Why is strategy consulting a valuable background for private equity firms?
More and more strategy consulting companies have an in-house private equity team. Wietske pointed out that these teams provide a great opportunity for someone who wants to explore what private equity is like, but also for someone that is already considering making the switch. Wietske’s experience of joining the in-house private equity team is what sparked her interest in becoming an investor.
“When you join as a strategy consultant, you learn to quickly understand companies and their environment through and through. You investigate the market, competition, customers, product, service, growth opportunities, and more. These are skills I also use in my work as an investor.
If you join an in-house private equity team, you learn to execute commercial due diligence, which is an important angle for an investor in determining if a company has the right (commercial) positioning to be attractive.
Furthermore, the fast-paced environment of (most) strategy consultants allows you to develop significantly faster. After working for only 2 years, I noticed I had gathered a skillset way broader and better than I would have imagined before I started working. And this skillset helped me in my role as a Private Equity Associate.”
Which skills do the two roles share?
As Wietske emphasized, working in strategy consulting means you will gain valuable soft and hard skills that will be useful if you decide to start in private equity later. Creating smart models, doing complex analyses, and making sure there is no room for error, to name a few. In terms of soft skills, adaptability and the ability to connect with advisors and management on a personal level are the most important.
“As you always work in different teams, you are challenged to adapt and adjust properly, allowing you to improve your social skills. You learn to understand complex issues and translate them into easy-to-understand materials. This allows people that are less familiar with the matter to understand you well and be aware of the next steps.
Thanks to the fast pace of strategy consulting, you learn to think 80/20, meaning that 20 percent of your activities will account for 80 percent of your results. Only focusing on the key 20 percent will almost always allow you to understand or solve the case you are researching.
Moreover, as I’m becoming more senior I notice I get more energy from the personal connections with advisors and management – this still includes the application of your “analytical toolset”, but being able to connect is key to being a good strategy consultant or investor.”
Private equity puts you in the driver’s seat
According to Wietske, the biggest difference between strategy consulting and private equity is that in consulting, you work for a client that wants your advice on a company they want to invest in, while in private equity you are directly involved with the company you invest in.
“As a strategy consultant, you deliver advice to your client (for example to Parcom). At Parcom, when you receive that advice, that is where it starts. You have to actually do something with the information and make the decisions – that makes it very “real” as you bear all the consequences of your investment decisions.
“For me, a big advantage of private equity is also the degree of responsibility and connection with the management teams of our companies, which I love – I get much energy from establishing and maintaining these connections and that makes me enthusiastic about my future career as an investor.”
Final words and advice
When asked what she would advise for a young woman working as a strategy consultant, she mentioned that “it is very dependant on your situation and your career wishes. When I look back at my own career, I think it’s very good for your professional growth to join a strategy consulting firm or investment bank (preferably a large one) to discover what you like and don’t like.”.
Despite her first impression of private equity, Wietske realised that she actually really enjoys it once she actually tried it. If, like Wietske, you find yourself wishing to take your involvement with companies and management to the next level, then perhaps private equity is for you!
“Once again, private equity didn’t attract me at all until I experienced it – let life surprise you, it will be fun!”
If private equity sounds exciting and the fast-paced environment doesn’t scare you, reach out to our Talent Managers! They will guide you through the application process and offer you exciting vacancies at our partner private equity firms! Contact us here.