Do you travel a lot for private equity?
Many consulting jobs require travel Monday through Thursday every week. If we compare this with private equity, your hours are primarily spent in the office, particularly at the start. You will certainly travel in private equity (to meet with investment targets, to go to conferences, to attend board meetings, etc.)
Private Equity Associate Lifestyle and Hours
At many smaller funds and middle-market funds, you can expect to work 60-70 hours per week, mostly on weekdays, with occasional weekend work when deals heat up.
Middle Market Private Equity (50-90 Hours Per Week)
So just like in investment banking, expect hours to be a little all over the place depending on what is going on work wise, but generally much better work life balance than the larger funds.
It's important to realize that your hours definitely get better in private equity over time. You might even have a normal life by the time you're 40! As the Associate, you'll be doing a lot of work that takes a requisite amount of time.
| Position Title | Typical Age Range | Time for Promotion to Next Level |
|---|---|---|
| Associate | 24-28 | 2-3 years |
| Senior Associate | 26-32 | 2-3 years |
| Vice President (VP) | 30-35 | 3-4 years |
| Director or Principal | 33-39 | 3-4 years |
Private equity investing often have high investment minimums, which can magnify gains but also magnify losses. Liquidity risk exists since private equity investors are expected to invest their funds with the firm for several years on average.
Private equity professionals work long hours and are highly competitive and must think critically, and have a passion for financial investing deals, not just following the markets. Other requirements to start a career in private equity are: Excellent grades and a notable transcript in school.
Many consulting jobs require travel Monday through Thursday every week. If we compare this with private equity, your hours are primarily spent in the office, particularly at the start. You will certainly travel in private equity (to meet with investment targets, to go to conferences, to attend board meetings, etc.)
In short, if you're at a top mega fund, then you can expect to get paid between $350-$400k per year. These numbers reflect total compensation paid to private equity associates in 2022.
Private-equity firms typically run leaner operations than banks and so have less need to cut jobs during slowdowns. But some have laid off about 5% to 15% of their staff, said Sasha Jensen, founder and chief executive of Jensen Partners, an executive-search firm for alternative-asset managers.
Are people in private equity smart?
Private Equity Career Training
PE firms are small, tight-knit, and full of extremely smart and highly motivated people.
Private equity fees are very high
Simply put, the less you pay in fees and charges, the more you keep for yourself, and, generally speaking, the higher your eventual returns will be. The importance of controlling your costs applies just as much to investing in private companies as it does to investing in public ones.
| State | Annual Salary | Monthly Pay |
|---|---|---|
| California | $89,038 | $7,419 |
| Maryland | $88,832 | $7,402 |
| Tennessee | $88,240 | $7,353 |
| Utah | $87,969 | $7,330 |
You usually get into the office around 9am and may leave between 7pm-9pm depending on what you're working on. You may work some weekends (or part of a weekend) depending on if you are on an active deal, but on average, weekends are your own personal time.
Those who wish to broaden their horizons or simply desire a change of pace will often migrate to similar sectors such as hedge funds or portfolio management. Additional exit options include: Being hired as a chief analyst by another firm.
| Annual Salary | Weekly Pay | |
|---|---|---|
| Top Earners | $241,298 | $4,640 |
| 75th Percentile | $187,500 | $3,605 |
| Average | $143,004 | $2,750 |
| 25th Percentile | $113,500 | $2,182 |
For a student looking to break into one of the top 10 PE firms, your chance is 1 in 300 or 0.33%. To break into one of the top 10 hedge fund firms, your chance is 1 in 147 or 0.68%.
With this power, however, comes greater accountability, as they're more deeply involved as company shareholders. This can lead to greater stress in private equity than in consulting firms.
Because private equity investments take a long-term approach to capitalising new businesses, developing innovative business models and restructuring distressed businesses, they tend not to have high correlations with public equity funds, making them a desirable diversifier in investment portfolios.
Working at a Private Equity Firm
The private equity business attracts some of the best in corporate America, including top performers from Fortune 500 companies and elite management consulting firms.
Is there a lot of math in private equity?
In my opinion, the techniques used to model PE transactions have a lot in common with those that are applied to Listed Equity. It has some maths in it, but nothing out of the world! 1) Not much in my experience in PE or IB.
"Two" means 2% of assets under management (AUM), and refers to the annual management fee charged by the hedge fund for managing assets. "Twenty" refers to the standard performance or incentive fee of 20% of profits made by the fund above a certain predefined benchmark.
The Rule of 72 is a convenient method to estimate the approximate time for invested capital to double in value. By merely taking the number 72 and dividing it by the rate of return (or interest rate) expected to be earned, the output is the approximate number of years for an investment to double.
Examples of solid answers to the “why private equity” question: You want to work with companies over the long-term instead of just on a single deal. You want to get exposed to the operations of companies and understand all aspects rather than just the financial ones (note: “exposed to,” not “control” or “improve”).
Both investment banking and private equity are demanding careers that require long working hours, although private equity firms tend to have a more relaxed work environment and offer a more flexible schedule.
