Private Equity Lateral Hiring: How to Make the Leap into Even Bigger Deals

As soon as you win a coveted private equity offer and start working, another thought may enter your head: Why not get an even better PE offer?

After all, people move around within investment banking, tech, and other industries all the time; why stay at one firm if you can win a better offer somewhere else?

Unfortunately, lateral hiring in private equity falls into the dual categories of “easier said than done” and “look before you leap.”

It is possible, but it is more difficult than moving around within IB, and it won’t necessarily help your career to the same extent.

But before going into the process details, I want to narrow the definition of “lateral hiring” first:

Private Equity Lateral Hiring: Why Switch Firms?

For purposes of this article, “lateral hiring” means that you have a full-time role at an established private equity firm, and you now aim to recruit and win an offer at another PE firm.

The term can also refer to moving into PE from different industries (e.g., investment banking or consulting), but we’re using a narrower definition here because other transitions follow different processes.

The most common reasons for switching PE firms are:

1. Bad Fund Performance, Lack of Deal Flow, or Poor Fundraising – These factors are usually related because deal flow depends directly on the availability of capital to do deals, and only funds that perform well can keep raising capital.
2. Lack of Advancement Opportunities – The firm is too top-heavy, with Senior Partners who are the equivalent of Roger Sterling or Bert Cooper on Mad Men (drink or read the news all day and collect all the profits). And no one below them wants to leave.
3. Office Politics or Poor Culture – There’s rampant favoritism or nepotism, management leads by fear, or turnover is very high due to unrealistic expectations.
4. Below-Market Compensation – Self-explanatory.
5. Industry, Deal Type, or Geographic Limits – You want to work in SF rather than NY, or you want to focus on tech growth equity deals rather than industrial buyouts.

If your motivation for switching firms is not on this list, you should think again because you’re probably doing it for the wrong reasons.

For example, if you’re switching firms to get a better “work/life balance,” you’re barking up the wrong tree because private equity hours are always intense.

Sure, middle-market funds offer better hours than the mega-funds, but you will still be working a lot more than in a normal job.

The same goes for issues like “too much portfolio company monitoring” or “carry takes too long to realize and might be worth less than expected” – yes, all fair points, but these are prevalent across most PE firms.

If these are your main concerns, you should consider switching industries and going for something on the lending side or a “corporate” role instead.

The Most Important Points About Private Equity Lateral Hiring

I would summarize it like this:

• Firm Motivations: PE firms typically make Associate-level lateral hires to replace anyone who quits or gets fired; at the VP level and above, firms make lateral hires when they raise larger funds or expand into new industries and need to execute more deals.
• Associate Process: You normally want to work at one firm for at least 1 year before switching, and ideally more like ~2 years. You should prepare for something resembling the off-cycle recruiting process, including all the networking and outreach. Practice fit/technical/deal questions and case studies, and know the strategies and portfolio companies of the firms you interview with like the back of your hand. Make sure you can accept potentially losing a year and forfeiting some/all of your bonus, depending on the timing and firms involved.
• VP Process: Prepare to discuss all your deals extensively, including sourcing, execution, and how you added value. Case studies could come up even at this level, so you still need a solid grasp of the technical side. You probably want to make this move earlier rather than later (just after promotion to this level). Dealing with bonuses and carried interest is tricky, and you should be prepared to give up at least something.
• Process Commonalities: Expect an extended interview process that takes 2 – 3 months, along with weeks/months of networking and outreach before that. A good result might be winning an offer in 3 – 6 months, but you may need closer to 1 year. Expect multiple rounds of interviews, a case study, and some type of “Superday” where you go on-site to meet multiple senior-level staff.
• Change One Major Factor at Once: For example, if you’re on the healthcare team of a mega-fund in NY, it’s reasonable to target middle-market funds in NY that also focus on healthcare. But it will be much tougher to switch to an industrials PE fund in Kansas City or a tech-focused growth equity firm in San Francisco. The main factors are firm/fund size, geography, and industry/deal focus.
• Look Before You Leap: It is very difficult to find an “exact match” in the PE lateral hiring market, so even if you dislike your current firm or position, switching firms may not be the right move. Moving up-market is always difficult because of the extra competition, but moving down-market has also become tougher because “replacement hires” are less common, and more professionals at large funds are trying to make the same move due to the lack of promotions (and questionable compensation promises).

The Process: How to Make the Switch

The typical process for a VP-level candidate who interviews with ~4 firms might look like this:

• Month 1: Begin contacting headhunters at the top firms, ideally via referrals, and reach out to contacts on LinkedIn, including alumni and former co-workers. Make a list of firms that meet your criteria and set up news alerts for expansions and new fundraising activity so that you can focus on the highest-probability openings.
• Month 2: Continue the outreach and find a few firms that are hiring. Review your deal experience, hone your story, and do some initial screens with Firms A and B.
• Month 3: Keep speaking with Firms A and B and move on to interview rounds with the VPs and Principals. Both processes fizzle out because the firms decide not to hire anyone for now. A headhunter introduces you to Firms C and D.
• Month 4: You go through initial screens with HR for Firm C, but they ghost you and stop responding. Firm D takes forever to respond to your first messages, but they become more engaged by the end of the month.
• Months 5 – 6: You go through multiple rounds of interviews with Firm D: Round 1 is with HR, Round 2 is with another VP, Round 3 is with a Principal, Round 4 is with another Principal, and then they give you a case study. Each round is 1 – 2 weeks apart.
• Month 6: You submit the case study, which you had a week to complete, and then you present it in-person to one Principal and one MD. You do well and get invited to a “Superday,” where you meet 3 of the Partners and win the offer… conditional on reference checks, which is a common requirement at this level. They also ask about your compensation expectations, so you cite “market norms” from recent reports.

As an Associate, this process might be a bit faster and require fewer in-person meetings, especially if it’s an “emergency replacement hire” situation. You’ll still have to convince at least some of the Partners, but you may not go through a full Superday.

Also, you’re more likely to get something like a timed, in-person modeling test in addition to or in place of the open-ended case study described above.

Lateral Hiring Preparation: Resumes, Networking, Headhunters, and Interviews

This site already has articles on private equity resumes, experienced banker resumes, networking, private equity headhunters, private equity interviews, and private equity case studies, so I don’t have much to add to the core points.

I will just note some differences for lateral hiring:

• Resumes: I recommend going in-depth into 2 deals at most because it will be very difficult to remember all the numbers for 3, 4, or 5+ deals. You can use shorter entries for the others, but try to center your experience and deal discussions around 2 main transactions. I do not recommend a separate “Transaction List” page for the same reason. If they want to see your full transaction list, let them request it.
• Headhunters & Networking: Most PE professionals do not have the time/patience for “informational interviews,” so contact them and get straight to the point (your experience, what they’re looking for, and if you would be a good fit). Headhunters still have power, but less so than in on-cycle recruiting; treat interactions with them as first-round interviews and be very specific about “The One Factor” you want to change.
• Interviews: All standard IB and PE interview questions are fair game, but expect the questions to shift to your deal experience as you move up; they shouldn’t really be asking a VP to walk through a DCF. Knowing your deals inside and out and understanding the firm’s strategy and deals are both crucial, and so is creating a convincing story for why you want to switch firms now (see below).
• Case Studies: Associate lateral hires are more likely to get timed, on-site case studies that are effectively speed tests, while VP candidates are more likely to get open-ended, take-home case studies that are more about presentation skills. It’s still worthwhile to practice both, but divide your time 70% / 30% based on your level.

We have an article on how to tell your story for buy-side roles, and most of that still applies.

You should spend less time on your university, skip internships, and focus on what you’ve done in your current PE role.

You should also prepare to answer common objections about your motivation and timing:

“Why Are You Leaving Your Current Firm?”

This is the key question in any lateral PE interview, and the tricky part is that you cannot necessarily cite your real motivation for leaving.

You obviously can’t say, “They didn’t pay me enough” or “The CEO is having an affair with the VP and making poor decisions,” but even something like “culture” is not a great idea because it’s difficult to explain without coming across in a negative light.

My advice is to cite something neutral and objective that you can back up with external data, such as a lack of fundraising or deal flow, or a desire to switch industries, deal types, or geographies.

Whatever you say, follow up by flipping it around into a positive about the firm you’re interviewing with, such as by citing the new, X% larger fund they just raised, which should result in a lot of deal flow over the next ~5 years.

“Why Did You Wait So Long to Leave? / Why Are You Leaving So Soon?”

Even once you’ve explained why you’re leaving, they may follow up by asking about the timing.

For example, if you started at your current firm as an Associate, got promoted to VP, and waited for a total of 5 – 6 years to switch firms, “Why did you wait so long?” is a reasonable question.

The best approach is to state that the job initially went well, but something major changed within the past 1 – 2 years that led you to this decision (e.g., a new fund that fizzled out or did not meet expectations).

If you’re an Associate leaving after ~6 months (or even ~1 year), you’ll almost certainly get the “Why are you leaving so soon?” question.

Leaving at this stage suggests you might be a job hopper or didn’t know what you wanted the first time around.

It’s probably best to go with a “The advertising was misleading” response.

For example, you researched the firm, spoke with staff there, and were sure they focused on turnarounds of undervalued industrial companies, which matched your interests perfectly.

But when you started working, it became much more of a standard LBO execution job, with little focus on turnarounds, despite the firm’s previous track record.

This might have happened due to market shifts, LP pressure, fundraising issues, or a mix of all of the above.

You could potentially cite something like poor deal flow, but this isn’t necessarily a great idea if you’re leaving in under 1 year, as that’s not enough time to assess it fully.

Avoid citing personal reasons, such as being close to Significant Other X in City Y, because they might wonder whether you’ll switch firms again if your personal life changes.

Final Thoughts on Private Equity Lateral Hiring

The most important point here is the “Look Before You Leap” one.

In fields like investment banking, it’s not a big deal to jump between different firms; people are always quitting and getting fired, and banks need headcount to replace them.

Also, you don’t give up too much by switching firms because super-long-term compensation like carried interest does not exist.

But in private equity, “replacement hiring” is less common as you move up the ladder, and the compensation and promotion structures disincentivize frequent job switches.

So, if you’re leaving for something that is not an exact match for what you want, you should probably think again.

And you should consider whether your real goal is to change firms or change industries  because the answer to many common complaints is “Take a chill corporate job.”