Private Equity as a Career
Description of the Job
Private Equity (PE) is ownership or interest in an entity that is not publicly listed or traded. A source of investment capital, private equity (PE) comes from high-net-worth individuals and firms that purchase stakes in private companies or acquire control of public companies with plans to take them private and delist them from stock exchanges. The private equity (PE) industry is composed of institutional investors such as pension funds, and large private-equity (PE) firms funded by accredited investors.
Fast Facts
- Number of hours per weekGenerally 60-70, but can be 70+ at certain firms
- Average starting pay$83k (entry-level), $116k (associate) Nationally
- Amount of travel requiredTravel is often required but very variable
Roles & Responsibilities
- Manage deals - This can include generating new deal ideas, reaching out to companies, raising capital, acquiring companies, improving companies, and selling companies.
- Build a valuation or leveraged buyout model for a potential deal
- Analyze potential add-on acquisitions
- Conduct market research to assess a company’s growth potential
- Monitor portfolio companies and supporting management teams (Potentially)
- Review CIMs (confidential information memorandum) and other marketing documents from bankers looking to sell companies. Also, review financial results from a portfolio company to ensure they’re in-line with the forecast
Skills Needed
- Data Analysis: Must be able to clean data and draw conclusions based on it, helping to analyze whether a company is a good investment opportunity.
- Knowledge of Financial Concepts: The ability to analyze financial statements and estimate the value of private companies, which is especially difficult because private companies don’t have to disclose their financials.
- Knowledge of Contract Law: PEs will be involved in structuring complex deals and doing the necessary due diligence.
- Negotiation Skills: A portfolio manager has to convince business owners that your private equity firm can enhance shareholder value, while preserving organizational values and culture.
- Networking Skills: A manager will need to network with investment bankers, venture capital investors and other market participants to generate leads for possible deals.
- Empathy/Ability to Relate to Others: A manager must be able to find ways to relate to both owners and employees in order to build strong relationships.
- Long-term mindset: It takes a long time to turn around companies and get a return on the investments.
Steps to Enter The Field
- A bachelor’s degree is required to work in private equity. Some common majors for this career include finance, accounting, mathematics, statistics, or economics.
- Some private equity interviews may include case studies so it is important to do case prep in order to be prepared for such case studies.
- Developing technical skills in the following areas can improve one’s chances of entering the field: Financial Modeling, LBO Modeling, M&A Modeling, & General Financial Analysis (source)
- Any of the following certifications can also help one land a job in private equity: Associate Chartered Accountant (ACA), Certified Financial Planner (CFP), Certified Public Accountant (CPA), Chartered Alternative Investment Analyst (CAIA), Chartered Financial Analyst (CFA), Chartered Private Equity Professional (CPEP), Financial Risk Manager (FRM) (source)
Landscape of the Field & Companies in the Field
- The world’s top 10 PE firms include: The Blackstone Group, The Carlyle Group, KKR & Co., TPG Capital, Warburg Pincus, Neuberger Berman Group, CVC Capital Partners, EQT, Advent International, Vista Equity Partners
- Other major players in the industry: This article discusses the top private equity firms and also provides a list of the top 50 companies in the industry.
External Resources to Learn More & Develop Skills
- Extended overview on PE: gives an extended overview of PE, includes various topics related to PE (recruitment, resumes, interviews, careers & salaries, groups), compares PE to other related fields, and discusses the various funds
- Best private equity online courses: provides a list of online PE Courses for all levels (beginner, intermediate, advanced)
- Top 60 Private Equity Blogs/Websites: An extensive list of the top blogs and websites focused on private equity.
- PE Hub: A community for professionals in private capital including those working in private equity across the world.
Related Careers
- Related careers: Venture Capital, Investment Banking, Hedge Funds, Growth Equity, Strategic Finance
- Career exit options are: Strategic Finance, Business Development, Strategy/M&A Family offices, Hedge funds, Long-only funds, Venture capital, Entrepreneurship, other PE firms, and Consulting
Informational Interviews
Patrick Mandiraatmadja
Company Name: Search Fund Accelerator
Title: Private Equity Analyst
Years of Experience: 1
Biography
Patrick Mandiraatmadja is a Private Equity Analyst at Search Fund Accelerator. He graduated from Boston University with a degree in Finance and Management Information Systems with a minor in Economics. He is also a LinkedIn content creator and can be found at #wordsbypat on LinkedIn.