Shadowing Practice: Secrets to Breaking into Private Equity (Insider Tips Revealed!) - Learn English Speaking with Video
Creating lesson...
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Every banker, every banker's mom, and every banker's girlfriend wants them to break into private equity.
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It's one of the holy grails of industries in finance
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and today I'm going to give you guys all the five main considerations
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and things you need to know to break into private equity.
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Now to be fully transparent,
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I haven't worked in private equity myself but back when I was in investment banking at JPMorgan, I spoke with a lot of headhunters to potentially go into the industry.
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I also worked on this particular video with my classmate at Wharton, Fei Tang, and she worked in private equity
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and will be this summer as well and she's also the president of the Wharton PE VC club.
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Alright with that said let's go into the first main consideration on the list
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which is the best background for breaking into private equity.
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First and most common way to break into PE is through investment banking
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and this is because PE firms want people who are able to immediately run deals
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and build financial models without a lot of mistakes or training
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and so I would say over 90% or
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so of all private equity investors at any firm usually have an investment banking background either from an analyst program
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or a post-MBA associate program.
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The second way to break into private equity is by going through management consulting
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but most consultants fit better into operational roles where they work on portfolio companies for a private equity firm
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and so if you want to join the investment team as a consultant you just really need to hustle
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and most of those spots go to the top consulting firms which are McKinsey, Bain, and BCG.
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With all this said there are consultant friendly PE firms such as Bain Capital,
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Advent, EQT, and Hellman and Friedman but as you can see consultants are the minority of the investors at any PE firm.
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The third and lesser known way to break into PE is going straight from undergrad
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but these spots are usually really uncommon and are really only reserved for the top Ivy League programs.
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I know super elitist but what can you do?
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Lastly for those who don't have an investment banking consulting or Ivy League background, what I would recommend is to go for those really really small no-name PE shops
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and build your experience kind of directly in the industry, network hard and kind of work your way up into the better shops.
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Now since you're watching this video I'm guessing you're interested in private equity and if
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so I highly recommend you check out this newly announced PE certificate program being offered by Wall Street Prep
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and Wharton which is where I'm currently getting my MBA.
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This program is sponsored by top firms like Carlyle and KKR
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and it's one of the first of its kind in which a leading business institution, Wharton, is partnering with the top financial modeling trainer Wall Street Prep to create a theory meets practice program.
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Over eight weeks and at a recommended eight hours per week, you can learn at your own pace through this online course that's taught by Wharton professors, Wall Street Prep's PE program director,
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and real estate PE investors including Martin Brand, the head of North America PE at Blackstone, and David Rubenstein, the founder of Carlyle,
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who will cover topics like the PE deal process, valuation, how to think like a private equity professional, and more.
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This newly announced program will run twice a year with the first one going from May 1st to June 25th
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and if you're interested be sure to use my code RARELIQUID
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because you'll get a few hundred dollars off and I'll leave a link to all of this down in my description below.
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Next up let's talk about the recruiting process
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which is specifically more for investment bankers and also some management consultants
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and this can be broken down into on-cycle and off-cycle recruiting.
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The on-cycle process is pretty crazy in the sense that it starts
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and wraps up within the first six months of your job as an investment banking analyst
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so by the time of around December
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or earlier you already know what private equity job you're going to have when your two-year analyst program ends.
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What kicks off the whole on-cycle process are headhunters who are hired by PE firms to just stalk analyst emails
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and somehow get a list of all of them and all the top banks.
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I remember when I was just one to two months into the job at JPMorgan, I somehow got emails from all the top top headhunters asking me if I was interested in on-cycle recruiting.
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Names of the most popular headhunters include CPI, Dynamic Search Partners, SG Partners,
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Henkel, Amity, and Oxbridge and it's super important to actually maintain good relationships with them
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so they can send you the best opportunities.
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Back when I started banking in 2015, it was more normal to get your offer around December
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but nowadays it's closer to September and that's because PE firms are
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so competitive as soon as one firm starts recruiting everyone else starts
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and then the whole process kind of wraps up in one to two weeks.
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Now you might be wondering why PE firms give offers to
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investment bankers who have only worked for a few months
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and that's because they know
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that investment bankers as long as they go through the two-year
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analyst program will be trained monkeys who will be able to crush excel models
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and run deals and so that's why PE firms give out these offers super early
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and try to attract the best talent ASAP.
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This means that investment banking analysts who are just ramping up on their jobs
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and already working demanding hours also need to prepare for recruiting
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and I've heard some horror stories in the past where an investment banking analyst was at a Halloween event
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and then got a notification at night
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that they needed to be at a super day for a
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private equity firm the next day at 8am to go through six interviews and an LBO modeling test.
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All the best and top private equity firms fill most
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if not all of their spots during on-cycle recruiting
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but anything outside of on-cycle recruiting in those first six months after you start your job as an investment banking analyst, the rest of that is called off-cycle recruiting.
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Off-cycle recruiting is a lot more spontaneous and headhunters will continually just reach out whenever new opportunities arise.
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Unlike on-cycle recruiting which is usually quick and painful, off-cycle recruiting is more like slow and potentially painful
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because PE firms can take more of their time to find the best candidate
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because they're not in a mad rush like the PE firms are during on-cycle recruiting.
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If you're If you're interested in breaking into investment banking first in order to eventually make your way to private equity, I've been working extremely hard on my own how to get into banking course.
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I think it's gonna be a great product for anyone interested in banking
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and I'm giving 50% discounts for those who sign up early using my link down in the description below.
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I'm also selling the resume and cover letter that got me into JPMorgan at rareliquidcareers.com.
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Feel free to check those out if you're interested.
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The third thing you have to know for breaking into PE is knowing what you want
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and it's not enough to just know that you want to break into private equity.
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Wanting to work in private equity because you want to date models and drink champagne bottles is not enough and spoiler alert, that doesn't come with the job anyway.
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First of all, of course, you need to understand what private equity is, what the deals are like, and what the business model is and if you want to get more of a beginner's overview of private equity,
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you can check out this video right here.
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It's also important to study the history of the industry.
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So, for example, you should know the fact that private equity firms, when they first came about, created a new financial engineering technique called the leverage buyout
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or LBO and they were able to generate IRRs
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or returns of 30% but nowadays firms are able to generate somewhere closer to 15%
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and that's because there's just so much dry powder and
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so much competition amongst private equity firms for the best targets for investments.
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Once you have a good sense of the job you need
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to know specifically what type of PE firm you're interested in with some of the main components being the investment strategy, geography, industry focus, and firm size.
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Two books I highly recommend are Barbarians at the Gate
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which is about the formation of KKR and the largest LBO in the 1990s
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and King of Capital which is about the creation of Blackstone.
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The more you know what you want
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and the more specific you can be the better the conversations will go with your headhunters and with investors during interviews.
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The next consideration of breaking into private equity is having an investor mindset by thinking and sounding like an investor.
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In investment banking, you actually don't do a ton of critical thinking
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when compared to private equity and my private equity friends always tell me that even though they work less hours, each hour they work is just so much more demanding
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and requires so much more critical thinking that it's usually a lot more tiring.
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But imagine how tired we are.
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Imagine how tired we are.
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This is because in investment banking, once your client sells itself or buys another company, that's pretty much it and you're kind of done.
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But in private equity, once you buy a company, you're stuck with that company for the next five to seven years
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and you better generate some good solid returns and execute on your plans.
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Otherwise, you're not going to generate those returns.
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Your investors will be pissed and they're going to pull their money, which means no money for you.
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In terms of money, we have no money.
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And so while in investment banking, you might have some words on the slide that talk about cost synergies or risks.
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When you're in private equity, you're going to actually have to shut down some parts of businesses at sometimes fire people
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and in general just make really really hard tough decisions.
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Private equity firms put up their own capital into their investments
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and so they have a lot of skin in the game
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and so it's very important for you to think like an investor.
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I need more than I originally asked.
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This isn't a handout club, it's an investment club.
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Personally, I think the best way to develop this mindset is
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to just start investing yourself usually in the stock market
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because that's most accessible and you don't have to put up a ton of money
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but it is I think important to just put up some of your own capital, know what it's like to have some skin in the game
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and I would also recommend investing in individual names just so that you force yourself to do some research into companies.
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Another way to develop this mindset is by reading books
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and the ones I particularly recommend are The Intelligent Investor
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and The Essays of Warren Buffett and that's just
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because he is like the king of all investors
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and he does invest in a lot of stocks
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but he also does a lot of buyouts as well
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and they're not leveraged buyouts but these are good foundational books for everyone to read to become better investors.
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The third way is to just talk to as many investors as you can
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so you can just gain a lot of exposure
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and just soak in their knowledge
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and I actually recently interviewed my classmate who worked in private equity
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and I'll leave a link to that video down in the description below.
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Lastly, another thing you can do is just formulating investment thesis on the companies
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that you really like
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or participating in case competitions like stock pitches for you to really learn how to research into companies
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and think about what makes them good investments.
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Last but not least, to break into private equity you're going to need to build a strong technical skill set.
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Most private equity interview processes are going to have either a short
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or long LBO modeling test with short ones being ones
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that don't require three statement modeling and usually last one to 1.5 hours.
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Longer LBO modeling tests can really vary depending on what kind of information they provide
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so for example you might have a three hour LBO modeling test where they give you some assumptions
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or you might have a five hour long test where they give you a 10k for a company for background info.
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For these longer tests they may also make you write a memo
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or create some slides for you to kind of analyze your findings and
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so it's also really important to understand for shorter LBO tests
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they're kind of testing to see how you handle some pressure
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and how quickly you can create models without making a lot of mistakes
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while for longer form LBO tests they're really trying to see how how you think more critically.
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I've also created a step-by-step tutorial on how to build a simple LBO
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that would be representative of a more shorter form LBO test
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so you can check out that video if you'd like as well.
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Alright so that wraps up the five main considerations for breaking into PE
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but just as a friendly reminder
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if you're interested in breaking into the industry be sure to
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check out the PE certificate program that's being offered by Wall Street Prep and Wharton
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and lastly in the next screen you're going to see a
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video about the day in the life of a private equity associate be sure to check
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that video out if you're interested that said thank you all
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so much for watching hope to catch you all in the next video thanks so much and peace out.
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Vocabulary and speaking notes for this lesson
This video has 163 sentences and 2404 words to shadow. The speech runs for 11:12. The speaker talks fast, about 215 words per minute, so expect linked and reduced sounds. 82% of the words are among the 3,000 most common in English; the rest is worth studying before you start.
Key vocabulary in this video
15 words from the video worth learning, with pronunciation and meaning:
| Word | Pronunciation | Meaning |
|---|---|---|
| equity noun | /ˈɛk.wɪ.ti/ | Fairness, impartiality, or justice as determined in light of "natural law" or "natural right". |
| investor noun | /ɪnˈvɛs.tə(ɹ)/ | A person who invests money in order to make a profit. |
| recruit verb | /ɹɪˈkɹut/ | To enroll or enlist new members or potential employees on behalf of an employer, organization, sports team, the military, etc. |
| analyst noun | /ˈænəlɪst/ | Someone who analyzes. |
| consultant noun | /kənˈsʌl.tənt/ | A person or party that is consulted. |
| consideration noun | /kənˌsɪd.əˈɹeɪ.ʃən/ | The thought process of considering, of taking multiple or specified factors into account (with of being the main corresponding adposition). |
| generate verb | /ˈd͡ʒɛn.ə.ɹeɪt/ | To bring into being; give rise to. |
| banker noun | /ˈbæŋkəː/ | One who conducts the business of banking; one who, individually, or as a member of a company, keeps an establishment for the deposit or loan of money, or for… |
| invest verb | /ɪnˈvɛst/ | To spend money, time, or energy on something, especially for some benefit or purpose; used with in. |
| wrap verb | /ɹæp/ | To enclose (an object) completely in any flexible, thin material such as fabric or paper. |
| consult verb | /ˈkɑnsʌlt/ | To seek the opinion or advice of another; to take counsel; to deliberate together; to confer; to advise. |
| mindset noun | /ˈmaɪn(d)ˌsɛt/ | A way of thinking; an attitude or opinion, especially a habitual one. |
| lastly adverb | /ˈlæstli/ | Used to mark the beginning of the last in a list of items or propositions. |
| newly adverb | /ˈnuli/ | Very recently/lately; in the immediate past. |
| associate noun | /əˈsoʊʃi.ət/ | A person united with another or others in an act, enterprise, or business; a partner or employee. |
Phrasal verbs you will hear
| Word | Meaning |
|---|---|
| check out verb | To record the departure or withdrawal of someone or something (such as guests, employees, books, etc.). |
| go through verb | To travel from one end of something to the other. |
| put up verb | To place in a high location. |
| wrap up verb | To cover or enclose (something) by folding and securing a covering entirely around it. |
| call off verb | To recall; to cancel or call a halt to. |
| give out verb | To utter, publish; to announce, proclaim, report. |
| kick off verb | To make the first kick in a game or part of a game. |
| reach out verb | To extend one's hand(s) forward; to reach for something. |
Grammar in this video
The structures the speaker uses most, with the exact words from the video:
| Structure | In the video |
|---|---|
| Passive voice be + past participle — the focus is on what happens, not who does it | are really only reserved · being offered · is sponsored |
| Relative clauses who / which + clause — extra information about a person or thing | people who are · firms which are · those who don |
| Present perfect have/has + past participle — a past action that still matters now | haven't worked · have only worked · I've heard |
Pronunciation to watch
The speaker uses 42 contractions and reduced forms, such as you're, I'm, they're. Say them the short way, as you hear them.
- The “sh” and “zh” sounds: consideration /kənˌsɪd.əˈɹeɪ.ʃən/, associate /əˈsoʊʃi.ət/, potentially /pəˈtɛnʃ(ə)li/, rush /ɹʌʃ/, exposure /ɪkˈspəʊ.ʒə(ɹ)/
- Long words — get the stress right: consideration /kənˌsɪd.əˈɹeɪ.ʃən/, associate /əˈsoʊʃi.ət/, potentially /pəˈtɛnʃ(ə)li/, certificate /səˈtɪf.ɪ.kɪt/, participate /pɑːˈtɪs.ɪ.peɪt/
How to practise with this video
- Listen to the whole video once without speaking and note the words you do not know.
- Start at 0.75× speed, shadow it sentence by sentence, then go back to normal speed once it feels easy.
- Record yourself and compare with the original, paying attention to words like equity, investor, recruit.
What is the Shadowing Technique?
Shadowing is a science-backed language learning technique originally developed for professional interpreter training and popularized by polyglot Dr. Alexander Arguelles. The method is simple but powerful: you listen to native English audio and immediately repeat it out loud — like a shadow following the speaker with just a 1–2 second delay. Unlike passive listening or grammar drills, shadowing forces your brain and mouth muscles to simultaneously process and reproduce real speech patterns. Research shows it significantly improves pronunciation accuracy, intonation, rhythm, connected speech, listening comprehension, and speaking fluency — making it one of the most effective methods for IELTS Speaking preparation and real-world English communication.