How to get into private equity: what you need to know

If you want to know how to get into private equity, start by reading our guide. If this is the career for you, there is no better time to make the move.

Private equity is something of a promised land for many finance professionals and the industry is currently booming — if you’re looking for a career in private equity, there really has never been a better time to make the move.

How to become a private equity analyst

To become a private equity analyst, you will need a bachelor’s degree in accounting, finance or a related programme and sometimes an MBA as well. Entry-level positions are available, but usually experience working in the financial sector is a requirement.

The most common way to get into private equity is via investment banking. Those working in finance move into private equity because it offers many attractions, including:

  • Interesting and sociable work as your team analyse a variety of different industries
  • The compensation — high salary, generous bonuses and enviable carried interest
  • A good working culture — fewer deals to focus on per year compared to banking — long-term projects
  • Continual learning about different types of businesses and what is needed for their success
  • Making a positive contribution to the jobs market
  • Opportunities for networking and relationship building to help career progression
  • Invaluable experience working with clients post-close to improve their business
  • The firms tend to be small, so career progression is directly linked to your performance

Given the benefits, it’s no surprise that competition is fierce, so candidates need to make sure they meet all the requirements and have exactly the right financial background.

Read on as we summarise what private equity involves and how to get into the industry. But first, let’s start with the basics.

What is private equity?

Private equity firms, known in industry parlance as General Partners (GPs), buy companies and improve them, selling them on for a profit. They raise the capital to buy these companies from outside investors called Limited Partners (LP).

It is called ‘private’ equity because the companies bought are private or become private due to the investment.

A job in private equity is part fundraising, part operational management and part investing.

Who are the outside investors?

The LPs or outside investors can include:

  • Pension funds
  • Insurance firms
  • Endowments
  • High-net-worth individuals
  • Family offices
  • Funds of funds (FOF) also known as a multi-manager investment

GPs also invest their own money into the funds and this is to reassure the other LPs that their interests are aligned. The money raised is then put into a fund, structured as a limited partnership and managed by the GP, to invest in the company for a majority or minority stake.

How do GPs convince LPs to part with their money?

GPs have to demonstrate an impressive track record in delivering good returns from their previous funds. They can usually do this because private equity has a long and successful history of producing. Private equity investments continue to be the best source of long-term returns for UK public pensions.

According to the BVCA Report on Investment Activity, the returns were almost double that of UK pension funds and the FTSE All-Share over the last decade – making a career in private equity all the more attractive.

Private equity training courses

Such a lucrative career with substantial rewards clearly fosters motivation, but this also means that private equity is notoriously competitive to get into. You won’t be the only one with an investment banking or consulting background.

Along with numeracy, working in private equity requires good commercial judgment — knowing what makes businesses tick. You need the ability to think critically about companies and investments. One way to set yourself apart and gain a deeper understanding about how private equity funds are structured and operate is to consider a private equity course.

The United Kingdom is second only to the United States in terms of private equity global importance, so it offers the ideal place to train in private equity and start your career.

A private equity training course can benefit many professionals who want to become involved with the industry, from those who will be making the deals to those who will be in a supporting role. A course such as an advanced private equity masterclass will advance your understanding of the latest industry insights and strategies and prepare you for LBO modeling tests in an interview.

Many professionals could benefit from a private equity course, such as:

  • Bankers, investment bankers and security analysts
  • Private bankers and wealth managers
  • Private equity, venture capital and hedge fund investment managers
  • Investment officers and investment committee members
  • Structured finance professionals
  • Risk managers
  • Lawyers wishing to understand modern finance

The study materials contain both knowledge and practice materials to assist with the learning process and help you in your job role.

Flexible financial learning
If you are looking to move into private equity from banking, you will need a course that is flexible around your working hours. The advanced private equity masterclass allows you to study anywhere and at your own pace, combining online with face-to-face.

As well as the private equity masterclass, there are a wide range of other online financial eLearning courses that you can use to build your expertise, whatever your chosen specialism. These can fit entirely around your ongoing work – providing you with invaluable new skills or enhancing your existing ones.

Private equity salaries

On average, an associate in a top private equity firm earns around £150,000 per annum.

A basic salary would be £75,000 to £100,000 per annum and then the bonuses on top total around £56,000 to £102,000 per annum.

Private equity trends

Private equity has enjoyed a period of enormous growth in the last few years, across the globe. Rising demand from pension funding is good news for the industry as pension funds are the largest private equity investors.

Private equity continues to attract fresh capital as the best performing asset class despite global economic and political uncertainty. The private equity industry has always been resilient in a changing world. Private equity’s track record for adapting and continuing to perform well predicts another successful year.

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