Working at a Private Equity Firm

01/08/2024  |   Sin categoría  

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Private equity firms invest in businesses that aren’t publicly traded and then attempt to expand or transform them. Private equity firms usually raise funds through an investment fund that has a clearly defined structure and distribution system and then invest the funds into the target companies. The fund’s investors are known as Limited Partners, and the private equity company is the General Partner responsible for purchasing, managing, and selling the targets to maximize returns on the fund.

PE firms are sometimes criticised for being ruthless in their pursuit of profit They often have an extensive management background which allows them to enhance the value of portfolio companies by implementing operations and other support functions. They could, for example guide a newly appointed executive team through the best practices in financial strategy and corporate strategy and assist in implementing streamlined accounting, IT and procurement systems that reduce costs. They can also find ways to improve efficiency and increase revenue, which is one way to improve the value of their possessions.

Private equity funds require millions of dollars to invest and it could take them years to sell a company for a profit. This is why the sector is illiquid.

Working at an investment firm that deals in private equity typically requires prior experience in banking or finance. Associate entry-levels are primarily responsible for due diligence and finance, while junior and senior associates are responsible for the relationships between the firm’s clients and the company. In recent years, the compensation for these roles has risen.