Onboarding a Private Equity Career: The Skill Prerequisites

A large percentage of people in private equity constitute professionals from investment banking sector with a couple of years of work experience. They enter the PE industry as associates, similar to how investment bankers start as analysts in their work domain.

Entering private equity is generally considered an advanced career move for investment bankers, however a very few individuals from the top business schools in the world, directly enter the PE domain. PE firms are mostly smaller in size compared to investment banks that employ hundreds and thousands of people. And hence, the existence of an intense competition to make it into the private equity industry.

Value of worldwide private equity transactions during 2014 & 2019

Talking about the global market size of PE in terms of the total amount of transactions made in the last five years, it was a staggering $845.56 billion during the period starting 2014 until 2019. That is what Statista has quoted in its recent study on the PE sector.

How to Break Into Private Equity in the First Place?

To start with, one will need to bag an entry-level private equity job, which you can do by acquiring at least two years of experience working in the investment banking domain, preferably as an ‘analyst’. The other way out to starting a career in private equity is to directly enter the domain while getting recruited by some PE firm that has come to your business school for hiring.

And that only happens when you doing a degree from a top-tier business school, that too, with a major in finance, or related subjects. In both the cases, you start your private equity career as an ‘associate’.

What Do PE Firms Do as a Business Entity in General?

Private equity firms invest in private companies by acquiring them for a certain amount. Later, they make some changes in the business strategy blueprint of these acquired private firms, and somehow make them do better in the market they belong to, thereby making them more profitable. Once, it starts to do significantly well in the market, PE firms, sell them at a heightened price.

Job Role of Private Equity Professionals

Associates, being the most junior in the hierarchy, work closely with firm partners at each stage of a PE deal. Besides, PE associates get the opportunity to work, and assist, almost every job position at the firm they are hired in, ranging from senior associate, to vice-president, to the CEO. And this way, they get to learn the deal-making process from the beginning stage till its practical realization.

To prepare well for the job role of an associate in a PE firm, one can take up a private equity certification by registering online for such skill-upgradation programs that are offered by a number of globally-recognized accrediting bodies.

Duties of a PE Associate

• Financial Modeling: The primary role of a PE associate is to execute on the financial analysis part of the deal, which eventually helps the seniors at the firm to take an informed call.
• Monitoring of Firm’s Portfolio: Upkeep of the financials of the portfolio organizations of a PE firm, generally comes under the job roles of an associate.
• Conducting CIM Reviews: Confidential Information Memorandum, or CIMs, are the documents that consist details of the new investing opportunities for the PE firm. Associates are supposed to review them, and analyse them for the prospective investment opportunities that can prove to be beneficial for the firm.
• Fundraising: When the PE firm forms new funds, associates are provided with the responsibility of assisting the senior executives in taking the process forward.

Career Roadmap of Private Equity Professionals

PE associates, generally, stay in their respective job designations for two to three consecutive years before being promoted to the role of a ‘senior associate’.

Spending two to three years as a ‘senior associate’, you become eligible to rise higher in the food-chain, and become the Vice-President or the Principal in the firm.

Two to four years working as a Vice-President, you graduate in the hierarchical structure to eventually become the Director, or Partner.

Hope, the article will help you embark on your PE career with an added confidence and surety.

Best wishes!