If you got the “Why private equity?” question in an interview, you’d probably say that you love investing and operations, and you want to build value for companies over the long term.
But in real life, most people are drawn to private equity because it offers high compensation, somewhat better hours than investment banking, and more interesting work.
Some people also enjoy the excitement of working on large deals and interacting with “the best and brightest,” as well as understanding company operations in more depth.
In this article we’ll explore what it’s really like in a career in private equity.
Private equity firms raise capital from outside investors, called Limited Partners (LP), and then use this capital to buy companies, operate and improve them, and then sell them to realize a return on their investment.
The industry is called “private” equity because the companies that private equity firms invest in are private initially, or become private as a result of the investment.
The job is part fundraising, part operational management, and part investing.
The private equity career path attracts people who are:
The private equity career path and hierarchy vary from firm to firm, but here’s a representative example:
And here’s a flow-chart summary:
Unlike other industries such as investment banking, where professionals will typically pursue “Exit Opportunities” into other fields, Private Equity is often seen as an exit opportunity.
Private equity professionals earn well – especially at the upper echelons. Here’s a summary of what to expect at each level in a front-office role at a big firm in North America (pay will typically be lower in other countries):
|Position Title||Typical Age Range||Base Salary + Bonus (USD)||Carry||Time for Promotion to Next Level|
|Senior Associate||26-32||$250-$400K||Small||2-3 years|
|Vice President (VP)||30-35||$350-$500K||Growing||3-4 years|
|Director or Principal||33-39||$500-$800K||Large||3-4 years|
|Managing Director (MD) or Partner||36+||$700-$2M||Very Large||N/A|
For more details, see our article on private equity salaries, bonuses, and carried interest (carry).
To get into private equity, you’ll need:
For more, see our comprehensive guide on How To Get Into Private Equity.
Private equity is a highly competitive and sought-after field. PE firms are small, tight-knit, and full of extremely smart and highly motivated people.
As a starting point, the right career background is critical. Overwhelmingly, PE firms hire people with experience working for top investment banks, and sometimes those with consulting, Big 4 transaction services, or related deal/valuation experience (e.g., corporate development at a normal company).
That said, firms expect new hires to hit the ground running with usable skills. And if you want to be competitive in interviews, you need to be well-versed in explaining your deal/client experience and answering technical questions and case studies.
Some of the courses offered by Mergers & Inquisitions and Breaking Into Wall Street that will help you win private equity roles include:
Completing these courses will help you win interviews and job offers for roles that pay $150K+ and position you for careers in private equity.