Center for Private Equity and Entrepreneurship (CPEE): There are a lot of students here at Tuck who are very interested in private equity. Everyone has said that it is very hard to get a career in private equity coming right out with a MBA if you didn't do it before Tuck. What are your general thoughts or advice for students who really want to go into this industry? What are some steps they can take while they are at Tuck? And what types of jobs should they look at coming out of Tuck?
Tankersley: First of all there are jobs available in the private equity business every year for MBA students- so I think they can compete for those jobs. I have hired 2 Tuck students over the years into the program, and over the last 2 years I have hired an MBA each year to come into our firm. So there are jobs out there- there just aren't very many of them and the jobs are very competitive.
One of the things that we do is we don't typically come, for example, to Tuck to interview, but we will interview students who find us. I guess the point is, if private equity is simply an interesting career choice they probably aren't going to make it. If there is a passion to be in private equity as demonstrated by their behavior, there is a very different path. So the first thing is, there are few jobs. They are available- we are not the only firm that hires analysts and associates- and they ought to make certain to figure out who is hiring and get in front of those folks.
Secondly, if you want to be in the industry but your background is not such that it makes sense for you to go right into the private equity business today, what you are really saying is that you want to be involved with the entrepreneurial process. Where can you get involved in the entrepreneurial process? You can get involved now in a lot of industries that service the entrepreneurial process. For example, there are a number of middle market investment boutiques that send their product to the private equity business. The people who have brought 3, 4, 5, 10 terrific deals to the private equity side are often times headhunted out of the shops into private equity because they know what to look for in a deal. So I think that is a very easy place to go for someone with little industry experience.
I would probably advise against going to join a start-up, unless you have some pretty good insights into what you are going to do. Most startups won't effectively use an MBA so you aren't necessarily getting the experience you need. And two, the venture capitalists funding that startup defines your universe of possible venture capital jobs. Again, any firm that has as its primary core constituency a entrepreneurial base is a great place to get involved, because in that activity you can learn the process and have an introduction to venture capitalists as a professional. Venture capitalists tend to always be looking and there are a number of associate positions that come into venture capitalists not from business school but come with related experience.
CPEE: For students lucky enough to find a private equity firm that is hiring, get an interview, get an offer, what kind of due diligence questions do you recommend they ask to find out if it is a quality firm?
Tankersley: I would ask for a list of their entrepreneurs and I would call the entrepreneurs and find out how the entrepreneurs perceive the firm. I think the entrepreneurs are the one group of people who won't cover for the venture capitalists. The limited partners will always say the venture capitalists are terrific because they put their money in, they made an economic decision. Syndication partners tend to want to do that too. But I think the entrepreneurs are the ones that tend to really know whether or not this is a good group. So if I was doing due diligence I would do that.
I would do a lot of due diligence in terms of understanding what companies this firm has been involved with or what is their track record. I would consume every bit of information the company puts out about it's portfolio and strategy, and see if it makes sense. I can't tell you how many times- and I have read a number of venture capital websites- where I find some pretty interesting inconsistencies between what people say they are going to do and their portfolio. I never understand that. If that's the case then the student will want to focus on that strategy drift to find out why. It may make great sense but they need to understand it. But mostly I would focus on the entrepreneurs.
CPEE: You have had the chance to work on a lot of exciting deals over your career. One thing that came out in class today was the team focus and everyone taking credit for the success. But as someone who was really the driver for many of those deals are there any, looking back, that really stick out as being incredibly satisfying to have worked on? And if so, which ones would those be?
Tankersley: Yes, there have been a lot of very satisfying transactions and some of them are satisfying for quite different reasons. I think that the formation of a company called Brooks Fiber Properties. We took that company from literally a business plan to selling Brooks for $3.4 billion. It was just extraordinary in terms of the opportunity that we had. We had a wonderful investment syndicate, fabulous management team, we hit a market exactly correctly and we were able to work very collaboratively together so that was a tremendous experience.
Earlier, one of the experiences that had been really terrific was a company called Conner Peripherals. What was so interesting about Conner Peripherals was that we were the lead investor and I was one of the 2 venture board members. But more importantly this company went from 0 to $1 billion in revenues in four years. The company at that time was a NYSE traded company and that was the fastest growth in the history of American electronic manufacturing. Watching and being part of that was really extraordinary. The entrepreneur there was unbelievable and a real visionary, and as a result very few entrepreneurs could have envisioned that growth and taken the steps to take advantage of that growth.
As we talked about in class, in 2002 we restructured a number of companies. The success of several of those companies -- which others thought were doomed -- is just terrific. And to see how well they are doing now- they are today's successor to Brooks Fiber and the Conner Peripherals.