to hedge funds, but theyve lost none of their swagger. We are in the business of flipping entire companies, one private equity deal-maker said with candor. You have to have the brains to see the opportunity, the balls to take it and the guts to make the investment work, even if it means cutting jobs or somehow being the bad guy everyone at the (target) company hates.
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Vault Career Guide to Private Equity What Are Private Equity Firms Looking For?
Confidence, the prototypical can-do attitude and an awareness of the exigencies of the job at hand are all critical to success in private equity. For one, there are no wallflowers at this party. You may have to ferret out details about a target company, negotiate a takeover bid or stand up to the entrenched interests at the company youre trying to streamline. And, of course, your supervisors and, ultimately, your investors will not take kindly to the word no, so youll need to be both stubborn and creative when dealing with problems. Finally, successful private equity players are almost hyperaware of what theyre doing and whats swirling around them. You may be in charge of streamlining labor costs at a portfolio company, but you need to be able to see the fact that the production lines could benefit from new technology, for example. Private equity firms create value, and you need to be on the lookout for ways to do that in any way possible.
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Go to www.vault.com
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Despite this, many private equity firms still keep to old hiring practicesonly a small number have a careers section on their web sites, and a handful of top firms dont even have web sites. But over the past five years, as competition for talent has intensified, a few firms have begun a more direct, focused search for talent. Today, were still up there in terms of prestige, but were up against a lot of lucrative opportunities, the managing director said. So we have to go out and get em young, and grow em ourselves.
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It should be noted that the only associate positions advertised on Bains site that day were for candidates with language ability for its international operations. And bear in mind that, at most Wall Street firms, an MBA graduate from a good program or an undergrad degree holder with four years of Wall Street experience can reasonably expect to be hired as an associate. At Bainand many other private equity firmstheyll want four years experience on top of the MBA.
Undergraduates
And yet a handful of private equity firms, most notably The Blackstone Group, have started to recruit on college and university campuses alongside other Wall Street firms, and under the same terms. They offer summer internships to graduates and undergraduates, as well as entry-level programs for BA/BS and MBA holders. Many on Wall Street see Blackstones programs as a template for the rest of the private equity industry to follow. And if the money continues to pour into private equity funds in the coming years, even the most recalcitrant firms may find themselves in need of talent. So lets take a look at what Blackstones program is like. Internships Between their junior and senior years of undergraduate work, business majors can apply to join The Blackstone Group for a summer internship. This 10week program, which starts in June, gives interns exposure to each of Blackstones businessescorporate private equity, of course, but also the companys real estate, hedge fund and corporate financial advisory arms. Like the majority of Wall Street undergraduate internships, the process starts with campus visits in the fall of students junior year; if Blackstone doesnt stop by your school, contact the firm directly through its web site. Applications have to be in by December, followed by a round of interviews, either at your school or via phone, followed by a spring-break interview in New York. Analyst programs Blackstone also offers an analyst program for undergraduates. Get going early, thoughapplications are due in August. Those are then followed up with presentations and interviews throughout the fall and winter and, again, a possible spring-break trip to New York for a final interview. The analyst program consists of an initial three-week introduction to Blackstone, including both the history and operations of the firm, as well as
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an introduction to the firms technology and resources. From there, youll be assigned to your division and group, and like most Wall Street analyst positions, youll be doing a fair amount of grunt workwriting assignments, research, database work, creating presentations, etc. Blackstone wont say how many people are welcomed into its program. Bear in mind, however, that Blackstone employs just 400 people60 of whom are managing directors. Unlike the major classes of analysts brought aboard Goldman Sachs or Merrill Lynch each year, this is a small and intensely competitive program. Other opportunities for undergraduates Other firms can, and do, take on exemplary undergraduate degree holders for the equivalent of analyst positions, but this is somewhat more rare. The kind of grunt work often done by analysts is simply outsourced to investment advisory firms, researchers and auditorsanalysts at Morgan Stanley or PricewaterhouseCoopers end up doing that sort of work for private equity firms on a contract basis. Firms can and do hire experienced undergraduatesthose with two to three years of experience in a wellestablished analyst program at a major institution. Theyre often charged with herding the contract work done by outside firms, and assisting associates and VPs with their duties. Again, these are rarely posted jobs; word-of-mouth through business school alumni associations or plain old social networking will help you find these positions. Scour your schools alumni directory carefully for anyone who works on Wall Street in an associate position or better; chances are they can point you to someone, somewhere. If youre fortunate, youll find someone who actually works for a firm, and your odds will increase dramatically. You also may simply have to ask around; your familys financial advisor or bank is a good place to start, as are your friends parents. Finally, you may need to simply pick up the phone and start cold-calling firms. Theres some contact information in the appendices of this book, but the Vault Guide to Private Equity Employers is a more exhaustive source of contacts for the serious cold-caller. There are other alternatives to getting into a private equity firm besides simply applying to the firm. If youve been a strong undergraduate finance student, youve already likely been in contact with investment banks. Working with the investment banking arm of a Morgan Stanleyor even Baird & Co.can be just as much of a boon for you down the road. Youll learn deal-making from some of the best in the business and likely have a
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greater role in researching prospective deals. After completing an analyst program at an investment bank and getting an MBA, youll be in a prime position to gain entry as an associate in a private equity firm. Likewise, working at a hedge fund could be an interesting entre into the private equity space. Many hedge funds have private equity investing arms note Fortress, which went public in early 2007. Hedge funds vary widely in their hiring practices, and you could very well latch on to a fund that will give you plenty of meaningful work to do in this area. The trick, of course, is choosing the right fund. See The Vault Career Guide to Hedge Funds for more.
Graduate students
While undergraduate recruitment is still rare, theres been a concerted effort on the parts of both private equity firms and MBA programs to promote the skills needed for success in private equity while still in graduate school. According to a recent article in The Wall Street Journal, some 11 percent of the 2006 MBA class at Harvard Business School went on to private equity firms. Thats up from just 7 percent in the Class of 2004. Other top-notch business schools report a similar increasebut generally such increases are reserved for the top 15 or 20 schools. After that, the limited number of positions and the firms ability to be picky narrows ones chances considerably. Hiring programs
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Again, Blackstone has taken the lead in instituting a formal associate hiring program similar to those found at larger Wall Street firms. The firm has few new positions each year, and thus targets only the top MBA programs around the country. The process starts in August and September with informational events at these target schools, followed by more formal, one-on-one interviews with the recruiter. If Blackstone doesnt show up at your school, you can submit an application at their web site, www.blackstone.com/careers/recruiting/associates.html. The firm will get back to you if it wants to follow up. And if youre not in a top MBA program, you ought to be in the top echelon of your class and focusing like a laser on the kind of skills private equity programs want. After that, Blackstone will likely do a follow-up phone interview over the winter and, if youre a top candidate, youll be flown to New York in the spring. Should you get the position, youll start in early August. Again, these are a handful of positions, and at the associate level, youll be working very
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closely with VPs and managing directors on some pretty intense work. You may even work directly with fund shareholders, target or portfolio companies and financiers at this level, according to Blackstone. Internships Blackstone also offers a summer internship for MBA students between their first and second years of school. It operates quite similarly to the analyst summer program outlined above. You wont get as much contact with clients or anyone outside the office in such a program, but youll work very closely with top people at the firm, and if you do well, youll be primed for a position there, or at another private equity firm, after your final year. Other opportunities for MBAs Other than Blackstone, however, there are more and more firms interested in hiring top MBA graduates. The majority of these firms dont have fullfledged programs in place; they hire associates on an as-needed basis and look for specific strengths based on current needs. But theyre approaching top-tier business schools to help with those needs. Harvard Business School remains the top choice of many private equity firms for recruitment. Its not just the quality of the education (it is Harvard, after all), but also the fact that private equity firms have been hiring Harvard grads for generations, and the network is in place to ensure a steady stream of graduate students to many firms. Yet other schools are actively trying to horn in on Harvards near-monopoly. Dartmouths Tuck School of Business is heavily promoting its MBA program in conjunction with its Center for Private Equity and Entrepreneurship. The University of Chicagos Graduate School of Business and the University of Pennsylvanias Wharton School are also actively recruiting would-be private equity MBA candidates. Columbia University offers a master class in private equity, open to just 36 grad students; the school is also working to pair executive MBA candidates already working in private equity with full-time MBA students in order to further network.
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Sample Resumes
Undergrad for entry-level/analyst position
This is a fairly typical resume from a just-graduated undergrad seeking an entry-level position in private equity. MBA graduate for associate position
OBJECTIVE To obtain an analyst position at a private equity firm or the private equity division of a financial firm or hedge fund in New York Bachelor of Business Administration in Finance, May 2008 Wharton School of Business, University of Pennsylvania Philadelphia, PA Graduated cum laude with a 3.4 GPA Summer analyst program, May 2007 to August 2007 Morgan Stanley, New York, NY
Participated in the highly selective summer analyst program within Morgan Stanleys investment banking division Aided associates in preparing briefing books for
EDUCATION
EXPERIENCE
Morgan Stanleys private equity client in the acquisition of a Fortune 1000 corporation Developed several research processes that helped the investment bank better perform cash-flow analyses Summer researcher, May 2006 to August 2006 Century 21 Citywide Realty, Des Moines, IA
Provided research assistance for the largest real
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EDUCATION
Aided in grant writing, accounting and operations for Habitats largest-ever construction effort Ensured materials and labor were on-site for each of 50 different home sites, coordinating an average of five construction projects per week Provided final accounting for each project and, on average, brought materials costs down 15 percent through active charitable recruiting and obtaining new grants Summer analyst program, May 2005 to August 2005 Bear Stearns Cos. Inc., New York, NY One of 20 undergraduates selected for summer undergraduate program at one of Wall Streets top investment banks Assigned to investment banking arm and aided in analysis of clients takeover offer from private equity firm by creating potential operational scenarios Researched other potential buyout opportunity for one of Bear Stearns private equity clients
Note that this candidate opted to include a summer of work in New Orleans with the Katrina rebuilding effort as job experience, rather than charitable work. The work is indeed laudable, but the candidate also managed to hone her operational skills through this challenging position.
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EDUCATION
Deputy head of major investment research, responsible for identifying companies in which the fund may take and build strong minority stakes Led the research effort for the fund in its partnership with two private equity firms to take Distressed Inc. private in a club deal Led a team of four analysts and a junior associate
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Summer associate program, Merrill Lynch & Co., New York, NY May 2004 to August 2004 Spearheaded new distressed debt valuation models for the firms private equity arm Aided in researching three investment banking deals on behalf of corporate and private equity clients Summer analyst New York, NY program, Baird & Co, May 2002 to August 2002
Conducted valuation research for middle-market M&A advisor and investment bank Assisted in preparing negotiation terms and briefing materials in deals to be closed
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through the ranks quickly, and brought into the firms other portfolio companies to work your magic.
Everybody thought I was going to be a lifer. I started at my firm right out of college as an analyst with asset management. I eventually moved into investment banking, the M&A advisory business, and it just clicked, and I took off. Pretty soon, I was a VP and second in command on a bunch of really great deals. Then one day my MD up and left the company after, like, 30 years or something, and heads off to a private equity firm. Two weeks didnt go by before he called me, wanting me to come with him. I headed over there to talk about it, and I was just impressed. It really is the top of the mountain when it comes to deal-making. Ive been at the private equity firm for about five years now, and just made MD myself.
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Networking strategies
Professional societies and school clubs are also a good tool for networking. Whatever your specialty, theres a society or association that can help you. Minority organizations are particularly helpful, as part of the societys overall mission is to get more minorities working on Wall Street. Again, be respectful and polite, and dont waste anybodys time. These strategies are good even if youre well beyond your school years. But if youre already working in the financial industry, youve got a leg up on everyone else. Chances are youve had contact with someone in your firm whos had contact with private equity firms. Put your feelers out among your colleagues and see what happens. Be discreet, of course, unless you dont mind your current boss knowing that youre looking for a change. In some companies, going to your boss is actually the thing to do, since some bosses are good at networking on your behalf. But thats a judgment call youll have to make based on your individual situation.
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Finally, keep good notes and records of people youve met through the financial world. Get business cards, send thank-you e-mails and do your best to keep in touchwithout being a pest. For someone youve met at a conference, for example, and havent seen since, an e-mail every six months or so is a good way to say hello and keep the relationship going. For folks youve seen a little more regularly, a friendly e-mail once a quarter is effective. Any more than that, youre probably dealing with them enough to not need a remember me? e-mail. Keep track of their movements throughout Wall Street, update them briefly on what youve been up to, and be sure to be helpful when you can. It seems like a lot of work, but done right, youll eventually know someone who knows someone who might have the ear of a Henry Kravis or Stephen Schwarzman. And that could lead to a job in private equity down the road.
Ive kept in touch with a college classmate through the years, and hes at a private equity firm that just bought a really troubled company. I figured why not, Ill give him a call. We had a great chat, and followed up a week later at his office. I came on about seven years ago, and have been at three portfolio companies in one capacity or another. They have real problems, real operational messes, and I really enjoy going in and fixing them. Its the challenge that I missed, and Im getting it here.
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The Interview
CHAPTER 6
The interview is perhaps the most important part of the whole employment process. If youve gotten that far, its obvious to the firm that, on paper, youre a viable candidate. This is your opportunity to stand out from that resume, and the resumes of everyone else whos applied.
Things to remember
There are a handful of mistakes that, firms say, candidates make in their interviews. The first is projecting the kind of hot-shot aggressiveness that seems to be the Wall Street stereotype. That may be all well and good for a position on a trading desk, but private equity firms tend to prefer more cerebral, thoughtful candidates. Their investments are for the long haul, and they dont invest lightly. Be strong and stick to your convictions, but dont be cocky. Present yourself as an aggressive value seeker, but one who does his or her homework. Secondly, remember who youd be working forthe private equity funds shareholders and the firm itself, not the portfolio company. The industry has a sort of PR campaign going that says were good for companies, says one managing director of a small private equity firm. We present ourselves as a hope for troubled companies, someone they can turn to. Thats all well and good, and its often true, but were there to find value and make money. Period. So dont make the mistake of putting a target or portfolio companys interests ahead of the funds or firms. Especially with hypothetical questions, you need to at least discuss the various value opportunities in dismantling a portfolio companys unprofitable divisions, spinning off pieces, or just closing up the whole company and selling the real estate it has for a profit. Questions during an interview with a private equity firm tend to fall into four categoriesyour expertise, your knowledge, your character, and your vision and goals. The following are some samples of each.
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reasonably bullish outlook for the industry is likely an assetwhy else are you applying?but dont sugarcoat it, either. Talk about the challenges facing the industry in a reasonable way, how the industry might overcome them, and why you ultimately think the industry will continue to grow and prosper. Is the market for mega-cap M&A/LBO deals done? Another question having to do with your knowledge of current events. There was a point when the industry seemed to be poised for that $100 billion LBO deal. That may no longer be the case, at least over the next few years. Do your homework, read up on everything you can and talk to contacts in the industry. Get a feel for the trends within private equity, and be able to talk intelligently about them. Company X is a struggling retailer with prime real estate. Do you break it up and sell the land, or try to refresh the business? You can expect at least one hypothetical question regarding your area of expertise during the interview, and probably another that has more focus and better elucidation than the one above. Know enough about the industry to mention a previous deal involving a similar situation and how you might handle things now.
What makes a good private equity deal-maker/ fundraiser/ researcher/ associate? This should be relatively easy. For most positions, its someone with an eye for opportunities to create value, developing plans to create value, executing said plans, etc. The whole point of a private equity firm is to wring as much value as one can out of an investment. And that should be the focus of your answer. Why do you want to work in private equity? Money, prestige or a perception of the industry as the next big thing will get you shown the door. Of course, those already working in private equity would be lying if they said they didnt enjoy those things. But ultimately, once the moneys in the bank and the persons name is in boldface in the newspaper, the challenge is what keeps them coming back. Private equity, to those in the industry, represents the very pinnacle of investing. Turning
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around whole companies, finding value where there doesnt appear to be any these are what keeps private equity folks in the game. Alternatively, youll sometimes be asked why this firm. Know the firm, and know what makes it tick. Tailor your answer accordingly. Where do you want to be in five years? If youre young and going after the equivalent of an analyst or associate position, feel free to talk about other opportunities. Perhaps you want to get an MBA if you dont have one already, or even a doctorate. Perhaps you want to build on your experience and join a portfolio company. Its good to have other ideas, but make sure that your position in private equity takes priority. Its perfectly fine to say, I dont know, but Im eager to find out what kind of opportunities would present themselves if I get the chance to work here. If youre older and applying for an experienced associate, VP or managing director position, the firm isnt going to want to hear anything other than a commitment to staying and growing with the firm. Theyre potentially going to throw a lot of money at you, so reassure them that their return on investment will last a good long while.
First off, a bit of a trick question here. The company doesnt do anything wrong, it simply has areas in which it can improve. That said, you should be knowledgeable enough about the company and its recent deals to talk intelligently about how the company operates. Play up its strengths, certainly, but dont be sycophantic. And dont pull any punches on ways it can improve, but again, dont be too negative. Where are the next opportunities for private equity? The answer to this depends on the position, of course. If youre interested in fund raising, talk about new potential sources of funds, including any ideas floating around about public offerings and the like, or potential new sources of private placements. If youre in deal-making or operations, be ready to discuss the trends youve read about recently, such as emerging market LBOs or a particular domestic sector. New financing plans are always welcome, too.
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If you were given a chance to go after Company Y, would you take it, and what would you do with it? Another hypothetical, with company Y likely a company in the news lately for various and sundry problems. If its a company with too much debt and not enough upside, feel free to say you wouldnt take it. If its a company with a decent balance sheet and some operational problems, then talk about what youd do. Ultimately, youd have to be up on the news to consider whether theres an opportunity to create value within the framework of an acquisition.
This is a good basic question for any company, let alone one in private equity. This question gives you a sense of the rarity of openings, as well as how long people stay at the company. The demand for good private equity employees is strong, and anybody with private equity experience can go elsewhere for more money, so dont get too alarmed if turnover seems a little higher than you might expect. That said, low turnover is a very good signpeople are making plenty of money, and the work keeps them interested and fulfilled. How do you deal with the issue of employee retention? Following the previous question, this is the sneaky way of asking about pay and benefits without actually asking. Youre likely to start a conversation about aligning the interests of the company and employee through various bonus programs and the like. You may also get a sense of the companys culture, especially if they actually bring up things like work environment, corporate values and work/life balance. (Admittedly, work/life balance discussions will be rareyou wont be expected to have a life.) Be wary of
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the interviewer who says he or she isnt worried; every firm on Wall Street should be. Even after the rough end to 2007, theres plenty of demand for top talent throughout high finance, and private equity firms are still up against tough competition from hedge funds, on the riskier side, and from more traditional Wall Street firms that may now be more averse to risk. You want to hear reassurance that this is a top priority for the firm. How much do you plan to take advantage of the recent interest in private equity investing to grow the business? Knowing the current mindset of private equity fund investors and the ebb and flow of the business is important, and this question shows you have some interest in that. This will also give you a sense of the strength of the companys business and its future plans for expansion. In your acquisition of Company X, you opted for Exit Strategy A instead of Exit Strategy B. Why is that? Asking smart questions about recent or historical acquisitions is always a nice way to show off your research and intelligence, and also get a better sense of the companys investing philosophy. That said, the key word here is smart. If youre going to ask about any deals, know them cold, and ask specific questions. Were you happy with the way Deal Y turned out? is not going to make you look good, and the interviewer is going to sit back and say, Well, sure. But if you can ask a smart question about the financing structure of Deal Y, that will get your interviewer talking.
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Lifestyle
Whatever job you take on Wall Street, you arent doing it because you like your weekends free. Those are the very canny words of a major investment banking CEO, and they especially hold true for those working in private equity. Your hours will be long, and you will be one of those people deftly wielding a BlackBerry at soccer games, in the corners of restaurants or even poolside. These are high-stakes investments, after all, and if youre helping to manage a billion-dollar stake in a major company, youll be held responsible for the outcome.
Entry-level lifestyles
At the analyst and associate levels, or in any support role, you can expect long hours8 a.m. to 7 p.m. wouldnt be seen as onerous. But on the other hand, unless theres something big pending, your weekends and vacation time can be your own. That said, if youre supporting the deal-makers, and theyre deep in negotiations with a major publicly traded company, youll be expected to be right there with them on a Saturday night at 10:30 p.m.
Executive lifestyles
In more senior positions, your day-to-day hours can actually be much more reasonable8:30 a.m. to 6 p.m. in some casesbut youll also find the line between work and the rest of your life to blur considerably. Some of your meals will be spent working, while evening conference calls and the occasional late-night panic e-mail will eat into what you once may have considered your private life. Travel will pick up considerably as well, no matter your role. You may have to fly out to Sacramento to convince CalPERS to invest in your fund, or head to Atlanta to finish a buyout deal, or tour a portfolio companys facility in China looking for ways to improve productivity and cut costs.
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Its not like you wont be able to take vacations, but since youll still be held responsible for outcomes in your absence, most high-level workers in private equity tend to schedule vacations carefully. If youre in major negotiations for a deal right around Christmas, you may not be able to get away for the holiday. And youd be wise to schedule your summer trip after your portfolio companys annual report to the funds board of directors. For most high-level private equity employees, this lifestyle is par for the course. And if youve worked on Wall Street in other capacities, youre likely used to the trade-off. But if youre just starting out and are eying a private equity career, bear it mind that your career can quickly become its own lifestyleespecially if youre successful!
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Big benefits
And of course, like most Wall Street firms, private equity employers generally dont skimp on other benefits. Medical, dental and various insurance plans are generally very good. Some firms will also set aside up to 20 percent of base salary in a retirement fundthats on top of the base salary, not a cut into it. The retirement fund can, in many cases, be invested in the companys private equity funds, giving workers an additional stake in their companys success. Indeed, its worth noting that at the managing director level, most companies will take a cut of your bonus money and roll it into the fund for you. Given the outsized returns and personal stake in the firms success, few complain.
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the most part, arent overly ambitious, though to be fair, youll have to work hard just to meet them. And the expectation is that, unless something unexpected happens, you will exceed them. If you can do that, then youll be on your way. Again, theres no set number of managing directors at any given firm, so if youre a canny deal-maker or particularly adept at finding and fixing operational weaknesses in portfolio companies, youll be called upon to do it again. And again. But performance is absolutely critical. You certainly will experience a setback or two, but youll also be measured by how quickly you overcome itand by how much.
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1:00 p.m.: The investment bank calls back, and it looks like we may have some movement on structuring future debt at the company thats furthest along in negotiations. I give my principal the heads up and we set up a call between their investment bank, our investment bank, us and the company. We manage to do it for 5pretty fast. 2:00 p.m.: Prep for the conference call. We gather all the material we have, call and e-mail back and forth, and get a basic agenda ginned up for everyone to see. I give my principal a to-do list of things left outstanding. I also order up some dinner for everyone in our office who will be on the call. 5:00 p.m.: We start the call and start hashing out the debt structures. If I have ideas, I pass notes to my principal. 6:00 p.m.: Dinner arrives. We keep going on the call as we eat. 7:20 p.m.: The call wraps up. Theres a preliminary agreement, but both sides have to go back and run it up the flagpole. I head back to my desk to enter my new tasks into my Outlook before I head home. Thatll include the flagpole documentI bullet out what should go in there and give it to my principal before I head home. 8:00 p.m.: Cab back home. I may work a little after dinner, or not. This was a long dayusually Im out by 6.
7:00 a.m.: Get on the train and head into the city with a sheaf of research notes from the night before. 8:00 a.m.: Arrive at work. If its Monday, prepare for the weekly meeting. The Monday meeting tends to last most of the day. Everyone talks about everything the companys doing, the state of every investment or potential target. And everyone chips in. People come in and out as needed, but for the executive committee, its a 9-to-5 thing. Since its not Monday, gather the latest research from Wall Street on potential takeover targets. 9:00 a.m.: Present updates, if needed, to the executive committee on previously discussed targets. Generally done through e-mail. 9:30 a.m.: Hit the phones. Theres always more to find out beyond what you read in the papers or in the research notes. Ill call clients, suppliers, anybody that the target deals with to see how they do things and what their problems might be.
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11:00 a.m.: Previously scheduled interview with a representative of a target company. This is purely informational, and both our guys and their guys know were doing it. Were just saying we want a stake, theyre saying they dont want to sell, but thats how the dance begins. So we meet and get a sense of each other at a lower level before we hand it off to the managing directors and the C-level executives. 12:00 p.m.: Lunch, target company rep in tow. 1:30 p.m.: Back in the office, writing up the report on the meeting along with potential follow-up questions and research. 2:00 p.m.: More phone work and computer research. 3:30 p.m.: Meeting with the deal team on a current negotiation. They seem to think theyre overpaying, and they want us to take a look at a piece of the targets business again. Turns out we hadnt revisited the topic in a few months, and it was easy to find out what was going on. Probably saved a few million there. 5:00 p.m.: Conference call with portfolio company managers about the latest in supply chain research. 6:00 p.m.: Order dinner while going over the days activity on portfolio and target companies. Write up developments for directors as needed. 8:00 p.m.: Home.
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10:30 a.m.: Sales meeting. A major university is considering a placement with us. Its my job to show them what weve done, what our plans are, and the mechanics of making the placement. In this case, theyre interested but want a follow-up meeting with their chancellor and our bosses. So on the ride back to the office, Im on the BlackBerry to see which of the bosses would be available and when. 12:00 p.m.: Following up on a lead. Even private equity firms cold call sometimes. A friend introduced me to a private banker a few weeks ago, and Im following up to see if theres a chance to do something together. 1:00 p.m.: Lunch. I always try to get out of the office for at least a half hour. Not everybody has that luxury. 1:30 p.m.: Another status call with an investor. 2:30 p.m.: Reviewing the quarterly letter to investors. Its early yet, but you want to be out there in front of them, whatever the news, so you can own the message. 3:00 p.m.: Meeting to go over the quarterly letter to investors with the writers and marketing consultant. 4:00 p.m.: Preparing for another sales call, this one for a hedge fund. You target your message differently. I wouldnt make the same arguments for a university that I would for a hedge fund. 4:30 p.m.: Catching the train out to Connecticut with a VP who helps run the fund. 6:00 p.m.: Dinner meeting with the hedge fund. When the VP is there, I tend to let her do a lot of the talking, especially when they get down and dirty with the numbers. I simply keep things moving and make sure we tackle all the high points. 9:00 p.m.: Back to the train station and into the city en route to home, with BlackBerry messages going the entire trip.
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1:30 p.m.: The real session. This is where stuff gets done. Today we drilled down and agreed upon a value for their major business arm, which was key. We got a lot more than they did out of it. 6:00 p.m.: Have dinner sent over. Informal chatting between the two sides over dinner. 7:00 p.m.: Wrap up the days talks. 7:30 p.m.: Convene with the team in the war room and dole out assignments for the overnight. Make a few phone calls to key people and update the MD again. 9:00 p.m.: Call the car and go home.
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1:30-3:30 p.m.: In the air. Id like to be saying that Im reading a book or napping, but Im going over the companys performance and calling out questions I need to ask. 4:00 p.m.: Car to the company headquarters. Settling in and getting prepared for the rest of the visit. 6:00 p.m.: Dinner in the company boardroom with the executive team. This is sort of the informal meeting before the real meeting the following day with the (private equity) firms top brass on the phone. I tend not to ask too many questions here. I want to hear from them how things are going. Ill pipe up on a few things, but this is their chance to vent at me. 9:00 p.m.: At the hotel and out cold within an hour.
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Go to www.vault.com
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Chrysler Group thanks to old friends at Cerberus who were impressed with his ability to contain costs throughout this career.
Thats not to say that the deal-makers rule the roost entirely. As weve seen, the top people in each of the firms divisions have to sign off on any given investment. But so much hinges on the firms ability to identify the best investments and get them on board, so its no surprise that people like Henry Kravis or Stephen Schwarzman are deal-makers first and foremost.
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Yet, as mentioned above, you can become one of those top employeesall you have to do is execute well, over time, on everything youre given. A challenge, but one that most attracted to this industry should welcome.
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equity investments, need people like you to help identify their opportunities. Indeed, the hedge fund may not even want to buy the company outright, but could instead use your expertise to find companies likely to be bought out so they can buy up the stock and bet on which one will go private first. Individual companies of all stripes could also use you to help them figure out their own shortcomings and opportunities, while investment banks like Morgan Stanley and Merrill Lynch could use the same expertise for the benefit of their traditional M&A clients. Deal-makers, of course, will always find a home on Wall Street, especially if theyve closed some successful private equity buyouts. Most private equity deal-makers have already had plenty of contact with their counterparts at most major investment banks; theyre the ones who negotiate on behalf of the companies being bought out. And a solid track record of deal-making could help you beyond M&A as well, as some multinational corporations have the need for an experienced negotiator and deal-maker for everything from government contracts to labor disputes. Operational turnaround specialists, likewise, have few problems leaving private equity firms to work elsewhere. Just think of where Bob Nardelli might go next if he manages to turn Chrysler around without too many problems. Once disgraced for taking major pay packages at Home Depot while the stock price foundered, Nardelli is getting a huge second chance with Chrysler. A difficult chance, to be sure, but if he pulls it off, nobody will blanch at paying him to run another company down the road. This is an extreme example, of course, but if you had a hand in turning around a major company, your expertise will be in demand elsewhere. Indeed, you may find yourself courted by public companies who want the turnaround expertise but dont want to be taken private! If youre interested, you can start talking to them. If not, you can just call the guy down the hall and clue him in on a potential takeover target. Finally, those experts who can get major banks to extend credit or underwrite debt offerings have perhaps the most flexible post-private equity career paths. Everybody needs money, and if you have a deft touch with those who give it out, youll find a home no matter what.
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Masters of the Universe mentality is alive and well in private equity, though in 2007, its at least a bit more muted and humble.
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CONCLUSION
The private equity space is undergoing immense change. Easy credita staple of the takeovers of the past decadecould be drying up. And the storied firms that blazed the trail for private equity investing in the 1970s, 1980s and 1990s are now up against stiff competition from investment banks and hedge funds. But there will always be a need for private equity investingand thus, private equity firms.
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Its too early to say how the credit crunch of 2007 (and into 2008) will play out. Buyout announcements in the fourth quarter of 2007 were half that of the previous quarter, even as the Federal Reserve started cutting overall interest rates. The rate cuts are nice, and ostensibly make credit cheaper for private equity borrowers. The problem, however, is that in the face of the subprimefueled credit debacle, the major Wall Street banks are now very gunshy. In fact, theres been talk that the major investment bankssome of whom, like Citigroup and Merrill Lynch, are under new leadershipmay pull out of creditdependent units entirely, either shutting them down or spinning them off into private entities to get the inherent risk of these businesses off their books. A wholesale departure out of private equity remains unlikely for most Wall Street firmsits just too profitable in the long run. But if the big banks start pulling out of private equity, that could leave more market share for independent firms. This is one of those times where you wait and see, says one long-time private equity investor. You keep looking for value, you run your companies as best you can, you assuage your investors and you wait until it gets better while the competition freaks out and drops the ball. It happened before, and itll happen again, and those who stick to their guns will be stronger for it.
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Appendix
Helpful Web Sites
Private equity search digestjobsearchdigest.com Blogging Buyoutswww.bloggingbuyouts.com Apaxwww.apax.com/Apax_Private_Equity_Rankings_2007.pdf
Clayton, Dubilier and Ricewww.cdr-inc.com/index_news.html CVC Capital Partners www.cvc.com/Content/En/OurLocations/LocationDetails.aspx?AID=5030 Fortress Investment Group phx.corporate-ir.net/phoenix.zhtml?c=205346&p=irolnewsArticle&ID=1016069&highlight= J.C. Flowers & Co. LLP investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId =1089967 KKRwww.kkr.com/who/offices.html Madison Dearborn Partnerswww.mdcp.com/contact.asp Permira (Europe)www.permira.com/en/contacts/contacts.html Providence Equity Partnerswww.providenceequitypartners.com
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Riverstone LLCwww.riverstonellc.com/contact_us/index.html Silver Lake Partnerswww.silverlake.com/content.php?page=news Summit Partners www.summitpartners.com/news/media_inquiries.aspx?mid=6&SID=605 Texas Pacific Groupwww.texaspacificgroup.com/contact/index.html Thomas Cressey Equity Partners www.thomacressey.com/contact_us.php Thomas H. Lee Partnerswww.thlee.com Warburg Pincuswww.warburgpincus.com/contact/index.html Welsh, Carson, Anderson & Stowewww.welshcarson.com
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Recommended Reading
Anderson, Jenny, The Old Money in Private Equity Isnt Ready to Welcome the New, The New York Times, July 20, 2007, pg. C5. Bartlett, Sarah, Money Machine: How KKR Manufactured Power and Profits, Beard Books, 2005. Bierman, Harold, Private Equity: Transforming Public Stock to Create Value, John Wiley & Sons, 2003. Burrough and Helvar, Barbarians at the Gate: The Fall of RJR Nabisco, HarperCollins, paperback reprint 2003. Conde Nast Portfoliowww.portfolio.com/news-markets/nationalnews/portfolio/2007/03/29/Whats-Wrong-With-This-Picture De la Merced, Michael, Wary Buyers May Scuttle Two Deals, The New York Times, Sept. 22, 2007, pg C1. Goldstein, Matthew, Hedge Funds Jump Into Private Equity, BusinessWeek, Feb. 26, 2007, pg. 46. Krantz, Matt, Private-equity firms put brakes on stock offerings, USA Today, Oct. 16, 2007, pg. 3B. Lerner, Hardymon et. al., Venture Capital and Private Equity: A Casebook, Third Edition, John Wiley & Sons, 2004.
Customized for: Himanshu ([email protected])
Lerner and Hardymon, Venture Capital and Private Equity: A Casebook, Vol. 2, John Wiley & Sons, 2001. Povaly, Stefan, Private Equity Exits: Divestment Process Management for Leveraged Buyouts, Springer-Verlag, 2007. Sorkin, Andrew Ross, In Defense of Schwarzman, The New York Times, July 29, 2007, pg. BU6. Sorkin and Merced, Behind the Veil at Blackstone? Probably Another Veil, The New York Times, March 19, 2007, pg. C3. Story, Louise, Bye, Bye B-School, The New York Times, Sept. 16, 2007, Section 3, pg. 1. Thornton, Emily, Education of a Dealmaker: I Got Cocky, BusinessWeek, Sept. 17, 2007, pg. 48.
Visit the Vault Finance Career Channel at www.vault.com/financewith insider firm profiles, message boards, the Vault Consulting Job Board and more.
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