Raising capital and finding outstanding companies in which to invest is the lifeblood of the private equity business. Dealmakers are the ones who make it all happen.
Dealmakers have the extensive personal network that connects them to sources of capital. They meet with sources of funding including major institutional investors, investment banks and hedge funds. Once that’s secured, the dealmakers try to buy private companies at the best possible price and terms. Their goals is to obtain enough capital and leverage at a low enough rate to make the deal profitable.
In many private equity firms, the dealmakers are the founding partners in the firm. So clearly, nothing gets done until the top guys sign off on it. They may not be sitting at the table on a day-to-day basis, through lengthy negotiations (unless it’s an extremely large deal), but they will make sure that the transaction aligns with the firm’s overall objectives.
Good connections have their rewards
Some dealmakers may have started in an entry-level position at a private equity firm, such as at the analyst or associate level. But many other dealmakers started their own firms after years of working elsewhere. Generally speaking, a dealmaker position at a private equity firm is generally created or filled by a senior professional who brings 10 or more years of experience at a big investment bank, or brings significant clients and potential deals to the new firm.
It also helps to have a great network of contacts and to go to the right schools. Approximately 11% of the class of 2006 at Harvard secured positions in private equity, according to school officials. The Ivy League schools have long been the schools of choice for those in private equity. Stephen Schwarzman, founder of the Blackstone Group, for example, is a Harvard Business School grad. Henry Kravis of Kohlberg Kravis Roberts went to Columbia Business School. In fact, the head of MBA admissions at Harvard is quoted as saying more than 27% of the senior leadership of private equity firms are graduates of Harvard Business School.
Senior bankers who work together on major deals at investment banks often form their own private equity firms, as well. The founders of Kohlberg Kravis Roberts & Co. all worked together at Bear Stearns, where they worked on some of the earliest leveraged buyout transactions. The two founders of The Blackstone Group, L.P., Peter G. Peterson and Stephen Schwarzman, previously worked together at Lehman Brothers.
Skills Needed
What type of skills are required for a dealmaker-level position? In looking at some senior-level private equity jobs listed on JobSearchDigest.com, we see a firm looking for a Vice President of private equity. This person would evaluate potential deals, analyze cash flows and returns, write investment recommendations and discuss all this with the General Partners of the firm. This position requires strong writing, communication and analytical skills, 5 or more years of related experience (in this case, in the Asian private equity markets), and an ability to work well within a team environment.
In another example, a London-based private equity firm is looking for a senior professional to head up their private equity team. This individual would lead the search for investment opportunities, originating deal flow. He or she would need a solid understanding of how to structure private equity funds, plus a stellar track record in private equity. This person would be part of the investment committee for a global asset manager.
As you can see, when it comes to a senior position in private equity, you will know when you are ready. Chances are, you will have been working in the industry for five or more years and have developed an extensive network of connections and prospects.
Next time, we’ll look at the dealmaker jobs in the venture capital industry, a subset of private equity.
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