Working at a Private Equity Firm

Private equity firms invest in companies which are not publicly traded and then work to grow or turn them around. Private equity firms typically raise funds through an investment fund that has a defined structure and distribution plan and then put that money into the target companies. The fund’s investors are known as Limited Partners, and the private equity company is the General Partner responsible for purchasing, managing, and selling the target companies to maximize the returns on the fund.

PE firms are often critiqued for being uncompromising in their pursuit of profit They often have a vast management experience that allows them to increase the value of portfolio companies through operations and other support functions. They can, for instance, guide a new executive team by guiding them through the best practices in corporate strategy and financial planning and assist in the implementation of streamlined accounting, IT https://partechsf.com/what-you-need-to-know-about-information-technology-by-board-room-discussion and procurement systems to reduce costs. They also can identify operational efficiencies and boost revenues, which is one way they can enhance the value of their investments.

Unlike stock investments which can be converted in a matter of minutes to cash Private equity funds typically require millions of dollars and may take a long time before they are able sell a target company for an income. This is why the sector is liquid.

Working at an investment firm that deals in private equity typically requires prior experience in banking or finance. Associate entry-levels focus on due diligence and financing, while senior and junior associates focus on the relationship between the firm and its clients. Compensation for these positions has been on a rising trend in recent years.