Private Equity Careers

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:

• Competitive, high achievers who are willing to work long, grinding hours.
• Extremely attentive to detail.
• Interested in deals rather than simply following the markets or investing in public companies or other assets.
• Interested in investing and operations and using critical thinking to evaluate companies rather than selling or being an agent.
• Interested in long-term projects such as building a portfolio company over many years, and are also open to non-deal work, such as company monitoring and fundraising.

The private equity career path and hierarchy vary from firm to firm, but here’s a representative example:

• Private Equity Analyst – Logistical Monkey
• Associate (Pre-MBA) – Deal and Analytical Monkey
• Senior Associate – More Experienced Monkey
• Vice President – Manager of Deals
• Director or Principal – Generator and Negotiator of Deals
• Managing Director or Partner – Rainmaker, Fundraiser, and Chief Representative.

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):

For more details, see our article on private equity salaries, bonuses, and carried interest (carry).

To get into private equity, you’ll need:

1. A sequence of highly relevant work experience, including transactions and financial modeling.
2. Top academic credentials (grades, test scores, and university reputation);
3. A lot of networking and interview preparation;
4. Something “interesting” that makes you appear to be a human rather than a robot;
5. The ability to think critically about companies and investments rather than just “selling” them.
6. A strong cultural fit with the firm – PE firms are much smaller than banks, so “fit” and soft skills are even more important.

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 tend to be relatively 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 a top investment bank, or professionals who already work in PE in different firms. 

That said, firms expect new hires to hit the ground running with usable skills. We recommend that professionals seeking a job in private equity should:

• Ensure they can answer the “Why Private Equity?” interview question like a seasoned pro. 
• Have a strong grasp of interview principles such as those covered in the BIWS Investment Banking Interview Guide. 

Private Equity interviews don’t come along every day: ensuring solid knowledge of these fundamentals will ensure you’re in the strongest possible position to land a job in the industry.