Private Equity Career Profile

Private equity career overview

Private equity (PE) is a common career progression for investment bankers (IB).  Analysts in IB often dream of “graduating” to the buy side, where they are many advantages but hours are still extremely long and require extensive financial modeling work.  Some roles in private equity are less client facing/sales oriented than investment banking, however senior principals at PE firms do a lot of fundraising, which involves a lot of relationship management.

Read more: buy side vs sell side

Personality

The personality of someone suited well for working in private equity on the buy side typically has the following character traits:

• Highly ambitious
• Competitive
• Detail oriented
• Quantitative
• Polished and presentable

Interview prep

Interview prep is critical for landing a job in PE.  There are three main categories of questions in PE interviews: behavior, technical, and prior deal experience.  For behavior and technical questions, please see our investment banking interview guide, which will bear a strong similarity to the types of questions you’ll be asked in PE interviews.  When talking about your deal experience, you should it in a way similar to how you have it written on your resume.  Start with a summary describing the main deal/overview, and then dive into two or three key issues or pieces of analysis that you played a big role in, and how they impacted the outcome of the deal.

Private Equity – Entry point

There are two main entry points into private equity: investment banking or an MBA program.

Associates are typically recruited from top MBA programs.  They may or may not have prior banking experience. They usually spend two to three years before they may be promoted to VP or move on to something else.

Associates are also frequently recruited from investment banks, where it is assumed that they have done a lot of financial modeling and valuation.

Private Equity – Exit strategy

Analysts and associates typically try to move up and eventually become principals in the firm.  Alternatively, after gaining valuable experience, some may leave to start their own firms or acquire operating businesses.  Many ex-PE people own and operate small to mid-sized businesses.

Compensation

Below is a guideline of how much you can earn in PE.  It should be noted that there can be a wide range based on the bank, the year, and the city you’re working in.

Associate: $200,000 to $300,000 (base salary plus bonus)
VP/Director: $300,000 to $600,000 (base salary plus bonus)
Principal: 1,000,000+

Private equity course work

Taking investment banking courses can be an invaluable way to learn what’s required on the job before you get hired.

It’s important to start with a solid understanding of accounting fundamentals.  Next, you should have a solid Excel crash course under your belt, which will teach you the basics, including shortcuts, formulas, and functions.  From there you can progress to financial modeling courses, which will be the basis of a day to day job in IB.  By taking a few courses, you can learn about various industries and see different types of models.

Thank you for reading CFI’s guide to a private equity career path.

If you want to save money on your financial education, your best bet is CFI’s Full Access Bundle.