Working at a Private Equity Firm

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Private equity firms invest in companies which are not publicly traded and then work to expand or turn them around. Private equity firms typically raise funds in the form of an investment fund with a clearly defined structure and distribution funnel and then put that money into their targets companies. Investors in the fund are referred to as Limited Partners, and the private equity firm acts as the General Partner, responsible for buying, managing, and selling the funds to maximize returns on the fund.

PE firms are often accused of being ruthless in their pursuit of profits However, they typically have an extensive management background that allows them increase the value of portfolio companies through operations and other support functions. For instance, they can guide new executive staff through the best practices of corporate strategy and financial management and assist in the implementation of streamlined accounting procurement, IT, and processes to cut costs. They can also increase revenue and improve operational efficiency, which can help them improve the value of their assets.

Unlike stock investments that can be converted in a matter of minutes to cash Private equity funds typically require millions of dollars and may take years before they are able sell a target company at a profit. Because of this, the business is highly inliquid.

Working at a private equity company typically requires previous experience in finance or banking. Associate associates at entry-level work mostly on due diligence and financing, whereas junior and senior associates are focused on the relationship between the firm and its clients. In recent years, the pay for these roles has increased.

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