Darren Herft's Top Tips for Getting Started in the Private Equity Space
If you've been thinking about getting involved in the private equity space, you may assume that it's an exclusive club for ivy league graduates, wealthy investors or veteran bankers.
From interesting social work to huge financial returns, private equity seems to be an incredibly attractive career path many involved in finance aspire to.
It is often noted that the most common way to get involved in the private equity space is through investment banking. Those working in finance often move into private equity because the industry offers many opportunities.
According to Australian entrepreneur Darren Herft, who has been featured on digital news platforms for his insights into private equity, this isn't always the case.
"The private equity arena offers competent graduates, accountants, and engineers a chance to get involved in a meaningful and thrilling career path," says Herft.
Private equity firms are always looking for the most experienced candidates and this search for seasoned prospects certainly does make entry into private equity difficult for some. With that, Darren Herft acknowledges that a linear path into private equity would be challenging for most out of school, but there are exceptions.
Herft says graduates who have demonstrated experience with financial modeling at reputed investment banks with a proven track record for success make for excellent candidates.
According to Herft, while some graduates may break into private equity by being recruited, those opportunities are exceedingly rare.
What makes private equity different from other industries is that private equity firms aren't looking to train graduates. They would much prefer to recruit graduates who already have consulting or banking experience under their belt.
Darren Herft says that while business graduates, for example, are desirable candidates, they should gain some experience in finance to acquire a competitive edge. Private equity firms look for candidates with advanced working knowledge of finance and a proven track record of success.
One factor that may be on the side of new graduates is their age. "Age plays a factor in the recruiting process of top private equity firms as they are looking for younger people to work for them and most graduates fit that criteria."
For graduates who want to further set themselves apart and increase their chances of being recruited by a top private equity firm, Herft recommends obtaining an MBA from a renowned institution.
He says, "Those looking for senior positions within top firms should remember that an MBA is often a prerequisite for consideration."
Recruiting in private equity firms isn't always rigid, however. Many firms acknowledge that candidates from other career paths have transferable skills that could benefit them in the private equity space.
The Harvard Business Review blog reported in 2021 that HBS alumni who came to business school from nonprofit and chemical engineering backgrounds were able to seamlessly transition into the private equity and venture capital space.
Networking is also a critical part of getting into a top private equity firm. The graduates mentioned in the Harvard Business Review would ask at the end of each valuable conversation - "Who else should I be talking to?" and "Would you be willing to make an introduction?"
For those who want to get started in the private equity space, Darren Herft lends some valuable advice: "It is a highly competitive market. My advice to undergraduates would be to obtain knowledge of finance and investing as it will help them gain an edge over their peers."
"Aspiring candidates must be prepared to fail. Even after rigorous preparation, they might not land their desired position or firm."