London Private Equity Recruiting: How to Conquer the Process and Win Offers

We’ve previously covered the private equity recruitment process in the U.S. – both the on-cycle and off-cycle versions.

The on-cycle version in the U.S. is a fast and fairly insane way to recruit for a job, particularly if you want time to think about the job before you start working.

I had never thought about covering European recruiting because I didn’t think there was much of a “process” there.

But that’s not quite the case.

It is more flexible and slower-moving than the U.S. on-cycle process, but there are recruiting windows and timelines.

To get the full story, I recently spoke with a reader who went through the process in London, won a private equity offer, and has now interviewed candidates for these roles:

London Private Equity Recruiting: Key Differences, Headhunters, and Candidates

Q: Can you start by telling us some of the key differences in the European process compared with the one in the U.S.?

A: Sure. First, to be clear, I will focus on the process in London for entry-level hiring (i.e., for Associate roles).

There may be differences in the continental European countries and smaller financial centers, and I would assume that the process is even less structured there.

In short, IB Analysts here leave for private equity after one (1) year on the job at the earliest, and it’s most common to have at least 18 months of full-time work experience.

Some Analysts may also stay in banking for closer to ~4 years and get promoted to the Associate level before moving into PE.

Instead of interviewing 1-2 years in advance, they tend to interview 3-4 months before the PE job begins.

The key “windows” are September – early December and January – April, and the recruiting process within those windows might take anywhere from 3 days up to 4-6 weeks, or longer. There are also opportunities outside these windows (more so than in the U.S.).

Headhunters are equally as important here, and you need to build relationships with them as well.

PE firms still recruit primarily from bulge bracket and well-known elite boutique banks, but it is possible to break in from a smaller firm, as in the U.S.; they’re also slightly more open to candidates from unconventional backgrounds.

Q: To clarify, you’re saying that the on-cycle process in which you interview for the job 1-2 years in advance does not exist in London?

A: Apart from 1-2 exceptions in the market, this is correct: it does not exist in the same way.

European funds understand the major problem with that approach: if you give someone a job offer 1-2 years before they start, they won’t be motivated to gain experience and improve their skills in the time in between.

Also, it’s too difficult to assess candidates with limited knowledge and deal experience. There’s less pressure related to the timing of MBA programs here as well.

Quite a few larger firms here have Private Equity Analyst programs for students right out of university, but that’s different from the IB to PE transition.

Q: You mentioned that headhunters are nonetheless still very important in London. Why?

A: As in the U.S., headhunters contact Analysts in specific groups at the large banks, but you can also reach out to them as a candidate.

Some headhunters even get to know students before they graduate, and it’s common to get referrals from candidates who know the younger students.

And as a university student or recent graduate here, it helps to get headhunter referrals from alumni who have already been through the process.

It’s crucial to keep the dialogue open and check in every month – or even up to twice a week if things heat up.

Recruiters look for the same qualities they do anywhere else: great communication skills, a well-defined set of firms and strategies you want to pursue (including names of specific, potential funds), and solid deal experience.

Q: What are some of the top London private equity recruiters?

A: Some of the top firms, among others, for London-based roles are KEA Consultants, Blackwood, Dartmouth Partners, PER (“Private Equity Recruitment”), Walker Hamill, and Altus.

Several divisions of well-known U.S.-based recruiting firms are also active here.

KEA Consultants, Dartmouth Partners, and Blackwood handle most of the mega-fund PE recruiting in London, but some other diversified recruiting firms and boutique firms also have great relationships.

Funds generally ask recruiters to “rank” candidates by tier, and the highest ranks can occasionally be recommended for an accelerated process.

Q: On that note, which types of candidates are competitive for PE roles in London?

A: The criteria are similar to the list in the U.S.: your bank, group, deal experience, university, personality/cultural fit, extracurricular activities, and academic results all matter a lot.

One difference is that the banks have slightly different reputations in Europe – for example, Rothschild is viewed as closer to an elite boutique here, so your chances of winning a PE role coming from Rothschild are higher.

Your deal experience also matters more because you’ll actually have legitimate deal experience by the time you recruit for PE roles!

Anecdotally, it seems like more consultants get into private equity here, and some firms even target 50% consultants and 50% bankers; most of the consulting hires come from the top three firms (“MBB” or McKinsey, Bain, and BCG).

In terms of industry and product groups, any industry team with good deal flow works, but M&A and Leveraged Finance have an advantage over ECM and DCM (as usual).

If you’re worried about getting pigeonholed because you work in a group like FIG or Oil & Gas, it depends on your bank’s reputation and how well you can spin your experience.

If you’re in FIG at a top bank, such as GS, MS, or Evercore, you can probably recruit for non-FIG PE roles.

But if you’re at a lower-tier firm, it will be harder to move from a specialized group into a generalist PE role.

If you have experience with deals involving standard, EBITDA-driven businesses, that can also help your case.

Finally, as with investment banking recruiting, languages are important in private equity here.

If a firm is interviewing two candidates with similar profiles who perform equally well, they’ll almost always pick the one who knows the more useful European language(s). Certain teams also recruit for specific language requirements from the start of the process.

London Private Equity Recruiting: Interviews and Case Studies

Q: Thanks for explaining that. You described the typical start dates for the recruiting process and the time it normally takes, but what about the process itself?

For example, do firms start by giving you a case study or modeling test, or do they save it for a later step?

A: Round 1 usually consists of a coffee chat or a similar, informal conversion.

In Round 2, they’ll usually give you a 1-hour modeling test where you have to build a relatively simple LBO model from scratch (e.g., one on a cash-free debt-free basis) or complete an existing template.

You might also take aptitude tests similar to the ones given at assessment centers.

In Round 3, you’ll go through multiple interviews with professionals at different levels, such as VPs, Principals, and Senior Associates. They’ll test a mix of technical, fit, and deal experience questions.

In Round 4, a few more people will join in and ask similar questions to “plug the gaps.”

Next – in Round 5 – you’ll get a case study with an information memorandum or other materials, and you’ll have to complete a model and make an investment recommendation.

You might have anywhere from 12 hours to a few days to work on it and present your findings.

If you pass this case study, you’ll start meeting the firm’s Partners in 1-on-1 interviews; you might also meet for lunch or drinks.

In the COVID era, I have heard that this entire process takes place over Zoom. I’ve also heard that firms tried “socially distanced walks” for a while (before the restrictions removed that possibility).

Q: We’ve covered private equity interviews extensively before, but what advice would you give about case studies? Are there any differences for London private equity firms?

A: The case study is the most frequent eliminator of candidates here.

In many cases, we get models that are mechanically correct, but which have wildly unrealistic assumptions, such as 10x EBITDA growth over ~5 years for a mature company.

You need to show your investment judgment and knowledge of the business – and you have to think through reasonable numbers in different scenarios and support them with data.

Candidates tend to get lost in small details that don’t even affect the recommendation rather than evaluating the business, market, and value creation levers (for more, see our coverage of private equity value creation).

There’s also a massive difference in “case study quality” among different candidates – far more than with their responses to interview questions.

So, my advice is to practice not just the financial modeling but also your skills in business evaluation, using companies and industries you’re interested in.

Unlike the rushed U.S. on-cycle process, you can take your time and get more practice here – so there’s no excuse to be underprepared.

Q: Some candidates also struggle with deal discussions, and some IB Analysts enter the process without having closed any deals.

How important are closed transactions?

A: They help, but they’re not the most important part of your profile; interviewers just want to see that you’ve worked on entire deals from start to finish.

They know that if a deal makes it 95% of the way but then falls apart at the last minute, it had nothing to do with the junior team.

If you’ve only worked on pitches, that could be a problem – especially if you’re recruiting after a few years on the job.

But if you’ve had real deal experience, you can prepare using the points suggested on this site before:

• What does the business do at a high level?
• What are its financial stats?
• What are the investment highlights and risks?
• How did you build the model, and what were the key drivers?
• How did you contribute to the deal?
• If you had been the buyer or investor, would you have done the deal?

London Private Equity Recruiting: Plan B Options and Other Tips

Q: One common complaint about the U.S. on-cycle process is that you can’t do much to improve your chances because your fate depends heavily on your university and current bank.

Is this also true of the process in London?

A: You can do a bit more to improve your chances here, such as networking with headhunters early on and getting referrals from contacts at other banks.

Also, since you could potentially recruit for PE any time within 1-4 years of your start date, you have a lot of time to gain better deal experience and improve your technical skills.

There are still some limits because your bank’s reputation and university’s quality do factor in, but it’s not quite as deterministic as the U.S. on-cycle process.

Q: If you go through this entire process but do not receive an offer, what should your next steps be?

A: It depends on why you did not receive an offer.

If you didn’t win enough interviews because your bank’s reputation wasn’t good enough, interview around and move to a larger bank as a lateral hire.

If your university wasn’t good enough, consider a Master’s in Finance or a similar program at a top university.

If you didn’t have good enough deal experience, wait a year, work on more deals, and apply again.

It’s not “one shot and you’re done” here – that could happen only if you’ve interviewed with every private equity firm in London and been rejected everywhere, which is almost impossible.

Some people even apply to the same firm twice and win an offer the second time around, if their profile has changed for the better.

The industry tries to push for a diverse range of backgrounds, so the issue might also be related to not “selling yourself” effectively.

Finally, remember that there is a lot of luck involved as well, so don’t draw hasty conclusions from only a few interviews.

Q: Do you have any additional tips or points that we haven’t covered?

A: Yes. First, seek out mentors who have been through the process. People message me for advice on LinkedIn all the time, and I try to respond to everyone I can.

Also, you need to treat private equity recruiting like a second full-time job.

That’s the biggest difference between candidates who succeed and ones who do not: treating recruiting like a full-time job vs. a hobby.

You might occasionally get lucky with the “hobbyist” approach, but if you want to maximize your chances of success, you need to use the “full-time job” approach.

Q: Great. Thanks for your time and for sharing all these tips!

A: My pleasure.

Want More?

You might be interested in:

• Off-Cycle Private Equity Recruiting: How to Win Middle-Market Private Equity Offers
• What to Expect in Real Estate Private Equity in London When You Join Right Out of Undergrad
• Private Equity Value Creation: Equally Viable Alternative to PE Deal Teams?