31 Jul 2014
Making Private Equity Public Knowledge
An insider's guide to an insider's industryby Dan MorrellTopics:
As Daniel Sheyner (MBA 2014) tells it, most private equity firms have a very specific target in mind when recruiting: "The best athletes." The highest-ranked investment banking and consulting analysts; the elite. "Goldman Sachs, KKR, Blackstone—they want to be the go-to destination," says Sheyner.
And Sheyner estimates that the industry counts only about 20,000 strong nationwide and hires just a couple thousand annually from a pool of tens of thousands, meaning that firms don't need to do much recruiting outside of the top tier.
These are the conditions Sheyner faced when he first tried to transition to private equity from consulting, looking for more ownership over his work. Because the consulting company he worked for wasn't targeted by private equity, he had to go out and sell himself. "Traditional recruiting channels were just not available," says Sheyner. He also reached out to personal contacts in the industry, spending nights and weekends getting free lessons in industry skills like diligence and financial modeling, carefully building his path to private equity. "I was very fortunate to have good friends the private equity industry who helped me learn what I needed to know," says Sheyner, who went on to work in private equity at Fidelity Equity Partners and Bain Capital Partners before coming to HBS.
The most common question in private equity interviews? "Walk me through your past deals," says Sheyner. An ideal answer shows you know both the facts of the deal and that you have an opinion on the upside and the downside.
To the relief of all private equity hopefuls, Sheyner has now shared those lessons. His exhaustive guide to breaking into the industry, "Private Equity Industry & Interview Guide"—offering everything from sample leveraged buyout modeling tests to typical recruiter questions—was released this summer. (Penned as part of an independent study with Associate Professor Victoria Ivashina, Sheyner received HBS course credit for the book.)
But now, after years spent breaking into private equity and detailing the industries' particulars, Sheyner is leaving it behind. In July, he started his first post-HBS job at Atika Capital Management, a new hedge fund in New York. As private equity has matured, he says, it's become a bit more institutional and hierarchical, making the path to partnership tougher. At Atika, he'll be one of three investment professionals, offering Sheyner the same thing that first attracted him to private equity: ownership. "It's an opportunity to place a really big bet on myself, which is what I want to do."
Class of MBA 2014, Section A