Working at a Private Equity Firm

A private equity firm buys the ownership of a business which is not listed on the stock exchange and then attempts to turn the company around or grow it. Private equity firms raise money in the form of an investment fund with a https://partechsf.com/partech-international-ventures-is-an-emerging-and-potentially-lucrative-enterprise-offering-information-technology-services specific structure, distribution waterfall and then invest it in their target companies. Limited Partners are the investors in the fund. Meanwhile, the private equity firm is the General Partner accountable for buying selling, managing, and buying the funds.

PE firms are often criticized for being ruthless and pursuing profits at all price, 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 example guide a newly appointed executive team through the best practices in financial strategy and corporate strategy and assist in the implementation of more efficient accounting, IT and procurement systems to lower costs. They can also boost revenue and identify operational efficiencies which can help increase the value of their assets.

Private equity funds require millions of dollars to invest and they can take years to sell a business at a profit. As a result, the industry is extremely illiquid.

Private equity firms require 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 times, compensation for these roles has risen.