The Upsides of a Private Equity Job
For people looking to work in finance, careers in private equity are a popular option. The chance to work closely with companies, evaluate investment and acquisition targets, learn closely about how businesses function, and earn great salaries in a prestigious, high-flying profession attracts the best candidates each year. These flock to apply to leading US private equity firms and elsewhere in the world, though only a few make it through to their dream job every year.
Here are the top reasons that attract people to private equity jobs:
A prestigious job
Private equity careers take you to the top of the finance sector, as they are highly prestigious. Professionals are part of management boards, they look across countries and sectors for large companies to buy and sell, and they offer advice and coaching to CEOs. The good PE firms take on very few people every year, and those hires tend to stay with the firms for long durations. It is thus considered quite an achievement to land a good PE job, as the person would have been selected by a very picky employer.
Better lifestyle than investment banking
Private equity jobs put demands on one’s lifestyle, but less so than, say, investment banking. There are no fixed clients, nor is there often the need to do quick, rushed, yet comprehensive presentations. Many effort-intensive tasks are handled not by the PE professionals themselves but by others – financial aspects looked at by accountants; due diligence conducted by consulting firms; and target identification as well as sale and acquisition management handled by banks. The work is tough, no doubt, and there are several long nights especially during due diligence processes, but overall the hours tend to be much better.
The other side is that pressure may not be constant but is in fact greater in private equity careers, due to the higher levels of responsibility entrusted even to juniors and no multi-level checking before work goes to the partner. There is more working by oneself in this field, so the camaraderie of an investment bank or other occupation could be missed.
Better long-term pay
A big upside of careers in private equity is that a large part of the compensation is made up by “carry”, which is a specific percentage of the profit made by the PE fund when it sells off its investments. This typically adds up to a massive amount over the duration of employment with a successful PE firm, which makes working with successful US private equity firms as well as those elsewhere across the world, an attractive proposition.
More intellectual challenges
A major difference in working for US private equity firms as well as PE firms elsewhere is that the job involves directly investing money in companies, as against an investment banker who basically advises a company on what to divest, what to acquire, and how to optimize finances. Private equity careers involve vast responsibilities such as pitching ideas, scouting attractive acquisition targets, crunching numbers, pitching ideas, and digging deep into how the management of a company should be better organized. This requires the person to have strong soft skills such as communication and personal skills so that he or she can interact and network well. A solid grasp of financial modeling and M&A is helpful and in fact imperative.
To boost the chances of starting or growing in private equity careers, it is helpful to have a private equity qualification. A desirous candidate could obtain a private equity certification from a reputed institution, as a certification shows the holder has the latest skills and knowledge in PE. It also shows the person looks to invest in continual learning and is capable of taking on higher roles in the field.