PEEK Guide to Private Equity December 2005

What is Private Equity? Private equity is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market. Categories of private equity investment include leveraged buyouts, venture capital, growth capital, angel investing, mezzanine capital and others. Private equity is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market. Categories of private equity investment include leveraged buyouts, venture capital, growth capital, angel investing, mezzanine capital and others. There is a wealth of information about Private Equity in all its forms available on the internet. The sites below are some of the best: There is a wealth of information about Private Equity in all its forms available on the internet. The sites below are some of the best: Vault.com (free guide to Venture Capital available if accessed through the Kellogg CMC homepage ) – comprehensive guide of what you need to know. MUST read. Vault.com (free guide to Venture Capital available if accessed through the Kellogg CMC homepage ) – comprehensive guide of what you need to know. MUST read. Dartmouth has a great primer and related information on its website: Dartmouth has a great primer and related information on its website: Confused by the terms you hear? Check out this glossary - Confused by the terms you hear? Check out this glossary -

What does the job involve? Sourcing: This involves identifying the company that the fund will invest in, often by trawling through hundreds of companies that will not make the cut. Sourcing: This involves identifying the company that the fund will invest in, often by trawling through hundreds of companies that will not make the cut. Due Diligence: Once you have identified a target, it is vital to conduct a thorough due diligence process to ensure that this company will meet the fund’s expectations in terms of operations and ultimately, returns Due Diligence: Once you have identified a target, it is vital to conduct a thorough due diligence process to ensure that this company will meet the fund’s expectations in terms of operations and ultimately, returns Execution: Getting the deal done – coordinating the bankers, consultants, lawyers, and target company staff to get the deal done and sign on the dotted line Execution: Getting the deal done – coordinating the bankers, consultants, lawyers, and target company staff to get the deal done and sign on the dotted line Ongoing management: Portfolio companies need to be looked after and given ongoing advice. This is often done through board positions, but level of involvement varies from fund to fund Ongoing management: Portfolio companies need to be looked after and given ongoing advice. This is often done through board positions, but level of involvement varies from fund to fund Exit: Managing the sales process, either as an IPO, a sale to another fund or sale to a strategic buyer is the final step. This is where the money comes in that makes the whole process (of up to 5 years) worthwhile. Exit: Managing the sales process, either as an IPO, a sale to another fund or sale to a strategic buyer is the final step. This is where the money comes in that makes the whole process (of up to 5 years) worthwhile.

How do I get a job? Network, network, network: Network, network, network: This cannot be stressed enough. Whether you have a background in Private Equity or not, it is vital to tap all the contacts you have in the field, conduct informational interviews, and identify other people to contact. This is largely a relationship business, and the majority of jobs are through connections. Cold calling may work, but be sure to be well prepared before sending out s or making calls. This cannot be stressed enough. Whether you have a background in Private Equity or not, it is vital to tap all the contacts you have in the field, conduct informational interviews, and identify other people to contact. This is largely a relationship business, and the majority of jobs are through connections. Cold calling may work, but be sure to be well prepared before sending out s or making calls. Part time work: Part time work: Consider working part time for a local fund. Many funds will allow individuals to work part time over the course of the year (usually for little or no pay), in order to gain experience and get your foot in the door. Be aware that these opportunities come around on the PEEK newsletters, but many are identified through networking. Consider working part time for a local fund. Many funds will allow individuals to work part time over the course of the year (usually for little or no pay), in order to gain experience and get your foot in the door. Be aware that these opportunities come around on the PEEK newsletters, but many are identified through networking.

How do I get a job? (cont’d) Be prepared: Be prepared: If you want a job in the field it is important to keep up to date with the latest news. Two free newsletters are available from and These cover news on a regular basis and will keep you in the know about the deals in the industry, the people involved and the trends you need to be aware of. If you want a job in the field it is important to keep up to date with the latest news. Two free newsletters are available from and These cover news on a regular basis and will keep you in the know about the deals in the industry, the people involved and the trends you need to be aware of. Make profiles. If there are funds that you are targeting, aim to understand the basics, before speaking to individuals there. Understand the sectors they invest in, their investment style (hands-on, purely financial engineering), the size of the fund and its target investments (small cap, mid cap, large, co-investment strategy). Also develop an understanding of the background of the General Partners at the fund – often people are more likely to hire individuals that are from similar backgrounds (banking/ operational/ consulting) so this will help you target funds. Make profiles. If there are funds that you are targeting, aim to understand the basics, before speaking to individuals there. Understand the sectors they invest in, their investment style (hands-on, purely financial engineering), the size of the fund and its target investments (small cap, mid cap, large, co-investment strategy). Also develop an understanding of the background of the General Partners at the fund – often people are more likely to hire individuals that are from similar backgrounds (banking/ operational/ consulting) so this will help you target funds.

How do I get a job? (cont’d) Be prepared: Be prepared: Brush up on your finance skills and take classes at Kellogg that will help you – there is a basic class on PE/VC offered as well as other supplementary classes such as Human Element of Private Equity Investing. Brush up on your finance skills and take classes at Kellogg that will help you – there is a basic class on PE/VC offered as well as other supplementary classes such as Human Element of Private Equity Investing. Take the PE Boot camp: To be planned for later this year, this will cover the basics you need to know and give you more hints and tips on the recruiting process. Take the PE Boot camp: To be planned for later this year, this will cover the basics you need to know and give you more hints and tips on the recruiting process.

How do I get a job? (cont’d) Be patient: Be patient: The majority of jobs come up after the major recruiting cycles are completed, so you have to wait if you want a job in this field. It is also important to devote a significant portion of your time to scoping and sourcing opportunities, if you are serious about finding a job in this field. Funds will expect you to have a self starting approach to finding investments when you join them – the job search is a similar process, and displays the same skill set. The majority of jobs come up after the major recruiting cycles are completed, so you have to wait if you want a job in this field. It is also important to devote a significant portion of your time to scoping and sourcing opportunities, if you are serious about finding a job in this field. Funds will expect you to have a self starting approach to finding investments when you join them – the job search is a similar process, and displays the same skill set. It is extremely rare for individuals to get jobs in Private Equity without a prior background in the field, or at the very least, a background in investment banking, or to a lesser extent consulting. The search may not be fruitful now, but there are several other intermediate steps you can take if this is your long term goal. It may take several years after Kellogg for you to break into the field without prior experience, but now is an ideal time to build up your knowledge and skill set so that you can be prepared when the time comes. It is extremely rare for individuals to get jobs in Private Equity without a prior background in the field, or at the very least, a background in investment banking, or to a lesser extent consulting. The search may not be fruitful now, but there are several other intermediate steps you can take if this is your long term goal. It may take several years after Kellogg for you to break into the field without prior experience, but now is an ideal time to build up your knowledge and skill set so that you can be prepared when the time comes.

Alternative paths into PE So what are my other options if Private Equity is not possible this summer/ straight out of school? So what are my other options if Private Equity is not possible this summer/ straight out of school? Investment banking: This is the feeding ground for later stage private equity, and will equip you with the kinds of skills that funds will look for. Whether it is industry specific (Healthcare/ Telecoms), or product specific (leveraged finance) it will help entering the world of LBO’s if you do not already have prior finance experience. Investment banking: This is the feeding ground for later stage private equity, and will equip you with the kinds of skills that funds will look for. Whether it is industry specific (Healthcare/ Telecoms), or product specific (leveraged finance) it will help entering the world of LBO’s if you do not already have prior finance experience. Corporate venture: Companies such as Motorola, Phillips and Intel all have their own internal venture departments. Although competitive, these will provide you with a similar experience to earlier stage venture capital investing, but within a more structured environment, with a regular recruiting cycle. Corporate venture: Companies such as Motorola, Phillips and Intel all have their own internal venture departments. Although competitive, these will provide you with a similar experience to earlier stage venture capital investing, but within a more structured environment, with a regular recruiting cycle. Operational experience: If VC is your aim, gaining significant operational experience running a company may be a longer term option to get into the field. However this will often be after reaching CEO level, so is definitely not a short term strategy. Operational experience: If VC is your aim, gaining significant operational experience running a company may be a longer term option to get into the field. However this will often be after reaching CEO level, so is definitely not a short term strategy.

Overview of funds with Kellogg Alumni

Interview tips Interviews with PE firms can vary in type and style tremendously. They can range from being completely relationship based, to full day financial case studies. Interviews with PE firms can vary in type and style tremendously. They can range from being completely relationship based, to full day financial case studies. Identify individuals who have interviewed with the target or similar fund to get an idea of interview style. Identify individuals who have interviewed with the target or similar fund to get an idea of interview style. Prepare with some basic consulting and banking cases available through the Kellogg Consulting club and IBCM websites. Prepare with some basic consulting and banking cases available through the Kellogg Consulting club and IBCM websites. Ensure you have fully researched individuals at the fund and investments made, as well as potential deals in their areas of interests. Ensure you have fully researched individuals at the fund and investments made, as well as potential deals in their areas of interests.

Other resources Capital IQ - Database available for access at the CMC, covering information about funds, by location, size and investments. Vital information source for research. Capital IQ - Database available for access at the CMC, covering information about funds, by location, size and investments. Vital information source for research (several white papers available) (several white papers available) (National Venture Capital Association) (National Venture Capital Association) (European VC Association) (European VC Association) (excellent website with many white papers – requires free login) (excellent website with many white papers – requires free login) Please contact Suveer Kothari if you have any questions or comments about this guide, or additional information to share. Please contact Suveer Kothari if you have any questions or comments about this guide, or additional information to