Private equity (PE), one of the many ways a company can acquire funding, can be an exciting and lucrative field for any expert in finance or business. Choosing a career in private equity can open doors to rapid advancement, introduce you to exciting people and companies, and reward you in numerous ways.
Financial and investment professionals, as well as recent graduates looking for work, should have a basic understanding of the PE industry, including what it is, the skills professionals need to succeed, and the types of employment opportunities available to those just starting.
The term “private equity” refers to a specific form of investment capital that is held privately. Investors are always on the lookout for promising companies, and private businesses (those not traded on public exchanges) are especially attractive targets. Private equity also involves acquiring publicly traded companies, restructuring them, and then reselling them for a profit. Institutional investors seeking portfolio diversification and higher returns than the public markets will find it to be one of the most alluring alternative investment options.
One must have a solid knowledge of related concepts like financial projections, business models, valuations, and ratios & analysis. You need to know not only how money works, but also how businesses are structured.
Networking with suitable people can help you stand out from the crowd of applicants and familiarize you with the culture and expectations of the workplace. Meeting other people in the Private Equity industry is easy with the help of online resources like LinkedIn and offline activities like career recruitment events. After beginning your career in this field, this network will continue to prove useful.
Having the ability to negotiate is essential when dealing with investors, executives, and business owners. Negotiating the details of both large and minor contracts, and convincing a wide range of stakeholders of the worth your business could provide, will be crucial.
When developing their investment theses, private equity firms engage in some critical thinking and consider which companies and industries to investigate. This calls for an analytical and critical approach to problems on both the micro and macroeconomic levels.
The ability to stay motivated and in touch with potential employers at all times is a must for people in PE. A senior employee or HR representative at a major private equity firm is unlikely to respond to an email or phone call. In light of this, it is imperative that you have perseverance and do not give up hope until you achieve success.
If you’re looking for a career change, private equity might be a good fit.
There must be a lot of allure to working for a general partner if private equity can lure investment bankers away from six-figure salaries.
Working in private equity does have its advantages. Some of them may include:
- Compare the salaries in investment banking with those in private equity, you’ll find that they’re very similar, with the added benefit of a more reasonable work-life balance.
- Careers in private equity are exciting because they combine aspects of fundraising, investing, and financial and operational management.
- Since private equity firms tend to have a flatter organisational structure, you can expect to have input into decisions right away.
Previously, private equity analysts were hired straight out of college, but today, many candidates will have worked as interns at investment banks first. They are expected to help with deal sourcing, industry research, thesis writing, and fundraising.
PE associates can handle the entire deal lifecycle, from initial contact to final payment. They will act as project managers for the private equity fund in many respects, including client interaction, financial analysis, deal sourcing, and closing.
The duties and responsibilities of the senior associate are identical to those of an associate, with the possible addition of additional compensation, most commonly in the form of bonuses and carry.
A vice president of Private Equity gives strategic insights to the portfolio firms controlled by the private equity firm and adds their knowledge to larger transactions and transactions that are close to completing but have encountered an obstacle.
The MD or Partner of a private equity firm is the company’s top executive. Their market credibility plays a significant role in securing financial support. The responsibilities of the MD revolve around answering questions from limited partners and convincing them of the value of the most recent fund.
PE is a highly desirable and competitive field of study. The key to success is to dive in headfirst and give it your all from the get-go. You can enter the world of investment banking, or you can get some real-world experience right after graduation by interning somewhere. You’ll need to show that you can handle the workload and can successfully build and maintain professional relationships.