A career in private equity is certainly enviable. Thousands and millions of finance graduates each year, try to break into the private equity, but only a few succeed in doing so. The reason? – a cut-throat competition, and an extended skillset to enter the said domain.
A Glance at the PE Industry
PE firms are investment management organizations that buy private companies that showcase a great future potential. These private equity investment professionals usually collect the capital needed to buy private firms by sourcing it from institutional investors and high net worth individuals.
Private equity jobs are among the most sought after, in the finance sector, and hence exists an intense competition for bagging such high-paying work opportunities.
All combined, US private equity firms, manage a total of $1 trillion in investment capitals. This humungous monetary amount is invested in varied forms in the financial markets, such as leveraged buyouts (LBOs), direct investment in private firms, and in acquiring partial stakes in public organizations.
The most renowned private equity firms in the world, at present, are Bain Capital, Kohlberg Kravis Roberts (KKR), and The Carlyle Group. There are other innumerable small PE firms located across the globe, that manage smaller investments, and specialize in managing investments across a specific sub-domain of the finance industry.
Requisite Skills to Become a Successful PE Professional
Below-provided are the essential skills, every aspirant, seeking a rewarding private equity career must possess:
- M&A modelling
- Financial modelling
- General financial analysis
- LBO modelling
Private Equity Qualifications – Funds
PE firms raise numerous pools of capital. Each one of them translates into a separate fund that is invested in organizations chosen by the fund manager.
The funds get projected in the market in the form of either a limited liability company(LLC), or a limited partnership (LP). Managing partner of such funds will generally spend a maximum of 2 years while raising more money out of the already available monetary amount. He will, later, invest the sum in buying new private companies, that will be kept up to a period of 4-7 years. After completing this time span, the fund manager will make sure to exit the acquired company by selling it in the market to another PE firm.
PE Job Position as an Associate
Associates are considered the most junior private equity professionals in the said industry. A majority of them have entered the PE domain having taken a couple of years of experience working as an investment banker. Private equity firms, generally, do not hire graduates having just completed their degree course.
You either need to qualify for a top-tier business school from where you can do your under-graduation degree course in finance, or you must be an experienced investment banker, to enter private equity.
Career in private equity, as an associate, requires you to conduct market research, carry out financial modelling, and perform underwriting tasks on a day-to-day basis. They are also supposed to assist senior team members in tasks such as deal-sourcing, portfolio-management, transaction-handling, company monitoring, and attending phone calls of investors.
Later on, after gaining considerable experience, you move up the ladder in the hierarchy. The next upper-level job positions in private equity that you will acquire, comprise vice president, principal, managing director, and partner.
Role of Vendor Neutral PE Certifications
Private equity certifications, like CPEP (Chartered Private Equity Professional), issued by globally-recognized certifying body USPEC (United States Private Equity Council), are vendor-neutral global professional credentials that are being preferred by the recruiters across the globe.
Acquiring CPEP will offer you a distinct competitive edge that will eventually make you climb up the hierarchical tree, much faster than your colleagues or teammates.
Hope, the article has lent you some valuable suggestions and advise on making a rewarding career in private equity.