Private Equity Job: How to Get into One

Private equity jobs are highly coveted among finance and MBA graduates. The jobs are lucrative, but scarce which makes them highly competitive to procure. Carlyle Group, Blackstone, Apollo Global Management, Bain Capital, KKR & Co. are a few top private equity firms in the world that are known for offering a rewarding career.

Private equity firms raise funds from high net worth individuals, institutional investors, and/or sovereign funds to invest in private companies or buy stakes or for leveraged buyouts (buying controlling stake) in a company. The controlling stake is bought when the PE time feels the need to redirect the growth efforts of the company to maximize the return on the PE firm’s investment. For each fund PE firm manages, it generates nearly 20% profit from it.

Skills for a private equity job

Private equity investment professionals require a gamut of technical skills including analyzing financial statements, comprehensive understanding of contract law, due diligence (finding out financial and legal details), and understanding of other industry sectors in which the firm invests.

Unlike other companies where fresh graduates undergo structured training on the job, most PE firms do not provide training and expect graduates who join them to already have skills, especially technical skills. Thereby, increasing demand for PE professionals but making it tough for individuals to break into it. On top of it, PE firms are very particular about hiring MBA graduates for PE roles. An average PE entrant has an MBA and investment banking experience of up to 3 years.

Most PE firms hire investment banking analysts with 2-3 years of experience at an investment bank. The reason for this is they have good knowledge of financial statements, preparing CIMs, financial modeling, due diligence, deal-making, etc. These are valuable transferable skills and come in handy in a private equity job.

Investment banking is the most common route candidates follow who aspire to work at private equity firms. Firms too look to hire candidates from top consulting firms including Bain & Company, McKinsey, BCG, etc. because of the similar transferable skillset. Other than technical skills, PE roles require strong negotiation, networking, relationship management, and salesmanship which are developed in consulting. These skills are important because PE professionals speak to investment bankers, venture capital firms, high net worth individuals and other investing institutions to convince that their firm can increase their shareholder value, reduce labor union, and improve cost-saving measures. Consulting also improves the operational management skills of consultants, which comes in handy in private equity. Portfolio companies often need restructuring and long -term planning where operations management skills play an important role.

Thus, when you’re applying for a PE role from a consulting background, it is important to consider the skills the firm is looking for. One major difference between consultants and investment bankers is consultants do not have as much exposure to financial modeling and other technical skills as bankers.

Get a private equity certification Private equity certifications like Chartered Private Equity Professional ( CPEP) from the United States Private Equity Council can be highly helpful in procuring a private equity job. This certification specifically focuses on equipping aspirants with the knowledge and skills required to excel in a private equity career. This is a globally –recognized certification and having this certification along with your MBA will significantly increase your chances of getting your foot in the door when it comes to applying for private equity jobs.