Having a career in private equity is like a dream for a lot of people who have an analytical mind and wish to make tons of money. As it is one of the most lucrative and competitive careers in finance.
That is because private equity firms deal with millions and millions of dollars. So firstly, let’s have a look at how private equity firms function.
An overview of how organizations in private equity work
- Investment management organizations that pool the capital contributed by individuals as well as institutional investors who possess a high net worth for the purpose of acquiring private companies.
- Working in a private equity firm involves some really hard work. This is because usually, an organization in private equity manages approximately one trillion dollars which are supposed to be put to use very carefully.
- And it is done through the application of multiple strategies such as leveraged buyouts and direct investment in private companies. Sometimes they also partially buy stakes in public companies.
Some of the big firms in private equity include Bain Capital, Kohlberg Kravis Roberts, and The Carlyle Group. Some firms in private equity also manage deals involving the lesser amount of dollars and are referred to as boutique private equity firms. Such firms are often highly specialized depending upon the kind of organizations they make investments in.
Careers in private equity
- Due to the interesting work along with the perks you get for doing that work, having a job in private equity is an aspiration for the most talented individuals in the financial sector. However, the world of equity is not just limited to professionals who possess a finance background as there are many crucial positions in equity that require people from diverse educational backgrounds.
- It is not very easy to build a private equity career as unlike investment banks, private equity firms do not require too many employees. And this creates some really intense competition among candidates for the limited slots available.
- Private equity firms are also quite popular for their comprehensible staff structure between senior and junior personnel. So basically, individuals at senior roles (for example, individual fund managers) are given the responsibility for making critical investment decisions, while professional occupying junior positions do not get the opportunity to manage any glamorous work. They are more involved in handling basic stuff such as researching companies, preparing reports and prospectuses.
Another interesting fact about equity firms is that the senior executives and the entry-level associates get the chance to interact on a day to day as these firms work in pretty close quarters. This blurs the gap between the senior management and junior associates which creates a communal feeling among them.
The biggest motivation for individuals to join private equity is the hefty salaries as well as the ample performance bonuses that large-scale equity firms provide to their staff members. It is a well-known fact firm in private equity are one of the most high-paying employers in the world of finance.