A route into private equity straight out of university
Private equity is typically an industry that junior bankers aspire to after a couple of years in investment banking. Competition for places is stiff – there are 200-300 applications for every available role, largely from analysts and associates at bulge bracket banks looking for an exit opportunity.
Getting into the industry straight out of university is incredibly rare – it’s only recently that even young MBAs have been considered viable recruits for private equity firms. There are a couple of exceptions – 3i is in the process of launching a graduate training programme, but Terra Firma, the UK private equity firm set up by Guy Hands in 1994, has been running a three-year training programme for graduates since 2009.
It’s a notable scheme not only because of its rarity, but because of its scale – since launch, 37 people have been hired into Terra Firma through the graduate programme and the firm only employs around 100 full-time staff.
Predictably, competition for places is tough. Last year Terra Firma received 1,589 applications for six roles, or 265 for every available job. The top investment banks in the UK received an average 38 applications for each position available in 2013.
What’s more, the calibre of graduates applying for Terra Firma’s roles is high – 588 applications came from the top-10 universities, with 159 London School of Economics students vying for places. That’s just the UK, however, with students from Yale, New York University and MIT also applying for the jobs from overseas.
Terra Firma says that its rotational programme acts like a “mini-MBA”, giving its employees a year on the deals team, a year working with portfolio companies and a further 12 months working across investor relations, marketing, legal and the chief investment officer division where they interact directly with Guy Hands. Oh, and Terra firma also puts you through the CFA.
We spoke to Charlotte Broadbent, who joined the Terra Firma grad scheme in 2011 and is now an associate on its investment team. She has a BSc in Geography from the University of Bristol.
It's unusual to go directly into private equity after university (rather than spend a couple of years in investment banking first). Why private equity instead of banking?
I spent a lot of time during university working in a consultancy business, so I was used to and enjoyed project-based work with clients, but also faced the frustration of not always being able to see a project through execution and ideas were often watered down.
A career in private equity offered me the opportunity to do the same sort of strategic and analytical work, but as active shareholders we get closer to the businesses we work with through the investment cycle. This really appealed to me and is significantly different from entering as a banking analyst, where the focus is purely on transaction work.
I didn’t intern in investment banking and not many private equity firms tend to hire graduates straight out of university. Joining Terra Firma as a graduate is completely different from joining a large bank – the analyst classes are quite small and the pyramid is quite steep, meaning you get a lot of exposure very quickly. You join at the bottom, but still interact a lot with the directors, managing directors and even, occasionally, Guy Hands – it’s very hands on.
You have a geography degree. Did this make it any harder to get in?
When I applied to university, I was focused on studying something that I was really interested in but that didn’t narrow my career options. While I didn’t have an eye specifically on a career path in finance, I always had a strong passion for business.
Actually, it became something of a USP and a conversation point when interviewing with the managing directors as I didn’t have the same stock experience as many of the candidates.
Can you run us through the hurdles you have to go through to get a graduate job at Terra Firma?
I went through the application process in January 2011 and I know it has changed a bit since then. My own experience was that after submitting my CV, I had a phone interview with a recruitment agency, which was a screening exercise before being invited into the Terra Firma office for numerical and verbal-reasoning tests. At the assessment day I had six or seven interviews with members of the team, and rather than box-ticking HR or competency-based questions it was much more about the individual.
I was also required to do a case study, presenting an investment opportunity to a managing director, and then a group exercise, which assesses how you interact with your colleagues. Strong academics were a given, so my background and experience became a talking point with some of the senior staff. The interviews weren’t easy, but they were enjoyable conversations about issues that I was genuinely interested in, rather than a pressure-cooker approach.
In the final stage, we were invited to Guernsey to interview with Guy Hands and it was only then that I started to get a perspective on how intense the competition and the diversity of candidates – the age range was from 20 to 30. There’s a big focus on team-work and being the right cultural fit for the organisation, so the more aggressive candidates didn’t end up getting a job. My understanding of the process now is that candidates will complete assessments designed to look at interpersonal and team fit, prior to the assessment centre.
Now you’re in the job, what does it involve?
The first couple of years as an analyst, it’s very much a learning curve, where you get to grips with the fundamentals of the industry, learn your analytical skills, how to contribute to new transactions and understand the portfolio businesses. It’s also a rotational programme, so I spent time in investor relations, focusing on fund raising projects, in the chief investment officer division with Guy and I’ve also worked across the healthcare and renewable energy transaction teams.
The fact is that there’s no real typical day in private equity and that’s what I love about the job. While we tend to hold our investments for much longer than public markets, we are constantly reacting to the demands of changes in our portfolio businesses or a specific transaction.
Also, it’s not just about spending all your time in Excel crunching numbers – I recently spent time in the Australian outback helping cowboys understand how to run budgets.
Hang on, what?
One of our directors took an interim CEO role for Terra Firma’s cattle business, CPC, and needed some analytical support, so asked me to come with him. The firm is going through a five-year operational transformation, so it was really exciting to get stuck into a business and learn so much.