A career in private equity can be personally and financially rewarding. Successful associates can often make a six-figure income in a matter of years. Although long hours are often necessary, especially when closing a deal, associates report great satisfaction from working closely with firm principals and partners to see a deal through from start to finish.
Let’s start off with some definitions, what is a private equity firm?
A private equity firm raises capital from outside investors (called limited partners) and then uses that capital to buy companies.
The outside investors might include:
- Pension funds
- Insurance firms
- High-net-worth individuals
Private equity firms operate and improve the companies and then sell them, hoping to make a profit. The industry is termed “private” because the companies in which the firms invest are private initially or become so later.
How can you get started in a private equity career?
Private equity jobs are some of the most sought-after jobs in the finance industry. These firms are generally smaller than investment banks, and the competition can be fierce. A bachelor’s degree in accounting, finance, or a related field, is useful when seeking a job in the field. Even with a degree, it’s best to have 2-3 years of experience as an investment banking analyst or management consultant.
Entry-level roles in private equity firms vary but often include analysts and associates. Analysts can be hired directly out of their undergraduate program without prior experience. They often assist associates with specific tasks but aren’t required to lead a deal from start to finish. Associates need to have the knowledge and leadership skills to carry out an entire deal.
Most associates remain in their role for 2-3 years before being considered for promotion to senior associate. Future promotions would see a senior associate becoming a vice-president/principal, and then director/partner.
The duties and responsibilities of a private equity associate can include:
- Analytical modeling. Associates often prepare due diligence reports, modeling with growth forecasts, and analytical reports necessary for principals and partners to make informed decisions about deals.
- Portfolio company monitoring. Associates often keep track of and maintain up-to-date financials on portfolio companies.
- Reviewing CIMs. A Confidential Information Memorandum is used to provide data about new investment opportunities. A private equity associate would read the CIM, analyze it as a potential fit, and provide a one-page summary for a senior associate.
- Fundraising. Entry-level associates handle preliminary fundraising while more senior members of the team focus on fundraising efforts with existing clients.
What does it take to succeed in the field of private equity?
Those who love both investing and operations will enjoy working in private equity. Many also gain satisfaction in improving the value of companies over time by using their critical thinking, risk assessment, sales, and leadership skills.
Premier Talent Partners places candidates in a wide range of roles in the finance industry with competitive pay, great benefits, and awesome culture. Ready to join the Premier team? Apply now!