Private equity is a promising field for young investment bankers and the best graduates in finance. The lifestyle varies based on the deal activity you get involved, location, team, and other factors.
Moreover, an increasing number of private equity firms provide opportunities for several aspiring individuals to get into the profession. Most of the firms recruit graduates from the University.
Though the competition is tough, a career in private equity wins in many ways. As mentioned earlier, the lifestyle changes as you move up from one position to another in the career.
When you join as a fresher in any of the leading firms, you may have to spend three months shadowing the founder and chief investment officer.
Get introduced to the lifestyles of private equity professionals here.
Private Equity professionals: Entry-level lifestyles
Before joining as an Associate, you should have worked as an analyst for two-three years in investment banking or consultancy firms. As an analyst or an associate, you have a supporting role to play.
An analyst may spend 60 hours a week in the office, but should always hook for calls throughout the day. In a portfolio company, the tasks get driven by the CEO’s business day. As an analyst, a typical day involves:
- Working on the financial model for the deal
- Initial operational assumptions
- Building a forecast for the business potential
- Working beyond number crunching
- Liaise with external people involved in the deal
- It could be a finance division of an investment bank
- commercial consultants, or
- the management teams
As a private equity associate, the typical day plans and task changes. A normal day in the life of an Associate involves:
- Preparing to take care of the pressing issues
- Checking mails and sharing attractive opportunities to the seniors
- Making a new base-case scenario for Leveraged Buyout Model
- Catching up news on both buy-side and sell-side
- Reviewing financial due diligence report of a portfolio company
- Optimizing IRR (International rate of return) using debt instrument
- Managing e-mails of monthly profit and loss
- Conducting market research to assess the company’s growth potential
Moreover, earning a certification in private equity will help you to gain supportive knowledge and skills to move up the ladder.
Private Equity Professionals: Middle-Level Lifestyles
Senior private equity professionals have three to six years of work experience in investment banking, consulting, and private equity with an MBA from business school. The main functions of a Senior Associate in a day involve:
- Screening and modelling of deals
- Identifying, structuring, negotiating, closing, and managing investment transactions
- Monitoring operating and financial performance
- Managing advisors – investment banks, lawyers, and accountants
- Sourcing, underwriting, and closing PE investments
- Performing advanced analytical and operational activities for investments and deals
Private Equity Professionals: Higher-Level Lifestyles
It will take three to six years to become a Vice-President. It is a more challenging position, wherein a typical day involves evaluating and executing investments. The sole responsibility consists of:
- Constructing completive analysis
- Taking a risk to dive into the new markets
- Preparing quarterly LP reports and CEO summits
- Managing the process, finance, and closing
- Building and maintaining internal systems
The next higher position is to become a partner or Managing Director. As a partner, you would be investing a proportion of wealth. As a Managing Director, you will be leading the firm, managing relationships with investors, raising new funds, and participate in investment decisions.
The transition to VP or MD is a tough nut to crack. There will be a fighting chance to become so. However, when all paths are dedicated to perseverance, honesty, market knowledge, and positivity, higher positions are gained in a swift and smooth manner.