Private equity firms are investment management companies that acquire private businesses by pooling capital provided from high-net-worth individuals (HNWI) and institutional investors. Private equity jobs are considered the most sought-after and competitive careers in finance.
The private equity firms manage nearly $1 trillion of investment capital that they put to use through strategies such as direct investment in private companies, leveraged buyouts (LBOs), and sometimes even partial stake purchases in public companies.
The job role in the private equity industry is mainly involved to gain capital from outside investors, called Limited Partners (LP), and use the raised capital to buy other firms, improve them and then sell them to get the returns on their investment. The job consists of part operational management, part fundraising, and part investing.
In this article, let’s get a few details about the important aspects an individual should know before they get into private equity.
Prerequisites to get into a PE firm
If an individual is looking for a job in the private equity industry, then they must consider the following:
- If an individual has done an MBA and has relevant experience in investment banking, then consider the exit strategy and join a PE firm as a post-MBA associate.
- If an individual wants to get into the PE industry, your age should be less than 30 years for an entry-level position. However, if you want to go into a senior position and have relevant experience, then your age can be more than 30.
- An individual can also consider real estate roles like commercial real estate brokerage so that they can break into real estate PE.
- If an individual has prior banking experience and they are in a senior position, they can join a PE firm as an ‘Operating Partner or Consultant’.
- If an individual wants to have the edge over their peer group, they should do multiple internships and certification programs, to begin with.
Private equity skills
The private equity career attracts individuals who possess these things:
- People who are highly attentive to details.
- Those who focus on achieving more and are willing to work long hours
- Individuals who are interested in cracking deals
- Those individuals who take risks rather than just investing in public companies
- Show interest in operations and investing
- Use critical thinking to evaluate companies rather than just selling or by just being an agent.
- Willing to be a part of long-term projects, which include building a portfolio company across many years
- Interested to do non-deal work like fundraising and monitoring the company.
- Must possess the ability to think critically about investments and companies.
- Soft skills to be a right fit in the private equity industry.
Apart from these, one must possess good technical skills. Those skills include:
- General financial analysis
- Financial modeling
- M&A modeling
- LBO modeling
The best way to enhance one’s skills before entering a private equity firm is by doing a certification program. There are many certifications available in the market. One such certification is Chartered Private Equity Professional (CPEP™) from the United States Private Equity Council (USPEC). Individuals who are aspiring for PE jobs from remote parts of the world can also apply for this certification program.
This CPEP™ is an industry-focused qualification, which elevates the knowledge and employer-appeal and will also bring an individual to the same high standards expected by the top PE firms.
Top PE firms
Here is a list of top PE firmswhere an individual can begin his/her career.
- Apollo Global Management Inc.
- Warburg Pincus LLC
- KKR & Co. Inc.
- The Blackstone Group Inc.
- Neuberger Berman Group LLC
- The Carlyle Group Inc.
- Bain Capital LP
- CVC Capital Partners
- Vista Equity Partners M
- EQT AB
Start immediately if you want to be in this growing industry. Master the aforementioned skills and network well. Apply to the firms where you can get an entry-level job and which offers you more learning experience.