One of the most coveted positions within a private equity firm is investor relations (IR). These client-facing professionals bring in investors and are responsible for retaining them.
Unlike hedge fund and long-only marketing and IR, which involve constant fundraising and prospecting, PE IR professionals have a limited time horizon for acquiring capital, and the assets are subsequently locked in. In between fundraising for fund launches, IR specialists educate and service existing investors. Many PE firms tilt towards IR people who not only have a big Rolodex, but also an ability to manage long-term relationships.
Because articulating the concentrated underlying investments of the portfolio is of utmost importance, there is a trend of PEs firm hiring from investment banking and MBA programs. The most common range of work experience for a first-time PE IR professional ranges from recent graduates to investment banking analysts, associates and vice presidents.
In such a competitive environment, how do you break in and prove that you’re qualified without prior experience in PE IR? Candidates who want to transition to PE IR should emphasize any of the following eight types of experience and qualifications.
1. Investment banking
Clients appreciate junior and mid-level IB candidates because these professionals have experience in building presentation materials and technical knowledge of modeling and analyzing companies. Middle-market IB firms are of particular interest because they tend to be more hands-on, giving juniors more deal exposure than bulge-brackets.
Recruitment from IB rotational programs generally starts a year prior to the completion of the two-year rotational program for associate-level positions, but we do see poaching of more experienced investment bankers several years into their careers, especially in IR, because PE clients tend to have a deals-oriented approach.
However, PE firms likely won’t take a bet on a senior level investment banker because they are expensive hires for candidates who have no existing track record in PE, and alts firms tend to prefer up-and-comers – at least in this market.
2. Funds placement
Clients love mid-to-senior candidates who have third-party marketing or fund-sponsor backgrounds. Outsourced funds placement groups are either independent broker-dealers or a division within banks. Because these organizations employ people who are solely focused on the sales aspect and whose compensation is directly tied to their individual contribution, candidates with this background are self-starters, aggressive, well-networked with allocators and consultants, and already trained in the art of sales and the sales cycle.
3. PE analyst
Candidates who already have experience at a PE fund from the investment side have intimate knowledge and are valuable when complex investment expertise is additive to pitching new business. Candidates should highlight product knowledge and highlight why they are sales-inclined.
4. Business school
PE clients dedicate significant HR resources to on-campus recruiting at top MBA programs and a limited amount of undergraduate programs. Warning: I advise against going to business school to transition into PE unless it is in the top 10 programs.
5. Buy-side sales
If you have been working at an asset manager, then your Rolodex may not be transferable, but the sales process doesn’t differ significantly. These candidates should outline their accomplishments and highlight relationship-management experience, not just sales, as PE fundraising is cyclical.
If you do not have the above backgrounds, here are some non-traditional ways to draw attention to your candidacy.
7. Chartered Financial Analyst
The CFA exams are a tough series of tests, and employers see this as a demonstration of intelligence and discipline, two enormously important traits for PE IR.
8. PE internship or operations
Even if you are a year or two out of undergrad, marketing yourself to PE firms as an intern suggests that you are an inexpensive resource, versatile and willing to learn from the ground up. Firms often like training their own talent and promoting from within anyway.
If you have an accounting, finance or operations background, then I suggest you find a smaller PE firm where the ops functions coordinate with the marketing functions, for example, by providing support for subscriptions, redemptions and performance stats. This can be a great launching pad to network and build relationships internally and transfer from a related department into IR.
Ultimately, the most attractive PE IR candidates are the ones who have sales DNA, can articulate complex concepts and demonstrate that they really want the job.
Alexis DuFresne is a senior recruitment consultant with a focus on front-office roles in the asset management search practice at Whitney Partners and the former director of investor relations at Harbert Management Corp. (HMC), a $3bn alternative asset management firm.
Photo courtesy of the author