Wednesday 23 March 2011

Private Equity Recruitment

I attended a seminar recently where Deborah Hannam presented to students on private equity sector recruitment. Deborah is head of private equity at The Rose Partnership and a member of the Institute’s Advisory Board.

http://www.rosepartnership.com/people.asp?pid=25

Private equity is certainly highly competitive and a difficult sector to get into but can be rewarding, both financially and intellectually, for those fortunate enough to join a successful firm.

It is interesting firstly to put the industry into perspective. Simplistically, private equity firms buy businesses and endeavour to sell them for a profit. To do this, they need to have identify the right businesses to buy, analyse the company in detail, decide on an appropriate valuation and if they are successful in bidding for the company (often this is in a competitive situation) they need to work with management in improving the performance of the company over the holding period and sell the company, hopefully for a handsome profit.

Private equity is not about sitting behind a spreadsheet and analysing numbers. Yes, financial skills are important but private equity firms need investment professionals who can build relationships at all levels (from board executives to managers of SMEs), exercise sound judgement on deal screening and investment decisions and very importantly to be highly passionate about the industry.

In her presentation, Deborah pointed to the following professional and personal qualities which PE firms look for in recruitment:

• Outstanding academic, career and personal achievements
• Sticking power
• Intellectual curiosity
• Depth of thought / analysis
• Strong judgement
• Logical and analytical mindset
• Conviction and courage
• Humility and ability to communicate with people at all levels

Private equity firms recruit people who will stay with the firm for the long haul. They want professionals who have the qualities to one day be partners of the firm.

If you are interested in moving into a PE firm and think you have the qualities in order to be successful, how can you get into the sector?

In her speech, Deborah Hannam drew on her 21 years of experience in executive recruitment to suggest some ways to access this opaque but lucrative industry. Firstly, you should know the industry inside out, having an understanding of the theoretical framework, the players in the market and industry dynamics. Noting that most PE firms do not recruit actively at any level except pre-MBA candidates, Deborah highlighted it is critical to be pro-active when looking to enter PE. Prospective private equity professionals should research the market thoroughly to look for any niche opportunities. For example, a firm may be focusing principally on renewable energy opportunities and may be looking for people with industry experience, not necessarily from a PE background. Other proactive measures include acting pre-emptively to present an investment to a PE fund and to write a case study on a particular acquisition or fund raising.

However, as always, networking is key and budding professionals should trawl through their rolodexes thoroughly to explore all avenues into the market.

If you have your own experiences to share, we welcome your comments to this blog. Also, if you are interested in recruiting any London Business School students for a permanent role, internship or for a student project, please contact our Career Services department at tlaurinaitis@london.edu.

Hans Holmen
Executive Director
Coller Institute of Private Equity

Thursday 3 March 2011

LBS Team Wins 11th Annual Wharton Buyout Competition

Blog by Brandon Parry, MBA 2012

Ten days ago, two teams traveled to Wharton, in Philadelphia, to represent London Business School at the 11th Annual Wharton Buyout Case Competition. The event, which hosts teams representing top US business schools including Wharton, Columbia, Harvard and Kellogg, revolved around a hypothetical private equity buyout case. Four days prior to the competition, participating teams were emailed something very simple in the middle of the night: the name of a publicly traded firm and its most recent 10-K filing. This year’s “target” for the competition was GameStop (NYSE: GME), a specialty video game retailer operating more than 6,000 stores worldwide. The basic question each team had to address was: “would you undertake a private equity buyout of the target?” The required output was a presentation – to be delivered in no more than 10 minutes before a judging panel of private equity professionals – laying out the full investment case, including industry analysis, key risks and potential returns.

Both teams sought to represent the best of LBS: a broad, but complementary, mix of backgrounds bringing rigorous analysis and keen insight to bear on the question. My team was comprised of an Italian investment banker (Matteo Masi), an American real estate private equity investor (Ryan Brewer), an Irish private equity associate (James O’Gara), an Italian management consultant (Matteo Luoni) and an American venture capital associate (me).

During the week of preparation, classes came and went, secondary to our primary focus: understanding everything there was to know about video game retailing, and GameStop in particular. Teams read critical industry reports, built financial projections, analyzed LBO returns, and contemplated the intricacies of the GameStop company charter to assess the buyout’s feasibility. After slightly less than 72 hours, we submitted a 45 page slide deck, with only seven minutes to spare until the submission deadline.

Proud of our work, but tired, we went home to rest for eight hours before heading to the airport in the morning. On the plane, we developed our presentation strategy, knowing we would need to rehearse for several hours in order to deliver the volume of content we wanted to cover in the allotted minutes. Upon arriving at the hotel, we rehearsed and rehearsed, ensuring we crisply delivered our investment thesis: that GameStop was attractively valued at the current price, but that industry headwinds and a dearth of tangible value creation alternatives made a take-private transaction unattractive.

The competition itself was structured in two stages, a first in which the eighteen participating teams were lumped into groups of six, out of which one would be chosen to advance to the final. To avoid any judging bias, team names were removed from the presentation and teams did not announce where they came from until the end of the day. Each team presented their thesis before 2-3 judges, all of whom were active private equity investors. Following the ten minute presentation, the teams were subjected to ten minutes of in-depth Q&A, covering anything the judges were curious about. Our presentation went smoothly (we covered all the content) and we felt we had answered questions well. With that under our belts, we headed into lunch.

Over lunch, the finalists were announced and my team was delighted to be chosen for the final. We would present before all the judges and all the other teams that had not advanced. We also faced an extended Q&A session to ensure in-depth questioning. By this time, our presentation was effectively memorized – the real wildcard rested in the Q&A portion, where judges could pick on any minor detail they wanted. In the final, before about 75 observers, we delivered our thesis and answered questions as they came in volleys from the judges. We walked away feeling we had put on a strong presentation and settled in to watch the final team present, and then await the judges verdict.

The judges returned after approximately 30 minutes of nerve-racking deliberation, during which my team distracted itself by walking around the Wharton campus. They offered high level feedback and suggested teams consider creative options for companies like GameStop, which have real assets but face industry challenges [used “headwinds” above]. Eventually, they announced the winning order – LBS first, the home-team Wharton second and Berkeley third – and our team breathed a collective sigh of relief and delight that a week of hard work had been rewarded.

The announcement was followed by a drinks reception at a nearby brew house; teams were able to thank the judges and received some insightful feedback on the strengths and weaknesses in presentation. Overall, the judges and other teams were highly complimentary of the LBS delegation’s work – many in fact asked for a copy of the presentation by email! Suffice it to say, the teams were both proud of their work and the ability to serve as good ambassadors for LBS abroad.

LBS Team Wins 11th Annual Wharton Buyout Competition

Ten days ago, two teams traveled to Wharton, in Philadelphia, to represent London Business School at the 11th Annual Wharton Buyout Case Competition. The event, which hosts teams representing top US business schools including Wharton, Columbia, Harvard and Kellogg, revolved around a hypothetical private equity buyout case. Four days prior to the competition, participating teams were emailed something very simple in the middle of the night: the name of a publicly traded firm and its most recent 10-K filing. This year’s “target” for the competition was GameStop (NYSE: GME), a specialty video game retailer operating more than 6,000 stores worldwide. The basic question each team had to address was: “would you undertake a private equity buyout of the target?” The required output was a presentation – to be delivered in no more than 10 minutes before a judging panel of private equity professionals – laying out the full investment case, including industry analysis, key risks and potential returns.

Both teams sought to represent the best of LBS: a broad, but complementary, mix of backgrounds bringing rigorous analysis and keen insight to bear on the question. My team was comprised of an Italian investment banker (Matteo Masi), an American real estate private equity investor (Ryan Brewer), an Irish private equity associate (James O’Gara), an Italian management consultant (Matteo Luoni) and an American venture capital associate (me).

During the week of preparation, classes came and went, secondary to our primary focus: understanding everything there was to know about video game retailing, and GameStop in particular. Teams read critical industry reports, built financial projections, analyzed LBO returns, and contemplated the intricacies of the GameStop company charter to assess the buyout’s feasibility. After slightly less than 72 hours, we submitted a 45 page slide deck, with only seven minutes to spare until the submission deadline.

Proud of our work, but tired, we went home to rest for eight hours before heading to the airport in the morning. On the plane, we developed our presentation strategy, knowing we would need to rehearse for several hours in order to deliver the volume of content we wanted to cover in the allotted minutes. Upon arriving at the hotel, we rehearsed and rehearsed, ensuring we crisply delivered our investment thesis: that GameStop was attractively valued at the current price, but that industry headwinds and a dearth of tangible value creation alternatives made a take-private transaction unattractive.

The competition itself was structured in two stages, a first in which the eighteen participating teams were lumped into groups of six, out of which one would be chosen to advance to the final. To avoid any judging bias, team names were removed from the presentation and teams did not announce where they came from until the end of the day. Each team presented their thesis before 2-3 judges, all of whom were active private equity investors. Following the ten minute presentation, the teams were subjected to ten minutes of in-depth Q&A, covering anything the judges were curious about. Our presentation went smoothly (we covered all the content) and we felt we had answered questions well. With that under our belts, we headed into lunch.

Over lunch, the finalists were announced and my team was delighted to be chosen for the final. We would present before all the judges and all the other teams that had not advanced. We also faced an extended Q&A session to ensure in-depth questioning. By this time, our presentation was effectively memorized – the real wildcard rested in the Q&A portion, where judges could pick on any minor detail they wanted. In the final, before about 75 observers, we delivered our thesis and answered questions as they came in volleys from the judges. We walked away feeling we had put on a strong presentation and settled in to watch the final team present, and then await the judges verdict.

The judges returned after approximately 30 minutes of nerve-racking deliberation, during which my team distracted itself by walking around the Wharton campus. They offered high level feedback and suggested teams consider creative options for companies like GameStop, which have real assets but face industry challenges [used “headwinds” above]. Eventually, they announced the winning order – LBS first, the home-team Wharton second and Berkeley third – and our team breathed a collective sigh of relief and delight that a week of hard work had been rewarded.

The announcement was followed by a drinks reception at a nearby brew house; teams were able to thank the judges and received some insightful feedback on the strengths and weaknesses in presentation. Overall, the judges and other teams were highly complimentary of the LBS delegation’s work – many in fact asked for a copy of the presentation by email! Suffice it to say, the teams were both proud of their work and the ability to serve as good ambassadors for LBS abroad.

Tuesday 1 March 2011

The 7th Annual PE Conference; a students perspective

Blog by Pascal Wittet (MBA2012)

“Turning the Corner – Delivering Value over the Next Decade”

Friday 11th February, 5.30am. I quietly crept out of bed so as not to wake my wife. This time of the morning is a shock to my student system but nevertheless I was excited for today would be the culmination of 6 months planning. We had three top class keynote speakers (Johannes Huth of KKR, Vincenzo Morelli of TPG Capital and Olivier Sarkozy of Carlyle Group) and four diverse panels covering both PE and VC. These 26 names had drawn more than 300 plus professionals, alumni, faculty and students to a sell-out event.

6.15am and on the 74 bus I have time to compose a short email to my previous employer. If I’m going to be up at this hour I might as well let somebody know!

8am with final preparations complete, the doors to the venue open and we stand armed with delegate name badges, smiles and directions to the C and three Bs; cloakroom, breakfast, bathroom, brochure.

After a rousing introduction from the Dean, Andrew Likierman, the conference kicked off in earnest. In between fulfilling front desk, ushering and microphone duties I was able catch some of the on-stage action.

One of the keynotes spoke with real passion about the introduction of new regulation (AIFMD) into Private Equity posturing that the reason this regulation was brought in was in part due to the poor perception in which European politicians regarded PE. Whilst the likely cost to PE is still unknown, the sentiment one was left with was that the regulatory burden could have been much worse.

The Emerging Markets welcomed Linda Yueh one of the world class economics professors from London Business School moderating a panel of speakers focusing on areas ranging from South East Asia, to Sub Saharan Africa, to Eastern Europe. While the Fund-raising panel welcomed panellists responsible for raising more than $50 billion over the last 10 years.

One of the speakers, with his dry wit and perfectly timed delivery had the audience in stitches. In taking questions from the audience, his candid responses left no-one in doubt as to where he stood with regard to the economic recovery. He explained that the US Economy had gotten into the crisis because it had over leveraged itself and now was trying to get out of it by borrowing.

The conference was rounded off by the VC Panel, skilfully moderated by Keith Willey, Associate Professor at LBS. It saw much disagreement about the future of VC in Europe with some predicting that London would become the next Silicon Valley whilst others argued that there just wasn’t enough entrepreneurial concentration for it to ever be able to compete with Silicon Valley.

Like any event, it is always difficult to quantify just how successful it was. However, never in my experience has a conference been so in demand that it has had to turn away Corporate Sponsors and panellists. Indeed, with one in every three tickets bought by industry professionals, seven years since first launch, has this become one of the PE and VC industries must attend events?

Monday 31 January 2011

7th Annual London Business School Private Equity Conference

Over the past 5 months our team has worked tirelessly to put together the 2011 London Business School Private Equity Conference.

The 7th annual installment of our conference, titled "Turning the Corner - Delivering Value over the Next Decade" looks to the shift that several major industry players are making from creating value through leverage, to value from operational excellence and core growth at a time when limited partners are diversifying commitments across investment platforms, older vintages are finally being realized, and new investment themes are beginning to be uncovered.

The conference will host some of the top practitioners in the European private equity industry including the following three fantastic keynote speakers:

Johannes Huth; Managing Director & Head of Europe - Kohlberg Kravis Roberts & Co
Vincenzo Morelli; Partner - TPG Capital, Chairman - European Private Equity Roundtable
Olivier Sarkozy; Managing Director & Head of Global Financial Services - The Carlyle Group

In addition, we have brought together a fantastic group of speakers to fill out four panels focused on:

Value Creation - Driving returns through operational excellence
Fundraising - Attracting capital in an uncertain environment
Emerging Markets - Finding opportunities beyond BRIC
VC 2.0 - Funding novel opportunities and seeking out hidden gems

Planning the conference has been a great experience, but also a tremendous amount of work. That being said, it has given each of us a chance to learn quite a bit, not only about how to put together a large-scale event, but also about the current themes in the private equity industry. Further, it has given each of a chance to reunite with contacts within the industry, contemplate where we stand in our career search, and think about how private equity will continue to fit within the world of financial investments.

We are very excited in welcoming these industry leaders to our school and are looking forward to put together what we believe will be the marquee student run private equity conference in Europe.

For more information about the event, you can visit our website at www.londonpeconference.org;
for a direct link to tickets you can visit http://londonpeconference.eventbrite.com/

The conference has been made possible thanks to generous donations by the Boston Consulting Group, 3i, William Blair, the Coller Institute of Private Equity, Capital IQ, and Preqin.