Working at a Private Equity Firm

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Private equity firms invest in companies that are not publicly listed and work to grow or transform them. Private equity firms typically raise funds in the form of an investment fund with a defined structure and distribution plan, and then they invest that money into the companies they want to invest in. Limited Partners are the investors in the fund, while the private equity firm is the General Partner responsible for buying selling, managing, and buying the funds.

PE firms are sometimes accused of being ruthless in their pursuit of profit however, they usually possess a wealth of management expertise that allows them to increase the value of portfolio companies by implementing operations and other support functions. For instance, they can guide new executive teams through the best practices of financial and corporate strategy and help implement streamlined accounting procurement, IT, and systems to reduce costs. They can also find ways to improve efficiency and increase revenue, which is just one way they can improve the value of their holdings.

Private equity funds require millions of dollars to invest and it can take years to sell a company at a profit. This is why the sector is liquid.

Working for a private equity company typically requires prior experience in finance or banking. Associate entry-levels focus on due diligence and financing, whereas junior and senior associates focus on the relationship between the firm and its clients. Compensation for these positions has been on a rising trend in recent years.