Working at a Private Equity Firm

A private equity company takes the ownership of a business that is not publicly listed and then seeks to turn the company around or to grow it. Private equity firms usually raise funds in the form of an investment fund with a defined structure and distribution plan, and then they invest that capital 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 accountable for buying, selling, and managing the targets.

PE firms are often critiqued for being uncompromising in their pursuit of profits However, they typically have extensive management expertise that allows them to increase the value of portfolio companies by implementing operations and other support functions. They could, for example help guide a new executive team by providing the best practices for financial and corporate strategy and assist in the implementation of streamlined IT, accounting and procurement systems to reduce costs. They also can find ways to improve efficiency and increase revenue, which is a way to improve the value of their holdings.

Unlike stock investments which can be converted quickly into cash and cash, private equity funds generally require millions of dollars and may take a long time before they can sell a target company at a profit. The this link sector is, therefore, highly in liquid.

Private equity firms require prior experience in finance or banking. Associate entry-level associates are principally responsible for due diligence and financials, while junior and senior associates are responsible for the relationships between the firm’s clients and the firm. Compensation for these positions has been on a rising trend in recent years.