Private equity firms
Private Equity (PE)Private Equity Career ProfilePrivate equity analysts & associates perform similar work as in investment banking. The job includes financial modeling, valuation, long hours & high pay. Private equity (PE) is a common career progression for investment bankers (IB). Analysts in IB often dream of “graduating” to the buy side, is an asset class and investing style that consists of buying an ownership interest in operating companies that are private – not publicly-traded. Common strategies within P.E. include leveraged buyoutsLeveraged Buyout (LBO)A leveraged buyout (LBO) is a transaction where a business is acquired using debt as the main source of consideration. An LBO transaction typically occur when a private equity (PE) firm borrows as much as they can from a variety of lenders (up to 70-80% of the purchase price) to achieve an internal rate return IRR >20% (LBO), venture capital, growth capital, distressed investments, and mezzanine capital. Typically, a PE firm looks for firms that are undervalued, so that acquiring the company will create value for the PE firm. Alternatively, a PE firm will look for a target firm that will synergize with its current operations to create value. In this article, you’ll find a list of the top 10 private equity firms in the world.
PE firms raise large amounts of capital (equity and debt) to buy companies, hold them for a period of time, and typically sell them as an “exit strategy”. The total amount of capital raised is how we have ranked the top ten private equity firms in the world.
Who are the top 10 private equity firms in the world?
(Top 10 P.E. firms sorted by total capital raised – from Wikipedia)
- The Carlyle Group – Washington D.C.
- Kohlberg Kravis Roberts (KKR) – New York City
- The Blackstone Group – New York City
- Apollo Global Management – New York City
- TPG – Fort Worth
- CVC Capital Partners – Luxembourg
- General Atlantic – New York City
- Ares Management – Los Angeles
- Clayton Dubilier & Rice – New York City
- Advent International – Boston
How to get hired by a PE firm
People typically enter private equity from investment bankingInvestment Banking Career PathInvestment banking career guide - plan your IB career path. Learn about investment banking salaries, how to get hired, and what to do after a career in IB. The investment banking division (IBD) helps governments, corporations, and institutions raise capital and complete mergers and acquisitions (M&A). Analysts work 100, as bankers work closely with PE firms on most of their deals, and so it’s simply a very logical way to enter the industry.
For more information on how to break into private equity check out our interactive Career MapMapInteractive Career Map - discover your career path in corporate finance. Learn which job is right for you: salary, personality, skills, certifications etc., as well as our financial modeling and valuation courses that are required skill-sets for the job.
Skills in Private Equity
For Analysts and Associates in private equity, the required skill set is a lot like that for investment banking – lots and lots of financial modelingWhat is Financial ModelingFinancial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. A 3 statement model links income statement, balance sheet, and cash flow statement. More advanced types of financial models are built for valuation, plannnig, and and presentation making. The work can be categorized into two kinds of tasks: (1) working on transactions and (2) managing portfolio companies.
When working on transactions, analysts and associates are responsible for building a financial model for valuation purposes, and for preparing transaction documents such as a Letter of Intent (LOI) or a Definitive Purchase AgreementDefinitive Purchase AgreementA Definitive Purchase Agreement (DPA) is a legal document that records the terms and conditions between two companies that enter into an agreement for a merger, acquisition, divestiture, joint venture or some form of strategic alliance. It is a mutually binding contract.
When managing portfolio companies, the work involves financial analysis, measuring performance, financial planning, and working closely with the company’s CFOWhat Does a CFO DoWhat does a CFO do - the job of the CFO is to optimize a company's financial performance, including: reporting, liquidity, and return on investment. Within a company, these responsibilities fall into departments typically known as the controller's group, treasury, and financial planning and analysis (FP&A) to optimize the operational efficiency of the business.
Source: CFI financial modeling templates.
Additional resources
This has been CFI’s guide to the top 10 private equity firms. To keep learning and advancing your career, we recommend checking out these additional resources:
- Private equity career pathCareer Guide to Private Equity JobsThis career guide to private equity jobs provides all the information you need to know - positions, salary, titles, skills, progression, and much more. Private equity firms are investment management companies that acquire private businesses by pooling capital provided from high net worth individuals (HNWI) and institutional investors.
- LBO ModelLBO ModelAn LBO model is built in excel to evaluate a leveraged buyout (LBO) transaction, which is the acquisition of a company that is funded using a significant amount of debt. The aim of the LBO model is to enable investors to properly assess the transaction earn the highest possible internal rate of return (IRR).
- DCF ModelDCF Model Training Free GuideA DCF model is a specific type of financial model used to value a business. DCF stands for Discounted Cash Flow, so the model is simply a forecast of a company’s unlevered free cash flow discounted back to today’s value. This free DCF model training guide will teach you the basics, step by step with examples and images
- Private company valuation methodsPrivate Company Valuation3 techniques for Private Company Valuation - learn how to value a business even if it's private and with limited information. This guide provides examples including comparable company analysis, discounted cash flow analysis, and the first Chicago method. Learn how professionals value a business
