Career guide to private equity

What is private equity?

Private equity is a type of finance where capital is invested into firms that are not traded publicly. PE firms support organizations at every stage of development right from inception (seed capital) to late-stage development (venture capital), transfer of ownership or a leveraged buyout (LBO), and restructuring (turn-around capital).

PE includes investors who:

  • Invest directly in private companies
  • Participate in the acquisition of a public company (withdrawing public capital from listing)

Capital comes from individual and institutional investors and is used to acquire and strengthen balance sheets, expand working capital, and fund new technologies.

Scope of private equity

When asked “Why do you want to go for a private equity career?” The answers we generally get to hear are:

  • Preferences to work in the investment sector
  •  The desire to create long-term value for a company

But a conscientious answer to this is:

  • Handsome salary
  • Business hours are better than investment banking.
  • Most importantly, the work is not monotonous other financial works.  

Let us further read through about the roles, skills, and certifications required for professionals to exclusively accomplish a job role in a private equity career.

Sort of work private equity professionals should be looking for

  • Professionals in this field must be interested in:
  • Long-term projects such as company portfolio building and also be open to non-deal work like fundraising and organization monitoring.
  • Investing and operations using critical thinking to analyze companies rather than just being an agent.

Skills required to work in private equity

A PE professional:

Technical skills

  • Must be proficient in analysis skills/financial modeling
  • Must be able to research markets, customers, and competitors
  • Must be able to develop and evaluate spreadsheets and know financial modeling/evaluation skills.

Non-technical skills

  • Must be competitive, highly ambitious, detail-oriented, quantitative, presentable, and polished.
  • Must know about specific industries

Education and experience requirements in PE

To seek a private equity career one needs to hold:

  • A minimum bachelor’s degree in finance, accounting, or any other related field and sometimes an MBA as well(depends on the job position).
  • There are certain entry-level positions available, but usually, experience working in finance for zero to three years is a requirement.

How do you answer PE interview questions?

To answer the questions in any of the private equity interviews, you need to:

  • Dig deeper into what’s happening in the industry.
  • Make sure you are thorough about everything you need to know.
  • Be sure to ask your networks (peers, colleagues, and teachers) for “market updates”.
  • Learn to differentiate between terms like hedge fund/ portfolio company
  • Find reliable answers to tricky questions by the interviewers.

Despite the existing skills, education, and preparation, not everybody can succeed in passing these tough interviews or even getting shortlisted by employers for the further selection process. In such a case, you can earn a private equity certification as it is a great credential to stay ahead of the competition.

Which private equity certification can you earn?

Many candidates are looking for a relatively large pool of work, so one has to do whatever (s)he can to stay ahead of the competition. Earning a private equity certification helps to improve knowledge and skills by several levels to the level expected by major PE and venture capital (VC) companies.

A good way is to enroll for the Certified Private Equity Professional (CPEPTM) from the United States Private Equity Council (USPEC) or the Chartered Financial Analyst (CFA) certification from the CFA Institute. These institutions have led the world’s most powerful initiatives for decades to establish and disseminate standards, norms, knowledge frameworks, learning ware, benchmarks, and references for PE companies and professionals.

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