The Secret Sauce Behind Chicago Booth’s Private Equity Program

A panel at the BPOC Private Equity Conference

When Yesenia Arteta was applying to business schools, looking to sharpen her skills as a private equity investor, Chicago Booth was high on her list because of its powerhouse finance program.

But what sealed Arteta’s decision to attend Booth, she said, was that “I fell in love with the people” — not only the smart, driven students who would be her peers, but also the industry veterans who shared lessons from the trenches and the alumni who took time during weekends to conduct mock interviews.

“When they spoke about the pay-it-forward culture, it wasn’t something that they just talked about,” said Arteta, who is in the final year of getting her MBA. “It was something that was embedded in the culture.”

Private equity has been gaining in popularity at Chicago Booth, which offers students a uniquely holistic experience. While many are drawn to the school for the rigor of its quantitative curriculum, they arrive to find world-class theoretical coursework, a plethora of opportunities to gain real-world experience, and a network of supportive mentors and industry partners that help them develop careers in the competitive field.

The number of Booth graduates accepting full-time job offers in private equity has been growing steadily, to 31 last year from 23 five years earlier, not including venture capital jobs, according to Booth Career Services. Firm interest in hiring Booth grads has also grown, with 162 postings for full-time roles last year compared with 138 five years ago, which had been the prior peak.

The program is attracting more students with previous private equity experience as well as those without who are looking to change careers. A small but growing number are opting to pursue Entrepreneurship Through Acquisition or operating roles at private equity firms.

The most dramatic swell of student interest has been in the Elfman-Wareham Private Equity and Venture Capital (PE/VC) Lab, a course that pairs lectures, speakers and case analysis with intensive internships during the academic year. More than 160 students participated last year, double the usual class size, and this year it received 338 applications. More than three-quarters of participants are career changers.

The increase was driven in large part by the COVID-19 pandemic, which forced the program to go virtual and therefore allowed students to take internships outside of Chicago for the first time. There are now 100 firms hosting interns, compared with 65 before the pandemic. Thirty-four are based outside of Chicago.

Chris McGowan

“We have students interning from Boston to Austin to Shanghai,” said Adjunct Professor Chris McGowan, who has taught the PE Sections of the PE/VC Lab for the last 9 years. The Lab, which has added a section to accommodate the larger audience, will continue to allow remote internships going forward.

Ingredient 1: Hands-On Experience

Experiential opportunities like the PE/VC Lab are fundamental ingredients in the secret sauce behind Booth’s Svider Private Equity Program, which is run by the Polsky Center for Entrepreneurship and Innovation and made possible by support from Booth alumnus Raymond Svider, ’89, partner and chairman of BC Partners.

Steve Kaplan

“You can actually get experience that you would have a hard time getting otherwise,” Steve Kaplan, the Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at Booth, said of the Lab. “No one else has anything at that scale.”

Kaplan, one of the world’s foremost private equity scholars, teaches Entrepreneurial Finance and Private Equity, a foundational course centered on academic research and analysis. The combination of the academic and practitioner perspectives gives Booth’s program an edge.

“You get the best of both worlds,” said Max Weiss, a current MBA candidate.

To Weiss, who worked in investment banking and at an M&A firm before deciding to go business school to pursue private equity, the combination is critical preparation for his career change. He has technical skills and industry connections, but “the hardest part of pivoting is just being taken seriously,” he said.

Coursework has deepened his understanding of investment principles and allowed him to speak intelligently at a macro level, while internships have given him a foot in the door and resume fodder that would have been hard to come by elsewhere.

Students with prior PE experience also appreciate the well-rounded approach.

Fade Oluokun

Fade Oluokun, an MBA candidate at Booth, worked as an analyst associate at a private equity firm before departing for business school to advance his career.

Despite two years in the industry, it wasn’t until he got to Booth, and took the class Commercializing Innovation with longtime private equity investor Scott Meadow, that he understood how funds are structured and the interaction between general and limited partners.

“I wasn’t comfortable asking that in my last job,” Oluokun said.

Also valuable was the Private Equity Case Challenge (PECC), an extracurricular competition where teams of students put together a proposal for a leveraged buyout and present to a panel of private equity judges. The winner competes against teams from other elite business schools in the Oxford Global PE Challenge for a cash prize.

“It was a great learning experience to get exposure to financial modeling, industry research, a targeted market,” Oluokun said.

Yesenia Arteta

For Arteta, a native of Colombia who had previously worked in private equity in Bogota, competing in the PECC allowed her to practice presenting in the “American-style” so she could be more effective at a U.S.-based firm.

Similarly, her part-time internship with a New York-based private equity firm during the PE Lab gave her insight into the American way of deal-making, which she found to be more straightforward and centered on cold calls than in Latin America, where relationships are cultivated slowly.

“That was something I wasn’t expecting that I needed to learn,” she said.

Another notable hands-on private equity opportunity at Booth is the Sterling Partners Investment Thesis Challenge (SPITC), which invites student teams to conceive and present an original investment thesis to private equity firms. The competitive program was the first of its kind among national MBA programs when it launched in 2011, and it has since hosted 284 students at 23 firms.

The PE firms, which mentor selected teams to fully develop their theses and reward them if they prove investible, “love this program because they get talented MBAs to do research, get out in the market and unearth target companies,” said McGowan, who has been faculty advisor for SPITC for 11 years.

“Firms generally have plenty of capital, but are short on ideas,” said McGowan, a 27-year veteran of the PE and VC industries and general partner at Chicago-based CJM Ventures.

For students, it’s an immersive lesson in deal sourcing, a process that is otherwise difficult to teach.

“This is a skill you are absolutely going to need in your career,” McGowan said.

That the experience ends with a tangible product of use to investment firms is helpful when it comes time to look for a job.

“How are you going to differentiate yourself from the hundreds of other people looking for those jobs?” Kaplan said. “Bring somebody a deal. If you bring somebody a deal you have value to add.”

Ingredient 2: Flexible curriculum

For students interested in private equity, a major benefit at Booth is the freedom to craft their experience accordingly thanks to a flexible curriculum with fewer first-year core requirements than many other schools. Those with experience can skip to advanced courses. Those who find internships during the academic year can be accommodated.

“What sets Booth apart is choosing your own adventure and the ability to really choose your challenges,” Oluokun said. “If you want to dive deep into the nitty gritty of a topic, that is your choice.”

In addition, students can customize their course schedule in order to leave time for other activities.

Max Weiss

Weiss, who was eager to get private equity training under his belt, did three remote internships at private equity firms during the winter quarter of his first year, then in spring participated in the PE/VC Lab while taking several private equity classes. For the Lab, Weiss got permission to work full-time as director of corporate development for a private equity firm, which offered not only experience but a decent paycheck.

Weiss still made room for his varied other interests, including operating a cannabis business he launched with his father and other entrepreneurial aspirations. Last spring he took a digital healthcare startup through the Edward L. Kaplan, ’71, New Venture Challenge, co-chaired the Private and Family Business Group, and cofounded the Legal Cannabis Markets Club.

Ingredient 3: Mentorship

One of the most distinctive elements of Booth’s private equity program is access to a deep bench of private equity professionals who offer guidance, career advice, and insights from personal experience.

Five Investors-in-Residence at the Polsky Center serve as formal mentors to the private equity program. In addition, a new mentorship program connects students with members of the Polsky Center’s Private Equity Advisory Board and Private Equity Council, the latter of which is a newly formed group of more than 40 mostly Booth alums who are managing directors, partners, or founders of private equity firms.

“They have a tendency to hire our students,” Kaplan said.

Mentorship is often sought when students are trying to land a job. Private equity is a difficult field to break into and, unlike consulting or investment banking, doesn’t have a predictable hiring process or schedule because firms hire as needed.

“The most challenging thing about recruiting for PE is the uncertainty,” said Arteta, who is seeking a full-time position at a firm that invests in Latin America and specializes in energy or infrastructure.

She recalls a particularly helpful conversation with an IIR that simply confirmed she had the experience and talent to succeed.

“It was like having a support system behind you that gives you the confidence to go for it,” she said.

Mentors take an active role in ensuring students set themselves up for success.

Tim Kelly

Tim Kelly, a retired private equity investor who serves as an IIR, said an important piece of advice he gives students is to undertake proper due diligence before accepting a job opportunity.

“I have seen a number of students taking entry-level roles with start-up firms or search firms that fail in their capital raising efforts,” said Kelly. He strongly advises students to research the team’s investing backgrounds, track records, and longevity together, plus ensure the firm has a plausible story behind why investors should bet on their abilities.

“The last thing a student wants is to join a firm that doesn’t have a reasonable chance of being successful garnering investor interest,” Kelly said.

McGowan, who serves as an IIR, often meets one-on-one with students as they get offers to help them analyze whether to join a firm.

“I end up looking at almost every offer letter that a second-year gets and I help them negotiate the best offer they can get,” he said.

Weiss appreciates how candid the guidance is.

A favorite experience of his was McGowan’s “overtime,” when he would stay after class during the PE/VC Lab and take student questions, often for  over an hour.

“It was so helpful to the point where I even asked, ‘You’ve climbed from the lowest rank to the highest rank, how do you structure time with your family? How do you find the right firm that fits?’ We talked for 20 to 30 minutes,” Weiss said. “[McGowan] was willing to advise on things everyone is thinking but no one asks.”

Weiss, who is seeking a role at a middle-market private equity firm that invests in healthcare, said he is targeting his search based on that conversation.

Nearly 150 different firms have hired Booth graduates between 2016 and 2021. Some of them are prolific hirers, including Apollo Global, Partners Group, Nautic Partners, Kinzie Capital, Roark Capital, Hidden Harbor, ParkerGale, Pritzker Private Capital, Silver Oak, CITIC, Vistria Group, Thompson Street Capital Partners, Waud Capital, and H.I.G Capital.

Nearly all students with prior private equity experience and looking to return have landed jobs back in the field, and Booth offers workshops that address considerations specific to that group, such as assessing what kind of firm to join, McGowan said. Students with an industry specialization do particularly well.

It is harder for career switchers to get the private equity jobs they want, so a separate set of workshops is designed for them, with guidance on which firms offer the highest odds and how to advocate for themselves.

McGowan estimates 15%-25% of serious career switchers graduate with private equity job offers.

“We do a good job sobering up potential career switchers in the beginning of their first year,” he said. “It isn’t easy, but we show them how it has been done before by previous successful career switchers who used specific programs and resources at Booth.”

Oluokun is thrilled to have been offered a role as vice president at Thompson Street Capital Partners in St. Louis, where he interned last summer. It was the step up he was seeking when he left his private equity prior firm, as an associate, to attend business school.

He feels rigorously prepared thanks to his time at Booth, confident in the nuts and bolts as well as his higher-level understanding of the business.

“I expected it to be difficult, but sometimes I was like, wow, I really did not know that,” Oluokun said. “Which is nice, honestly. What I learned here I would not have learned otherwise.”

Article by Alexia Elejalde-Ruiz, associate director of media relations and external communications at the Polsky Center. A longtime journalist, Alexia most recently was a business reporter with the Chicago Tribune. Reach Alexia via email or on Twitter @alexiaer.