Getting a Private Equity Internship: What to Expect
Unlike investment banking internships at the large banks, private equity (PE) internships rarely lead to full-time return offers, especially if you’re interning during the school year. This can come as an unpleasant surprise to students who expect their PE internships to convert to full-time roles like investment banking internships often do.
There are a few reasons for the low full-time offer rates from PE internships:
- PE firms tend to be much smaller than investment banks, so they only hire a handful of new analysts each year. There simply aren’t enough full-time spots for all the interns.
- The deal cycle is less predictable in PE compared to banking. So firms don’t know their hiring needs too far in advance.
- Interns get limited exposure to deals during a short school-year internship. So firms have less data to assess potential fit.
The conversion odds are better for a summer internship, but still unlikely. The main goal as a PE intern is to learn about the industry and demonstrate strong financial modeling skills.
Additionally, compensation practices for PE interns are different than in banking. It’s common for smaller PE firms to offer unpaid or partially paid internships, especially for school-year programs. You may only earn a modest stipend after completing an initial training period.
The upside is that PE interns often get meaningful hands-on experience – working on live deals, creating LBO models, and preparing investment memos. The experience can be invaluable for aspiring private equity professionals.
When trying to break into investment banking, prior PE experience may not help as much as you might expect. Investment banks tend to view PE internships less favorably than banking internships. The skills developed and day-to-day roles don’t directly translate. For example, investment banking involves advising clients on deals and transactions, building pitch books, and managing complex financings – whereas PE focuses more on evaluating companies for investment, financial modeling, and portfolio management. So those coming from a PE background often have to start as new analysts in banking. The PE experience gives some helpful financial modeling and valuation exposure, but isn’t considered a direct path into investment banking.
So if you’re interested in PE, manage your expectations appropriately about full-time offers. Be prepared to work hard and make the most of the experience to position yourself for PE roles in the future. The internship is just one step in the journey.
