How You Can Join Top Private Equity Firms in Analyst Roles

For young graduates, it would be a dream come true to start a career in private equity, right after completing their graduation in finance.

Breaking directly into private equity right after graduation is difficult unless you come from an ivy league university or a top-tier business school. In fact, if we go a few years back, there existed no job roles as ‘private equity analysts’ in the said industry. Banks typically, hire the best students from the undergraduate courses of top universities and reputed colleges for analyst positions.

Source: Payscale

One big reason for joining private equity, soon after completing your undergrad in finance, should be to ensure a handsome pay and live a luxurious lifestyle. As per Payscale, the average annual compensation of a private equity analyst in 2020 in the U.S. is $67,519. However, as you gain experience and climb up the hierarchical ladder, after competing for five to nine years in the industry, the salary rises up to a whopping, $90,000.

Job Description of a PE Analyst

Many of the 🔗 top private equity firms in the U.S. use ‘associate’ and ‘analyst’ interchangeably. Besides, some of them advertise openings as “Associate/Analyst’. The reason being strikingly similar job responsibilities and duties, on paper.

The day-to-day tasks performed by those, already pursuing a 🔗 career in private equity, comprise:

• New deal sourcing via cold calling.
• Portfolio companies’ monitoring.
• Developing financial models.
• Performing due diligence on prospective investments.
• Review CIMs issued by bankers interested in selling.

Key Factors That Will Define Your Role as a Private Equity Analyst

Factors that help determine your job role as a PE analyst in the financial markets:

• The kind of deals your firm undertakes (large-cap vs. Middle-market vs. Growth equity), and the strategic model it leverages (financial engineering vs. add-on acquisitions vs.operational improvements).
• Deal structuring model too plays a vital role in establishing your job role as an analyst at the firm.
• The PE firm itself, and the way it treats its company analysts (associates being trained sincerely, or considering them soulless creatures who can help here and there, but not critical to the organization’s existence).

Detailed Day Schedule of a PE Analyst

Here, we are considering a middle-market PE organization that majorly concentrates on leveraged buyout deals & add-on acquisitions. To paint an average scenario, we are considering a moderate number of deals happening each month at this specific firm.

Having pre-stated all of that, here’s the typical day of a PE analyst at a 🔗 US private equity firm would look like:

👉 8:30 AM: You arrive at the workplace after having read the market news while on the way to the office. As soon as you reach the office premises, you check your mailbox for anything demanding urgent attention.

👉 9–11 AM: The associate in your team comes to you, and tells you to update some LBO model, on which you have been working for the past few days. You get busy in the addition of cases to analyze the impact, in case, the estimations prove to be incorrect by a large margin. You get occupied in contemplating the bidding price for this company.

👉 11–12 PM: You, along with the other team members submit teasers for a variety of companies being considered for investments by the managerial team. The team associate begins the process of shortlisting the most impressive teasers.

👉 12–2 PM: A portfolio firm of yours has planned to acquire a $20 million add-on. The company VP, your team associate, and you start contemplating the odds.

You are asked to join a call that involves a discussion regarding customer contract, and the target company’s financial data. In the meantime, you eat your lunch at the desk.

👉 2–3 PM: Some data is found to be inaptly formatted, and requires cleansing up in Excel, in order to it to be usable, and presentable. The associate decides to allocate this grunt work to you.

👉 3–5 PM: A portfolio company just declared its quarterly results, and therefore, you get the responsibility to update the internal records for the firm. Also, you are required to draft a report, concerning the organization-wide meeting.

👉 5–6 PM: You get back to working on a few teasers that were discussed in the morning. You start researching on a few industry sectors, to eventually entail that the majority of the companies are not good fits.

👉 6–7 PM: Time to briefly explain your research findings to the team associate and the company VP. You need to talk about one company that happened to be promising because it falls into the bracket of highly scattered markets constituting only the small businesses.

👉 7–8:30 PM: You get to conclude that your company would like to go ahead with a bid targeted against a professional services firm, as the figures and numbers work perfectly well, even with the possibilities of the worst performance.

Becoming a PE Analyst: The Pre-Requisites

To secure a good probability of bagging an analyst role straight out of an undergrad college, or having completed a master’s program in finance, you should ensure possessing the below-stated qualifications, and skill sets:

• You have succeeded to secure your admission into a 🔗 top-tier business school (Wharton or Harvard in the U.S.), or at least, in one of the top 20 universities.
• You have gained internship experience at a boutique investment, or a corporate finance bank, during the initial 2–3 years at the college.
• You must have your networking sources ready to help you present an interview opportunity for an analyst role in PE. Or, if you happen to have interned at a top bulge-bracket, or an elite boutique bank, they might contact you in the first place.

🔗 Private equity investment professionals in the higher management roles at a reputed PE firm, sometimes recruit summer interns, and later, extend full-time job offers to a selected few.