Career In Private Equity
Career in private equity needs to be suited to your will and if you are willing to go the end give it some time then any career will suit you, But when we attach career with time the few options that come to our minds are banking, finance, investment or equity investment (private equity, government bonds, etc).
Here we will focus more on a career building with private equity. If you are thinking of opting a career in this then you obviously know it, but let’s be from the start.
What is private equity?
Private equity comprises investors and funds that put millions or billions of their funds for share acquisition of firms which is already minting dollars but in a need of major cash for restructuring and applications.
These firms are generally not noted in public exchange. Private equity firm buys a stake in these firms and after some time sell them out for thick profit or some time for a loss as well.
The work which you required to do demand hours but it is very much interesting. You get to meet not only bankers and lawyers but CEO’s and top management official although when you are at a very primitive stage of your career. The pay (as per other finance career path) is good because you get basic as well as bonuses, but also you get this ‘carried interest’ which is basically some shares of the firm you are working in. So by the time you gain much experience you also have a fair share of the firm in your pocket.
Education Requirement for Career in Private Equity
It is difficult to break into private equity directly after doing your graduation or post graduation with very little experience (exception cases are if you are a Harvard, Stanford, etc graduate). Else you have to start with finance, accounting, mathematics, statistics or economics. The most important qualification to become private equity is to have prior 2-3 years of experience as an investment consultant. Some firms also sometimes look for a candidate who has a certificate in financial management.
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Banking experience also comes handy in this field as banking and private equity required almost the same skills, so it helps them to learn the required skill more easily.
So if you are opting for it, it is more advisable to have a long-sighted view in this field rather than just hit and run.
Career Path in Private Equity
To hop into this bandwagon mainly you have to introduce yourself to the idea of a financial institution. Among the institution, the field can be dividing into two sets, where each one leads to the same destination just that the time taken is different.
- Undergraduate candidates– If you are an undergraduate student then to reach the senior level in your firm you need to have at least 2-3 years of working experience as an associate.
- Postgraduate candidates– If from the previous one you directly want to switch into senior wing then you need to have a postgraduate degree (plus some summer internship in private equity firm).
A career path in here is very straight forward like associate, senior associate, partners, general partners the only thing that matter here is the timing, the point at which you enter this market. Private equity is often seen as a destination rather than a path to open new option, so you have to keep moving until your salary gets added up with carried interest.
Job Position or Application Area
We have already discussed job position it is very straight forward, so let’s talk about the application area.
The ground that we need to cover is massive if we are talking about the application area because one thing that is the major need for any firm is money and equity is the solution to it. That’s why if you are a working member of private equity firm you need to understand if you are investing agriculture firm you need to have agricultural insight or if it is a steel manufacturing plant than you need to have insight in the steel industry.
So the point that I want to put in here is that the ground that you see is limitless and you can not cover all of it, that’s why it is said to define your portfolio and then be an expert in it. Portfolio management is also a very big task in it as you have to keep in mind the different variables that need to be considering while considering a specific profile.
Salary
| Rank | Base salary | Total annual cash compensation | Long-term incentive/carried interest | Total remuneration |
| Analyst | $80.7k | $104.10k | — | $110.60k |
| Associate | $107.7k | $157.3k | $66.2k | $174.8k |
| Senior associate | $138k | $198.4k | $145.9k | $264.5k |
| Director/principal | $246.10k | $400.8k | $383.8k | $687.7k |
| Managing director/partner | $397.40k | $691.30k | $1,517k | $1,873k |
| Chief executive officer | $573.5k | $948.80k | $4,959k | $3,312k |
Source: Preqin Get the data Embed
Salary is not an issue if you are into this sector it is just that the time you need to grow yourself into. As you can see from the chart the more stable you are in the more bonus is there for you. So it a very well paid job.
Career Outlook in Private Equity
Private equity is a career that will never stop growing as it is one of the oldest profession, yes the forms will change with time. There is no actual data that how far will it go in coming years but observing from the market growth there is no stop to it. As one of the siblings of private equity, algorithm trading is reported to grow from 47% current market capturing to 80% in coming 7-10 years.
Conclusion
By looking at all the major aspect of private equity we can say that it a very much straight forward career where the growth is directly proportional to the time spent in the required field.
And watching the personal and professional satisfaction that you will get in this, it appears to be one of the most lucrative fields to work on. So keep the machine running.
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