Private equity offers a challenging and highly rewarding career. It is still the place for junior investment bankers. Good compensation, bonus, and interest earned through carried interest are all part of the buy-side’s attraction. Competition is fierce among the US private equity firms, which has shot up the number of private equity jobs. Nearly 3/ 5 of private equity plans to increase their workforce, according to Preqin.
However, a few things private equity professionals disappointed. For instance, the high priority on pre- MBA candidates to join deal teams or investment roles.
Private equity is a performance-driven industry. That is not to say that other companies are not, but compensation in private equity is highly influenced by performance. Private equity salaries in the U.S. range from $86k for analysts to $420k for MDs. Total remuneration for the year ranges from $121k to $1.6 million.
Pre-MBA candidates are highly preferred by private equity firms for nearly all roles. In most cases, these PE professionals have anywhere between 1-4 years of experience in consulting or banking. On the other hand, post- MBA recruitment for investment roles is limited. Post- MBA roles often require the candidate to have previous private equity experience. Even in that case, landing a new PE role is dicey.
Post- MBA candidates with an exceptionally strong skill set, knowledge, or experience may get a PE role if they tried a little higher. This is especially true for the lower middle market where recruitment processes are less structured and allow the flexibility to reach new areas. In most cases where this happens, there are high chances that the interview is scored through personal or aggressive networking.
Why is private equity recruiting geared towards pre-MBA candidates?
A simple reason behind this practice is because they pre-MBA candidates can be hired at the Associate level, where previous PE experience isn’t required much. Plus, the number of positions available at this level is comparatively larger than in other positions.
Principal and vice president roles are generally reserved for post –MBA candidates, which requires significant previous experience in private equity. Also, post – MBA roles tend to be smaller in number than pre-MBA roles.
There are more operating roles for post – MBA candidates. Still, these roles are hard to come by, as portfolio operations teams hire a handful of individuals among elite MBA programs each year. The number of these roles is increasing each year.
What is the career path at private equity firms?
PE firms are smaller, which is a result of high competition in the industry.
At all levels, getting into private equity is tough. However, once you’re in the firms offer a clear growth trajectory.
For investment bankers, who switch to private equity is the exit option, after a few years of stint in investment banking. Yet this is no extraordinary feat.
Some PE firms also hire Analysts in junior-most positions. These are usually first-year analysts from investment banks or consulting services with exceptional skill sets and credentials.
A career trajectory in private equity looks like the following –
2. Senior Associate
3. Vice President
4. Director/ Partner
The growth of a career in private equity from associate level to partner requires consistent growth of the network.
Further, industry-valued credentials from third-party vendors can significantly increase your chances of joining a private equity firm. USPEC’s CPEPTM is a globally recognized credential for people who are about to start their MBA and even seasoned private equity professionals. Depending on your experience and expertise, you can choose a credential.