Working at a Private Equity Firm
Private equity firms invest in companies that are not listed publicly and then work to expand or turn them around. Private equity firms raise capital by way of an investment fund with a specific structure, distribution system and then invest it into the companies they wish to invest in. Limited Partners are the investors in the fund. Meanwhile, the private equity firm is the General Partner accountable for buying or selling the fund and overseeing the funds.
PE firms are often critiqued for being uncompromising in you can check here their pursuit of profits however, they usually have extensive management expertise that allows them to increase the value of portfolio companies through operations and other support functions. For instance, they could guide new executives through the best practices in corporate strategy and financial management and help implement more efficient accounting, procurement, and IT processes to cut costs. They also can find ways to improve efficiency and increase revenues, which is one way they can improve the value of their investments.
Private equity funds require millions of dollars to invest, and it could take them years to sell a company with a profit. This makes the industry highly liquid.
Private equity firms require prior experience in banking or finance. Associate entry-level associates are mostly responsible for due diligence and finance, whereas senior and junior associates are responsible for the relationships between the firm’s clients and the company. In recent years, compensation for these roles has risen.
