Working at a Private Equity Firm

Private equity firms invest in businesses which are not publicly traded and then work to expand or turn them around. Private equity firms raise capital through an investment fund that has a predetermined structure, distribution waterfall, and then invest it into the companies they want to invest in. Limited Partners are the investors in the fund. Meanwhile, the private equity firm is the General Partner, responsible for purchasing selling, managing, and buying the targets.

PE firms are often criticized for being ruthless and pursuing profits at any price, but they have vast experience in management that allows them to improve the value of portfolio companies by enhancing the operations and supporting functions. For instance, they can guide new executive teams through the best practices in financial and corporate strategy and assist in the implementation of streamlined accounting, procurement, and IT methods to reduce costs. They also can identify ways to improve efficiency and increase revenue, which is a method to enhance the value of their investments.

Private partech international data room do it yourself equity funds require millions of dollars to invest, and it can take years to sell a business for a profit. The industry is therefore highly in liquid.

Private equity firms require experience in banking or finance. Associate positions at entry level focus on due diligence and financing, while senior and junior associates focus on the relationship between the firm and its clients. In recent years, compensation for these positions has risen.