Working at a Private Equity Firm
Private equity firms invest in companies which are not publicly traded and work to grow or transform them. Private equity firms raise funds in the form of an investment fund with a specific structure, distribution system and then invest it in the companies they wish to invest in. Limited Partners are the investors in the fund, whereas the private equity firm is the General Partner responsible for purchasing selling, buying, and managing the funds.
PE firms are often accused of being ruthless in their pursuit of profits however, they usually have a vast management experience that allows them to boost the value of portfolio companies by implementing operations and other support functions. For instance, they are able to visit site walk a new executive staff through the best practices for corporate strategy and financial management and assist in implementing streamlined accounting, procurement, and IT systems to drive down costs. They can also increase revenue and improve operational efficiency that can help them improve the value of their assets.
Private equity funds require millions of dollars to invest, and it can take years to sell a company at a profit. Because of this, the business is highly inliquid.
Private equity firms require experience in banking or finance. Associate entry-level associates are mostly responsible for due diligence and financials, while junior and senior associates are accountable for the interaction between the firm’s clients and the company. In recent times, compensation for these positions has increased.