8 Things You Must Know About A Career in Private Equity

A career in private equity is highly sought after. A lot of confusions and mysteries exist around private equity jobs. This article answers 8 important aspects of private equity careers.

Chris Gilbert
7 min readSep 17, 2020

An industry of achievers and go-getters, private equity jobs are on the most-wanted list of ambitious finance and banking professionals.

What does it take to make a career in private equity? What are the skills and qualifications you need? How is it like to work at a private equity firm?

Here we clear the air around the mystery surrounding the jobs of private equity investment professionals through 8 important aspects of PE jobs.

1. What’s the difference? — PE vs. VC vs. Investment Banking

Private Equity is an active way of investing in privately held companies. The objective of the investment usually is to grow the company for a medium to long term period, and then either sell it or list on a public exchange for a handsome profit. The investment capital is pooled from high-net-worth individuals. Private equity professionals work closely with the management of the companies to maximize their value. They bring to the table their expertise in financial engineering, governance, and industry best practices for operations. Different private equity firms may specialize in a particular type of investments — such as early-growth companies with a distinct product or service, or technology only companies, etc.

Venture Capital is a subset of 🔗 Private Equity. This group provides funds and capital to early-stage businesses, essentially startups. By investing in new ventures, they take high-risk and thus many tend to come on board with some specialization in the field to undertake the right business and guide them through sometimes.

Venture Capitalists typically invest in equity, while PE uses a combination of equity and debt.

Investment banking is usually the source where 🔗 private equity professionals come from. Investment bankers advise clients and assist them in mergers and acquisitions and even in their plans of going public. They are not involved in nurturing companies in their growth but are vital in facilitating important financial decisions in the company’s lifecycle.

2. What you need — Degrees and Qualifications

Aspirants are often confused if an MBA is a necessary private equity qualification to enter the industry. Not so much.

Degrees in economics, finance, are as good, so long as you know the rules of the game and have the requisite skills. Economics, finance, and mathematics are sister fields, which are considered equivalent to gold. That said, candidates with MBA are also recruited by top-of-the-line PE firms, but it’s not mandatory.

Many professionals join MBA courses after joining PE.

Other than degrees, it helps to hold a third-party qualification in Private Equity. You can go for the popular CFA charter. Among focused private equity certifications is one offered by the United States Private Equity Council. The 🔗 Chartered Private Equity Professional (CPEP) offered by USPEC is a transcontinental certification well-respected within industry circles across the globe.

3. What you need –Technical Skills

On top of anything, a willingness to learn new things outside of the comfort zone highly helps to flatten the learning curve for aspirants. Other than that, to enter private equity across the world, including 🔗 U.S. private equity firms, it helps to have the following technical skills.

· An interest in understanding new technologies and learning about new industry trends.

· An interest in understanding industry value chains, for instance, of O&G, utility companies, etc.

· An analytical bent — including quantitative and financial modeling skills

· Entrepreneur-like business savviness, and management-like cautiousness

· Good communication and relationship building skills

4. What you need — Experience

It is a myth that only experienced professionals are hired and demanded in private equity jobs.

Many large private equity firms hire summer interns and new graduates, similar to investment banks.

That said, since there are usually few openings in private equity compared to investment banks, a career in private equity is considered as an exit route by experienced investment bankers, usually analyst level.

If you are a recent graduate and wish to score an internship in private equity, develop a business, accounting, finance, or economics background, along with strong analytical and financial modeling skills.

5. Job roles at Private Equity — Analyst to Partner

The available career path in private equity can vary from firm to firm — majorly depending on the size. A typical career path in private equity goes like:

Junior Analyst >> Senior Analyst >> Associate >> Senior Associate >> Manager >> Director >> Partner >> Senior Partner

Other than these Private equity jobs, firms also take on Operating Partners. They can be former CEOs or COOs who can provide portfolio companies of private equity firms with years of extensive operational knowledge and expertise as well as deep industry connections and network.

6. A typical day for Private Equity Investment Professional

Begin the morning with the latest news and market trends.

Skim through financial daily. Not one, but many — Financial Times, Bloomberg, Regional paper, and sometimes even LinkedIn.

Check emails, any immediate partner requests, and any updates on the portfolio companies one is involved with.

Once in the firm, the day is usually a mix of fixed deliveries and ad hoc tasks. These responsibilities depend upon the seniority level in the firm. Fixed deliveries can include weekly meetings, updates with portfolio companies, periodic financial reporting, meeting with the digital marketing team, board meetings, annual strategy meetings, etc.

In case a deal is being shaped up, the private equity professional will build financial models, value the company, perform sensitivity analysis, and draft investment papers. She also keeps an eye on any red flags, weekly updates with due diligence providers, and any show stoppers developments.

If a portfolio company is preparing for exit, one would be involved in making calls with management and financial advisors, discussing buyers, gauging market sentiment, and most importantly creating 🔗 Information Memorandum (IM).

7. Rewards

A strong hand on valuing companies and understanding the market, PE professionals earn good premiums.

Along with this, they get to work with management teams, board members and are highly exposed to all that’s latest in the industry and technology.

Without doubts, 🔗 private equity jobs are also very financially rewarding and gratifying, especially the carried interest.

8. The Best and Most Challenging Parts

Among the best thing about private equity careers are,

  • Working with super smart people and the latest technologies from across the world.
  • Variety- With varied types of businesses and industries, the diversity offered by a Private Equity career is huge.
  • Experience- Right from sourcing the deals to exit, there is a lot of learning and experience that one a PE professional gets through the portfolio lifecycle.
  • Finally, PE jobs offer a high degree of flexibility and quality time. The staff is treated like grown-ups who can handle their responsibilities without micro monitoring.

Among the toughest and most challenging aspects of PE, jobs are the bouts of long working days and hours one needs to put in during the year. Sometimes these periods are so taxing, that your passion and interest for the field is the only anchor that drives you through.

Do you have what it takes for a 🔗private equity career? As with most vocations, private equity also needs hard work and passion. Nonetheless, the rewards and experience are worth it and rewarding for finance enthusiasts.

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