As noted in my previous blog, a credible MBA applicant doesn’t just say they want to go into “private equity” but knows exactly what type of private equity. To answer this question, you first need to understand private equities’ different flavors. Some types of private equity are easier to understand than others.
Some private equity firms build expertise in one or two geographical regions and then focus only there. Helios invests in Africa; Xander in India; BC Partners now spends a lot of time in Israel. Bigger firms will have their regional groups. For example, Bain Capital has really focused on Asia with multiple offices across the region.
Applicants who have deep knowledge of a particular region — maybe they were born or grew up there so speak a local language and understand the cultural nuances — are very credible when the say they want to go into private equity in that region.
There are the boutique firms that are very strict in terms of what verticals they invest in. ABRY Partners only invest in media and communications; Madison Dearborn traditionally only invested in old economy companies (though that has changed); Polaris generally focuses on health care.
Simultaneously, other bigger firms have created groups to focus on only one industry. It was considered something of a validation of the industry when Kleiner Perkins created a group just to focus on green investments.
MBA applicants who have education and/or work experience in a specific industry, would do well by identifying which PE firms may be looking for their expertise. Newbies who join a large private equity firm will most certainly focus on only one industry
LIFE-CYCLE OF COMPANY
A more sophisticated way of categorizing a PE firm is by when in the life of a company they invest. I will only address broad categories though there are sub-categories in each. This is a long, complicated story, so I have left it to my next blog post.