Working at a Private Equity Firm

Private equity firms invest in companies that aren’t publicly traded 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 waterfall and invest the funds into the companies they want to invest in. Investors in the fund are known as Limited Partners, and the private equity firm acts as the General Partner responsible for buying and selling the target companies to maximize the returns on the fund.

PE firms are often critiqued for being uncompromising and pursuing profits at all cost, but they possess years of management experience that allows them to improve the value of portfolio companies through improving the operations and other functions. For instance, they could walk a new executive staff through the best practices for financial and corporate strategy and help implement streamlined accounting procurement, IT, and systems to drive down costs. They also can find operational efficiencies and boost revenue, which is one method to improve the value of their investments.

Private equity funds require millions of dollars to invest, and they can take years to sell a company at a profit. The industry is therefore highly liquid.

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