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The Path To A Career In Private Equity - Career - Nairaland

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The Path To A Career In Private Equity by sharmaniti437: 11:46am On Aug 26, 2019
Commerce and finance graduates idolize working at private equity firms, even more than investment banking. A career in private equity is often the destination and generally not a place to open up better opportunities. Compared to other sectors in the financial services industry, private equity pays more than any other sector.

A Financial Analyst, earns an average of $296,155, according to the 2015 Private Equity and Venture Capital Compensation Report. However, not all analysts, earn this much. For fresher analysts, it lies between $100,000 to $120,000. Further, job opportunities in private equity are also growing. It is projected to grow by nearly 37 percent from 2012- 2022, according to the U.S. Department of labor.

What does a private equity career look like?

Investors and funds make private equity firm. These funds can range from millions to billions. These funds are used to buy a stake in companies that are looking to raise capital for expansion or restructuring.

As an analyst, you will manage private equity firms’ portfolio of companies, find investment opportunities and look for possible exits from invested companies, in ways that maximize return for a private equity firm. This requires a lot of number-crunching and looking at financials of portfolio companies.

Analysts typically spend around two-three years in this role, before being promoted to senior associate. Another at least 10 years of experience, leads to managing director. General partners typically have 10-15 years of experience working in private equity.

What skills do you need to be a private equity professional?

Private equity firms hire undergrads, MBA grads, and experienced professionals. Most private equity professionals come from investment banking. Certifications in private equity are also helpful to enter private equity. Many of them have spent years gaining knowledge of private equity and looking through good deals.

Private equity requires almost the same set of skills. Work can get stressful at times, mostly when a potential deal comes through. Compared to investment banking, it is a less pressurizing job. To start a career in private equity, you need –

1.Strong analytical skills-At every level in private equity, a thorough inspection of financials is required. For this, strong analytical skills are required.

2. knowledge of financial modeling/analysis Knowledge of the capital market, business finance, commodities, etc. comes handy while evaluating financials of prospective investment companies and prepare reports.

3. Knowledge of specific industries – Analysts are typically required to focus on select industries. During market research, knowledge of specific industries gives you an edge over private equity professionals who don’t hold that knowledge.

4. Market, competition, and customer research – Seeking a high-yielding private equity investment deals require looking through market, competition, and customers, so sound knowledge of these areas would push you to do better.

Overall, a career in private equity is highly rewarding given the payouts and future job outlook, but it also requires extensive experience, to look through financials, and spot investment opportunities.

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