Everything You Need to Know About a Career in Private Equity

Finding yourself at a crossroads in your career, whether you are just finishing school or whether you are a seasoned worker, is a daunting and exciting experience. For those with a background in finance, in particular, there are a few coveted career paths that stand out more than others. Private equity is a field which contains many of those coveted paths, which is why learning everything there is to know about the field can help.

What is Private Equity?

For those unfamiliar with the field, private equity refers to investment partnerships where a firm buys and manages a company for a period of time before eventually selling it. A private equity firm is responsible for operating these investment funds over time and aiming to ensure profitability. Oftentimes, people consider private equity to be the same exact thing as venture capital despite the fact that there is a key distinction: private equity firms typically invest in mature companies whereas venture capital exists in the world of start-ups.

Private Equity vs. Public Equity

While fewer people may have heard of private equity, a larger portion may have heard of public equity. This type of equity refers to when a company goes public through an initial public offering (IPO) where an underwriter sets the price of the stock and it starts to trade on public markets. Private equity only deals with companies that have not gone public yet, which is the biggest difference.

How to Secure a Career in Private Equity

Those who are interested in pursuing a career in private equity will certainly want to know how to go about this, as it isn’t easy by any means. Generally, securing a career in private equity requires earning at least an MBA or a master’s degree in finance, as well as multiple years as a consultant in a similar role. However, those who are on the younger side and coming out of school have a chance at being hired right out of the gate if they have a degree in business.

The Career Trajectory of Someone in Private Equity

Finding the best career in private equity can be a challenge due to the fact that private equity is a large field, with openings across healthcare private equity, financial private equity, technological private equity, and more. However, regardless of the specific career path a person is considering, there are four main pieces to the trajectory:

Private Equity Analyst

First and foremost, a person will become a private equity analyst when they are just starting out in their career, which is why this position is most often filled by younger individuals. An analyst tends to handle the research and analysis on potential investments within the industry, including both industry and market analysis. This leads them into making recommendations to clients about whether or not investing in an opportunity is a good idea.

Private Equity Associate

Serving as the next step up after being a private equity analyst, a private equity associate takes on more responsibility. An associate is responsible for conducting industry and market research as well, but they also help maintain relationships with fund managers while also analysing potentially investment opportunities on behalf of clients.

Private Equity VP

Once a person has become established in the private equity world within their career, they can eventually proceed to becoming a vice president. Utilising the data gathered by analysts and associates, a private equity vice president helps to oversee deals and agreements while managing the overall investment strategy and daily operations. This is the first management level role that a person in private equity will likely handle.

Private Equity Director or Principal

Finally, after enough years of experience, a person can progress to becoming a private equity director or principal in their chose field of private equity. In this role, a person will spend the majority of their time focused on sourcing deals or fundraising and are often the point of contract when new people are introduced to the firm.

Begin an Exciting New Career Today

While a career in private equity may not be the right choice for everyone, and certainly will not be an easy field to break into, it can be quite lucrative. For those who are interested in the path, research further into the field to expand upon what you have learned above. Start a new career as soon as possible so that you know whether or not private equity is actually the right path for you to consider.