Career in Private Equity/career-in-private-equity/index

As a PE Professional, You’ll Be a Business-Builder

Private equity firms are investment management companies that acquire private businesses by pooling capital provided from high net worth individuals (HNWI) and institutional investors. As a PE professional, hence you will be involved in activities and decisions that create new businesses, turnaround old, ailing ones, and grow the promising ones with greater vigor. You will be a part of PE teams that buy a stake in a target company or go in for an outright buyout or engage in “leveraged buyouts” (LBO),

As a PE Professional, You’ll Be a Fund-Builder

You may also be involved in creating and growing Private equity funds by raising money from other investors and larger funds, who want to make more money by acquiring stake in companies that are in need of capital and restructuring, that are already bringing in revenue, and that can be made more profitable. Of course, since you’ll be raising all this money privately, nothing would show up in public exchanges or stock markets.

As a PE Professional, You’re With the World’s Best

Since PE is a complex, capital-intensive and leadership dependent business, only the best financial and business brains and groups operate PE businesses. As a professional, hence, you’d always be working with the best employers and the best teams – like those in TPG, Blackstone, The Carlyle Group, Bain Capital, and Kohlberg Kravis Roberts (KKR), SoftBank among others.

In Private Equity, You’ll Never Be Short on Adrenaline

You work will get you to interact with not only bankers, consultants, and legal representatives, but also CEOs and top management teams though you may still be at a junior level. You will get to know how businesses work at high levels, and do things that create new businesses and improve old ones. Indeed, PE pays well too – often better and bigger than most other white-collar jobs around. In addition to the basic pay and bonus, PE professionals often receive an incentive known as “carried interest,” which is a direct share in their company’s profits and a substantial part of their earnings. PE professionals in the US get to earn carried interest before they reach the director level. In European and Asia-Pacific firms, however, the carried interest is paid at the Director level and beyond.

Who do Private Equity Firms Hire?

Private Equity firms usually hire their Analysts from bulge-bracket investment banks, middle-market banks, and boutique banks. They also consider PE professionals from rival firms, and in rare cases, even undergrads for junior roles in emerging markets. But as a rule, for graduating students or recent graduates with little or no experience, it may be nearly impossible to break into private equity without a specialist, global qualification in PE. That’s the reason students of MBA and MS Finance programs around the world increasingly pursue a high-end global qualification like the CPEP™ simultaneous to their academic coursework.

Investment Bankers & Financial Consultants +
Management Consultants & B-School Graduates+
Non-traditional Backgrounds+

Must-Haves for Private Equity Jobs

There is no doubt, given the importance of analytical abilities, the biggest PE firms prefer candidates with majors in Finance, Business or Engineering or Physical Sciences. Though a top b-school MBA or an ivy-league MS does make you more appealing for PE recruiters during the initial screening stages, it’s no guarantee for a top PE job. A specialist, global qualification in PE showing your expertise in PE per se adds greatly to the appeal for employers. Indeed, as said earlier, strong professional background in investment banking, strategy consulting, corporate development, or restructuring is what recruiters seek.

PE recruiters typically expect and look at the following very closely about candidates for analyst and associate positions:

  • A good academic degree
  • A PE certification
  • knowledge about various industries
  • Experience in finance/ investment banking and PE
  • ability to develop and analyze spreadsheets
  • financial modeling/analysis skills
  • insight into how businesses are doing
  • how management interventions could help businesses
  • ability to research markets, competition, customers, etc

People skills and a cool head to handle deal pressure are also among important requirements. Also show your capacity for leadership and entrepreneurship.

When Do Private Equity Firms Recruit?

For traditional candidates for PE jobs (IB analysts, etc.), there is an on-cycle and an off-cycle recruitment process. The on-cycle process for analysts at big PE and boutique firms runs October-January/March in New York. If you are selected, you will only begin work in August of next year.

The off-cycle process is meant for roles outside New York; roles for anyone who is not working at an investment bank; and roles at smaller firms. Off-cycle takes more time than on-cycle, but you start work immediately. In London, firms start the process in January, not in October, and present “start immediately” and “interview in advance” options.

Tests in the on-cycle process are time-bound and quick. Unlike in on-cycle, tests in off-cycle require more thought and preparation of a real investment thesis. Outside the US and the UK, too, a similar pattern of case studies/modeling tests and interview questions is followed. Headhunters call the shots in the on-cycle process.

PE Tests & Interviews

PE firms usually assess technical capabilities of working under stress and with unstructured information through case studies and modeling tests. These may be quick, 30 minute tests like creating a simple LBO model, or a more standard 1-3 hour exam, asking applicants to build a real LBO model; or even a take-home test in which applicants may be required to write a detailed strategy or an investment thesis and submit it within a few days or a week.

PE interview questions can also be categorized: Fit (questions relating to PE, the firm, your long-term goals); market/industry (about industries/companies that interest you); technical questions (similar to IB interview questions); and deal/client experiences (how you added value to a deal). Many candidates put too much focus on technical and modeling tests and too little on questions about fit, etc., which are equally important. Firms will test your business sense and “commerciality.”

Key Positions


Vice Presidents and Principals

Managing Directors and Partners

Getting That Great PE Job

To elaborate further, we have noted that the largest private equity firms are involved primarily in leveraged buyouts (LBOs). There are some other focus areas that might interest you. These include

  • 01. providing equity to firms that have begun to generate revenue but still require capital to increase growth (growth equity);
  • 02. providing mezzanine debt - debt that is subordinated to bank debt and generally the last stop in the capital structure before equity;
  • 03. participating in secondary funds that purchase private equity interests that are traded;
  • 04. participating in funds that invest in other funds (fund of funds) and
  • 05. investing in turnaround situations – companies that are troubled or bankrupt and need crisis management. Some private equity firms like Cerberus get involved in every stage of the business: venture capital, growth capital, buyouts, mezzanine investments and turnarounds. Others stay focused on just one area such as middle market buyouts (Riverside is a good example). It is very difficult to break in to private equity coming with a recent undergraduate or MBA degree.
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