What is a PE internship?
A Private Equity (PE) firm uses capital raised from investors to buy and sell companies for a profit. PE firms increase the value of a portfolio company by improving operational efficiencies and/or employing financial engineering techniques. PE firms typically pool investor contributions into specific funds with investment criteria based on, but not limited to, geographic location, industry, and/or target company size.
An internship in PE is a 3-to-6-month period of temporary employment. Interns assist investment professionals and actively engage in all stages of the investment process. Interns are also involved in the company’s business development and participate in marketing activities. Interns are typically required to work independently as well as demonstrate an ability to collaborate with co-workers and external professionals.
Typically, PE internships are not advertised openly because most do not follow the rigid hiring process used by most bulge bracket investment banks. Furthermore, PE internships are less likely to convert to full-time offers. However, they are valuable ways to gain financial industry experience and are a key stepping stone in securing a subsequent summer internship at a bulge bracket investment bank.
Almost every large private equity firm has an internship program for undergraduate students. These programs are often highly structured and intensely competitive. Internships at mid-market and boutique firms tend to be much less structured and follow a less rigid recruiting process. Smaller firms will only offer unpaid internships on a rolling basis.
Key Learning Points
- A PE internship is a 3-to-6-month temporary work assignment typically undertaken by undergraduate students with an interest in pursuing a career in finance
- Recruiting for PE internships depends on the size of the PE fund – larger funds tend to have formal, rigid programs and recruiting while internships at smaller funds are much more informal
- PE internships are less likely to convert to a full-time offer than a typical investment banking internship
What Does a PE Intern Do?
PE firms come in all shapes and sizes, so a “typical day” is impossible to define. Generally speaking, you will have responsibilities similar to those of an analyst or associate at the fund. These are, but are not limited, to the following:
Interns are usually given the less desirable tasks on the list, such as KPI reporting or markets/news monitoring because they are the lowest in the pecking order. This is especially the case when interning with a smaller PE firm with a lower head count.
What to expect in a PE Interview
PE firms typically look for candidates interested in business strategy, a particular sector or geography, and/or M&A execution. PE firms hire students with strong academic backgrounds, but cultural fit, technical ability, and critical thinking skills are also very important. Expect detailed interviews, and most of the interviewers will be experienced ex-consultants or bankers. The typical questions asked in consulting and investment banking interviews are all fair game. Therefore, it is very important to research and prepare for PE interviews using resources such as the Private Equity Associate, which is a comprehensive course that has everything you need to succeed as a PE Associate. It includes an example PE interview with suggested answers and feedback from a former PE partner.
How to Optimize a PE Internship Experience
Most PE internships do not convert to full-time offers, therefore you should focus on getting the following out of it:
- Test out the finance industry for fit
- Gain good resume experience, especially if you are on a deal that closes while interning
- Recommendations and referrals – PE professionals tend to have good contacts within most investment banks and are likely to make introductions or referrals
- Improve your skills
Concerning the last point, the larger, more structured internship programs will generally offer training. At smaller companies, it may be prudent to use downtime to reinforce your knowledge of accounting, financial modeling, or whatever specific focus the PE fund in question has from materials available on previously completed deals. It could be interesting to take a portfolio company, model the financials, and compile industry and news reports in your downtime.
Lastly, the best way to optimize your experience on a PE internship is to generate goodwill by making everyone else’s life easier. Come to work on time with a positive mindset and willingness to do the tedious grunt work. Ensure all deliverables are always double-checked, and try to anticipate tasks that might save everyone else time.
Download the accompanying document for a PE interview cheat sheet and a template for a cold-call email.