Working at a Private Equity Firm
Private equity firms invest in companies that aren’t publicly traded and then attempt to grow or transform them. Private equity firms raise funds in the form of an investment fund that has a clearly defined structure, distribution system and then invest it in the companies they want to invest in. Limited Partners are the investors in the fund, while the private equity firm is the General Partner responsible for purchasing or selling the fund and overseeing the targets.
PE firms are often criticized as being ruthless in their pursuit of profit However, they typically have an extensive management background which allows them to enhance the value of portfolio companies https://partechsf.com/ by implementing operations and other support functions. They can, for example guide a newly appointed executive team through the best practices in financial and corporate strategy and assist in the implementation of more efficient accounting, IT and procurement systems that reduce costs. They can also boost revenue and find operational efficiencies which will help them increase the value of their assets.
In contrast to stock investments, which can be converted quickly into cash, private equity funds usually require a large sum of money and may take a long time before they are able sell a company they want to purchase at profit. Because of this, the market is extremely inliquid.
Working for a private equity firm usually requires prior experience in banking or finance. Associate entry-level associates are responsible for due diligence and finance, while senior and junior associates are responsible for the relationships between the clients of the firm and the company. Compensation for these positions has been on an upward trend in recent years.