You must have heard about how highly people think of the private equity field. The primary aspirers of a P.E job are investment bankers. It is no news for an investment banker to be wanting to break into private equity. But, it isn’t everyone’s cup of tea to join P.E. So what is it about private equity that makes it overly competitive and why is so tough to make a place for yourself in it?
If you compare investment banking to private equity, there is a wide difference which most of you might not be aware of. In IB, bankers are required to advise disparate enterprises on topics like acquiring and divesting. They enable companies in optimizing their wealth in the best way possible.
Private equity professionals, on the other hand, are the risk takers since they are ones who directly invest money in organizations. Apart from putting forward ideas as well as crunching numbers, P.E professionals are busy in seeking potential targets, gaining knowledge of the core dynamics of several industries, creating an understanding of the functionality of companies and enabling the management of those companies to run it smoothly.
Mergers, acquisitions and financial modeling are two themes that a private equity professional must have at his or her fingertips. They are obviously needed to have amazing people skills along with excellent communication skills in order to deal with the management and build a robust network. Therefore, a job in P.E is considered to be absolutely well-rounded.
The Lifestyle of Private Equity Professionals
In comparison to investment bankers, the lifestyle of professionals working in private equity firms is considerably better and more peaceful. The first point of difference is that private equity professionals do not have clients. This means they are not required to burn the midnight oil to make presentations.
Also, most of the labor-intensive tasks are outsourced by private equity firms. So, banks help them look for targets and manage acquisitions along with sales processes while consulting firms assist them with precise, persistent work. And, accountant evidently takes care of their finances. However, this doesn’t mean that P.E professionals do not work hard. When it comes to diligent projects, they burn the candles from both ends. But, relatively, their working hours are better, on average.
Private Equity Professionals – The Salary
As Private Equity Professionals, one can never be unsatisfied when it comes to the compensation part. One segment of the pay is the long-term remuneration which is in the shape of ‘Carry’ that is a share of the gains which the fund produces after selling investments. If the fund turns out to be successful, this amount can surely be in millions and millions of dollars. And, this is one of the most attractive qualities of an effective P.E business model. Moreover, being at the peak of the so-called financial food chain, private equity professionals obtain a plethora of unpatrolled benefits.
