Working at a Private Equity Firm

Private equity firms invest in businesses that aren’t publicly traded, and then work to expand or transform them. Private equity firms typically raise funds through an investment fund with a defined structure and distribution plan, and then they invest that money into the companies they want to invest in. The fund’s investors are known as Limited Partners, and the private equity firm acts as the General Partner responsible for buying, managing, and selling the targets to maximize profits on the fund.

PE firms are often critiqued for being uncompromising in their pursuit of profit however, they usually have an extensive management background that allows them to boost the value of portfolio companies through operations and other support functions. For instance, they can guide new executive staff through the best practices for corporate strategy and financial management and assist in the implementation of streamlined accounting procurement, IT, and methods to reduce costs. They can also find ways to improve efficiency and increase revenue, which is one way they can enhance the value of their possessions.

Private equity funds require millions of dollars to invest, and it can take years to sell a company at a profit. As a result, the business is highly inliquid.

Working for a private equity firm usually requires prior experience in finance or banking. Entry-level associates work primarily on due diligence and financing, while junior and senior associates are focused on the relationship between the firm and its clients. In recent years, compensation for these positions has risen.

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