Working at a Private Equity Firm

Private equity firms invest in businesses which are not publicly traded and then work to expand or transform them. Private equity firms raise funds in the form of an investment fund that has a clearly defined structure, distribution system and then invest it in the companies they wish to invest in. Limited Partners are the investors in the fund, while the private equity firm is the General Partner responsible for purchasing selling, managing, and buying the funds.

PE firms are often criticised for being brutal and seeking profits at all price, but they have extensive management experience that allows them to boost the value of portfolio companies by improving operations and supporting functions. They can, for example help guide a new executive team through the best practices in financial strategy and corporate strategy and assist in the implementation of more efficient IT, accounting and procurement systems to reduce costs. They can also find ways to improve efficiency and increase revenue, which is one method to enhance the value of their holdings.

Private equity funds require millions of dollars to invest, and they can take years to sell a company with a profit. The industry is therefore highly https://partechsf.com/what-you-need-to-know-about-information-technology-by-board-room-discussion illiquid.

Working at an investment firm that deals in private equity typically requires previous experience in finance or banking. Associate positions at entry level focus on due diligence and financing, while junior and senior associates are focused on the relationship between the firm and its clients. Compensation for these positions has been on an upward trend in recent years.