Becoming a Private Equity Professional: What Does It Take?

A perception prevails among the general public that private equity ropes in the best of the very best in the finance markets. The pay, the perks, and the work, everything connected to PE is considered gold. Everything mentioned until now is actually true. Private equity is pretty much a dream job for any young graduate having a finance background.

And because it has got so many perks attached, breaking into it is considerably tough, maybe ten times tougher than becoming an investment banking analyst!

Private Equity Job – What Do PE Associates Do?

A Typical Day in the Life of a PE Associate

8 – 8:30 AM: You reach office, check emails that had come overnight from different continents. Follow-up with officials and executives located across the globe on video conferences/calls.

8:30 – 9:00 AM: Ruffle thorough important magazines, newspapers, and online news portals, such as WSJ, FT, Bloomberg, etc. to check for anything attention-worthy about your portfolio firms.

9:00 – 9:45 AM: You get a call from the CFO who wants to speak with you on a co-investment opportunity in a blockchain company. You investigate the company’s business model, future market share, growth estimates, among other vital factors, and prepare a brief report about the same.

9:45 – 10 AM: You hold a final discussion exploring the chances of investment in the previously considered co-investment opportunity. It doesn’t feel beneficial to you, and a pass is given.

10 – 11 AM: An Indian Mezz Fund’s managing partner who is all set to raise $350 million walks in to discuss the proposal. However, the past funds have performed well, the concerns on risks related to EM mezz arises. Discussions in the meeting were about the quality of management in the concerned businesses.

11 – 12:30 PM: You write a few meeting notes from the last week, and send some after-meeting DD mails.

12:30 – 14 PM: A lunch presentation organized at a hotel by a US megafund who has raised $10 billion awaits you.

14:30 – 15 PM: An internal meeting is scheduled to assess the company’s pipeline and to scrutinize the business travel itinerary. You get onboard a flight to attend an LP meeting in a different country.

15 – 16 PM: You get busy attending the reference calls from the fund investors that are seeking closure.

16 -18 PM: A little modeling work, meeting notes, and emails will consume these hours. And you are done with the day!

Securing a Private Equity Job: The Way Out

PE recruiting is considered far more difficult in comparison to investment banking. To break into a career in private equity, having some experience with investment banking is almost a necessity. Landing an interview for a PE associate position can be attained through two major avenues:

  • Impress a talent agent or recruiter who could mediate between you and the PE firm to arrange an interview.
  • Networking with private equity professionals and PE firms.

The first option is meant for professionals presently serving the IB domain, and wanting to break into PE. The second option takes into account those who are currently pursuing an MBA or have recently completed the graduation course.

Investment Bankers Seeking a Career in PE

Investment bankers often move to PE, and the recruiting season extends throughout the year. However, recruiting is a slow process, and sometimes, it take months to jump the boat. The best path to take for a move from IB to PE is going with a head-hunter.

Grabbing a Private Equity Job While at a Business School

Network, network, and network! That’s the magic trick, and the easiest one to grab an interview opportunity at a PE firm while at college. PE firms conduct recruitment activities at top business schools, similar to what an investment banking does at an undergrad university. Make the most of such recruitment activities by making valuable industry connections.

Remunerations, Perks, and Benefits in PE

PE remunerations and benefits are best described on WSO, a community of aspiring finance professionals. However, there are several factors that affect the pay and compensation in a PE job. The median income of a PE associate ranges in between $200k-$250k. The base salary lies a bit above what an investment banking professional would get, something more than a $100k. It’s the long-term incentives and annual cash compensation that makes a PE job lucrative.

PE – Exit Opportunities

Private equity might be seen by many as the end career goal, but there are others who don’t feel the same way. There do exist few exit opportunities after a successful run as a PE executive. They are:

  • Venture capital firms, and hedge funds.
  • Entrepreneurship
  • Establishing a portfolio firm.

Concluding Thoughts

However, almost no PE company hires people straight out of college besides the exception of top business schools, a PE internship would certainly help to break in the industry with much ease. The alternate way to enter PE would be gaining a few years’ experience in IB. Talking about an apt educational background to eventually end as a PE professional, a bachelor’s degree with a major in either accounting, statistics, economics, mathematics, or finance will do. An MBA (finance) would never hurt.


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