Working at a Private Equity Firm

Private equity firms invest in businesses that aren’t publicly traded and then work https://partechsf.com/partech-international-ventures-is-an-emerging-and-potentially-lucrative-enterprise-offering-information-technology-services to expand or turn them around. Private equity firms typically raise funds in the form of an investment fund with a defined structure and distribution plan and invest the funds into their targets companies. Fund investors are referred to as Limited Partners, and the private equity company is the General Partner in charge of buying, managing, and selling the funds to maximize returns on the fund.

PE firms are often criticized for being ruthless and pursuing profits at all cost, but they have vast experience in management that allows them to increase value of portfolio companies by improving operations and supporting functions. They can, for instance guide a newly appointed executive team by providing the best practices for corporate strategy and financial planning and assist in implementing streamlined IT, accounting, and procurement systems to cut costs. They can also identify ways to improve efficiency and increase revenue, which is just one way to improve the value of their holdings.

Private equity funds require millions of dollars to invest and it could take them years to sell a company at a profit. Because of this, the industry is highly illiquid.

Working for a private equity firm typically requires previous experience in finance or banking. Associate associates at entry-level work mostly on due diligence and financing, while senior and junior associates focus on the relationship between the firm and its clients. In recent years, the pay for these roles has increased.