Senior Equity Portfolio Manager, San Francisco, CA
Private Equity Analyst, Newport Beach, CA
Portfolio Associate, Chicago, IL
Hedge Fund Research Assistant, New York, NY
Venture Capital Associate, Boston, MA
Where are the jobs? What if I only have an operations background? How should I think about my search? Read on as Samantha Cerone – an NYU grad with a background in restructuring – helps us tackle these tough questions.
How did you first become involved in Finance? What path ultimately led you to Private Equity?
I graduated from NYU in 2005 with a bachelor’s degree in Finance. Prior to beginning my full time career, I worked hard during my undergraduate years to secure various internships. I had always known that I wanted a career in Finance. Following graduation, I started my career in Private Equity at Houlihan Lokey Howard & Zukin’s Financial Restructuring group. For those unfamiliar with the term, Private Equity involves making private investments in portfolio companies and managing them actively so as to generate value within each portfolio company. The ultimate goal of the private equity investor is to generate enough cash flow from each of its portfolio companies to pay off leverage and make a return on each equity investment.
Tell us a bit about your experience at a hedge fund. What did an average day look like?
As a hedge fund analyst, I was responsible for staying abreast of several companies within select industries, including gaming and chemicals. I would study each company within my industries in great detail, focusing on its operations, its balance sheet and financial earnings projections. To do this I relied on resources such as public filings, earnings calls, industry consultants and conversations with management teams.
On an average day I would come into the office at 7:00 AM and catch up on the morning news. This could take anywhere from 1 hour to several hours. During the day, I would have set up several phone calls with various research analysts, industry consultants and managers to discuss different companies or investments that I would be looking at. Quiet moments during the day were valuable time for reading financial statements, earnings call transcripts or information on an industry that I covered.
The largest advantage would be the ability to actively manage a portfolio investment. As a hedge fund analyst, I am often looking at an investment as a public investor. Many of my questions go unanswered and much of my work involves doing lots of research in order to make very educated guesses. Private equity involves a more formal due diligence process with the assistance and support of the management team in place. Also, when I have ideas for a company as a public side investor I don’t always have access to management so it’s not easy to get ideas implemented. Lastly, I have come to prefer transaction-based work and its emphasis on strategic negotiation and relationships. One of the biggest disadvantages of private equity is that it is very cyclical. The abundance of credit in the market enabled private equity to flourish up until 2008. Now that there is not ample liquidity to get deals done, it is harder to be as dynamic in PE. Investors are seeking more liquid investments and shorter term market plays. There is definitely more opportunity within hedge funds whose mandates are more flexible than those of a traditional PE fund.
If someone is creative and has experience with strategy and operations he should try to communicate to interviewers how he can relate that experience to a financial statement and why this is valuable. For example, though most of my work day involved sitting behind a computer reading news feeds or other information, on occasion I would visit a company. My first time on a plant tour, I didn’t really know what to look for or what I should be paying attention to. I remember visiting an aluminum smelting facility and being so impressed by the sight of bubbling liquid-hot aluminum that I failed to notice how inefficient the plant was set up. It takes a discerning eye to understand how these inefficiencies show up on an income statement. A candidate should do his best to convey that he brings a fresh perspective to a team of financial experts who might overlook operational or strategic nuances.
There are lots of entrepreneurs and startups that are building businesses from scratch. I think this is a tremendous opportunity to get one’s foot in the door and grow within a potentially burgeoning organization. I started my career in financial restructuring. I think that restructuring is a promising career path right now. There are a lot of insolvent companies and financial meltdowns that require a very special set of skills that only restructuring bankers and legal advisors possess. Experience in restructuring would provide a young professional with a solid real-world education in what makes a business falter. It is a great opportunity to learn how to rebuild businesses and identify potential pitfalls.
I am applying to business school for fall 2010 and concurrently looking for employment. If I am fortunate enough to secure full-time employment then I intend to participate in a part-time MBA program. Should I attend a full-time program, I will be actively seeking a private equity internship because I ultimately want a career in PE. I am also interested in careers in restructuring. My experience in restructuring was a very satisfying intellectual challenge.
I am very gregarious. I make a memorable impression on people and I use this to develop a network. No only do I benefit from the people I meet; I also do a good job of introducing people within my network to each other. I seek to create an exchange of ideas amongst the people in my network rather than establish a one-way flow of information from my mentors to me. This demonstrates that I am conscientious of other people’s objectives and people are very appreciative of this and perpetually willing to support my goals.
Though we can’t make you more driven, we can provide you with the tools that will help take you to the next level of your career. If you’re ready to take the initiative, visit us at Doostang for more info.