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Working at a Private Equity Firm

A private equity firm takes an ownership stake in a company that is not listed publicly and attempts to turn the company around or increase its size. Private equity firms International Ventures raise funds through an investment fund that has a predetermined structure, distribution funnel and then invest it into the companies they want to invest in. The fund’s investors are referred to as Limited Partners, and the private equity firm acts as the General Partner, responsible for buying, managing, and selling the targets to maximize profits on the fund.

PE firms are often accused of being ruthless and pursuing profits at all cost, but they possess vast experience in management that allows them to boost the value of portfolio companies by improving operations and other functions. For instance, they could guide new executive staff through the best practices in corporate strategy and financial management and assist in the implementation of streamlined accounting, procurement, and IT processes to cut costs. They also can find ways to improve efficiency and increase revenue, which is one method to enhance the value of their possessions.

Unlike stock investments that can be converted quickly into cash however, private equity funds typically require a large sum of money and could take years before they are able sell a company they want to purchase at profit. This is why the sector is in liquid.

Private equity firms require experience in finance or banking. Associate positions at entry level focus on due diligence and financing, while junior and senior associates focus on the relationship between the firm and its clients. In recent years, the compensation for these positions has increased.

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