Why is private equity so hard?
Landing a career in private equity is very difficult because there are few jobs on the market in this profession and so it can be very competitive. Coming into private equity with no experience is impossible, so finding an internship or having previous experience in a related field is highly recommended.
While the travel will be less, the work in private equity is very stressful and demanding, so the hours you actually spend working may be more stressful or mentally demanding.
Market conditions have changed materially and the cost of debt is much more salient than it has been compared with the previous decade. Exacerbating this is the trend over the past 18 months of banks retrenching from leveraged buyouts, leaving private credit as the main source of funding to help finance these deals.
Working at a Private Equity Firm
The private equity business attracts some of the best in corporate America, including top performers from Fortune 500 companies and elite management consulting firms.
Private equity is a highly competitive and sought-after field. PE firms are small, tight-knit, and full of extremely smart and highly motivated people.
Private equity professionals work long hours and are highly competitive and must think critically, and have a passion for financial investing deals, not just following the markets. Other requirements to start a career in private equity are: Excellent grades and a notable transcript in school.
I'll tell you right now, private equity is a pretty hard and busy job. Any deal-oriented job is going to involve intense, short sprints and private equity is no exception. It's not quite at the level of investment banking hours, but you'll still be working a lot.
Breaking into Private Equity
I'll be upfront with you: getting into private equity isn't easy. Not only do private equity firms have extremely particular job requirements, they also offer relatively few roles.
Compared to other jobs in the financial space, private equity roles can provide a more balanced lifestyle, potential for better pay and more engaging, connected work. Private equity is growing in popularity, and an increasing number of college graduates or financial professionals are looking to break into the space.
A career in private equity is one of the most desired professional pathways for a number of reasons – it can be extremely lucrative, it's intellectually rewarding, and in general provides a better work/life balance than other highly competitive areas in finance such as investment banking.
Why is IB better than PE?
Analysts at all types of private equity firms earn significantly less than Associates, just as Analysts in IB earn significantly less than Associates. In fact, PE Analysts often earn less than IB Analysts! So, you might initially make less money if you start in private equity.
Both careers demand exceptionally long hours, with investment banking often requiring analysts and associates to work 80 hours a week or more. Private equity generally offers a better work/life balance, but long hours may be required, particularly during the execution phase of a deal.
Ultimately, it depends on your goals and needs. If you're an established company looking to expand or restructure, PE may be a better fit. If you're an early-stage company looking to grow and develop, VC investment would make more sense.
Why Leave Private Equity? The short, simple answer is that you might work in the field for a few years and find out it's not for you. For example, maybe you have to do a lot of “sourcing” (cold calling), which you dislike. Or you find it boring to look at deals constantly but reject 99% of them.
Fully agree with Pedro here - CFA is not necessary and doesn't really give you an advantage. Most of the work is CDD, as you point out, so as long as you can read and interpret financial statements, you're good.
Private Equity Principal Salary + Bonus: Compensation reports indicate highly variable numbers, but the 25th to 75th percentile is in the $500K to $800K range. Carry becomes even more important at this level and may substantially increase total compensation.
With this power, however, comes greater accountability, as they're more deeply involved as company shareholders. This can lead to greater stress in private equity than in consulting firms.
| Private Equity Salary Data | ||
|---|---|---|
| 2nd Year Associate | $160k – $180k | $170k – $270k |
| 3rd Year Associate | $180k – $200k | $180k – $300k |
| Senior Associate | $200k – $220k | $210k – $390k |
| Vice President (VP) | $230k – $260k | $340k – $520k |
As for hours, both private equity and investment banking can be demanding careers. However, investment bankers tend to work longer hours, often working late into the night and on weekends. Private equity firms also tend to have a more relaxed work environment and offer more flexible hours.
Private Equity Associate salary in India ranges between ₹ 2.5 Lakhs to ₹ 44.0 Lakhs with an average annual salary of ₹ 11.8 Lakhs. Salary estimates are based on 125 latest salaries received from Private Equity Associates. 0 - 5 years exp. 0 - 5 years exp.
How much does a private equity CEO make?
As of Feb 29, 2024, the average annual pay for a Private Equity Ceo in the United States is $82,146 a year. Just in case you need a simple salary calculator, that works out to be approximately $39.49 an hour. This is the equivalent of $1,579/week or $6,845/month.
As of October 2019, the US college population size of students pursing business degrees is 3.9 million,3 according to the National Center for Education Statistics. For a student looking to break into one of the top 10 PE firms, your chance is 1 in 300 or 0.33%.
Private equity is a core pillar of BlackRock's alternatives platform. BlackRock's Private Equity teams manage USD$41.9 billion in capital commitments across direct, primary, secondary and co-investments.
One potential route to break into private equity without a banking background is via management consulting. It's slightly more difficult than breaking in from investment banking, but it's common enough that you'll still be able to leverage headhunters and participate in standard on-cycle and off-cycle recruiting.
Private Equity Worldwide
According to Statista, the USA, China and the UK are the clear leaders in Private Equity activity worldwide, with the USA being the 800 pound gorilla in the room.
