Working at a Private Equity Firm

02 Aug Working at a Private Equity Firm

Private equity firms invest in businesses that are not publicly listed, and then work to expand or turn them around. Private equity firms raise money in the form an investment fund with a defined structure, distribution system and then invest it in their target companies. Limited Partners are the investors in the fund, and the private equity firm is the General Partner responsible for purchasing, selling, and managing the funds.

PE firms are often accused of being ruthless and pursuing profits at every price, but they have years of management experience that allows them to increase value of portfolio companies by improving the operations and supporting functions. They can, for instance help guide a new executive team through the best practices in corporate strategy and financial planning and assist in implementing streamlined accounting, IT, and procurement systems to reduce costs. They can also boost revenue and improve operational efficiency which can help increase the value of their assets.

Private equity funds require millions of dollars to invest and it could take them years to sell a company at a profit. In the end, the industry is extremely illiquid.

Working for an investment firm that deals in private equity typically requires prior experience in banking or finance. Entry-level associates work primarily on due diligence and financing, whereas junior and senior associates concentrate on the relationship between the firm and its clients. In recent times, compensation for these positions has increased.

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