Is private equity a high paying job?
For the vast majority of first-year private equity associates, the base salary is around $135k to $155k. Then, based on fund performance, bonuses tend to range from 100% to 150% of the base salary.
Private equity is a very lucrative career. As an asset class, private equity has enjoyed tremendous success over the past decade. Investors around the globe continue to pile their money into private equity firms.
Private Equity Career Training
Private equity is a highly competitive and sought-after field.
but nowhere near as much as in management consulting. While the travel will be less, the work in private equity is very stressful and demanding, so the hours you actually spend working may be more stressful or mentally demanding.
Many investment bankers graduate to working in private equity, therefore, private equity salaries tend to be higher.
Private equity owners make money by buying companies they think have value and can be improved. They improve the company or break it up and sell its parts, which can generate even more profits.
Landing a career in private equity is very difficult because there are few jobs on the market in this profession and so it can be very competitive. Coming into private equity with no experience is impossible, so finding an internship or having previous experience in a related field is highly recommended.
Earning potential: While both consulting and private equity can be high-paying careers, private equity investors make more money given their ability to share in the upside of their deals (e.g. carry, bonus, etc.)
Private equity firms usually seek someone with a strong sense of numbers. As such, the majors they generally look for include Finance, Accounting, Statistics, Mathematics, or Economics. GPA will, of course, be a factor here.
PRIVATE EQUITY WINS. Compensation. The package is often designed to attract investment bankers, who are better paid than strategy consultants. As a consequence, you should expect a significant increase in your total compensation package, up to 100% in some cases.
Why not to go into private equity?
Private equity funds are illiquid and are risky because of their high use of debt; furthermore, once investors have turned their money over to the fund, they have no say in how it's managed. In compensation for these terms, investors should expect a high rate of return.
| 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 |
Wealth managers and Private Bankers are stressful jobs in finance. Finishing near the top on some surveys and further down on others, wealth managers and financial advisors deal with one particular vehicle for stress: they eat only what they kill. Wealth managers get fired nearly as often as they get hired.
The top 5 highest paying jobs in finance are investment banking, hedge fund management, CFO roles, private equity, and actuarial positions. These careers typically offer substantial salaries and the potential for significant bonuses.
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.
| 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 |
It's no secret that private equity firms have a bad reputation. They're often seen as ruthless vultures that swoop in to buy up struggling companies, slash costs, and then sell them off for a profit.
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.
Job Losses and Cost-Cutting:One common criticism is that private equity firms may focus on cost-cutting measures to boost short-term profitability, which can lead to layoffs and job losses.
PE is all about deployment of capital via valuation of target companies, and return optimization based on the PE firm objectives. If you are the models person, the valuations person or the treasury person with multiple currencies exposures then a lot of math.
What are the odds of breaking into private equity?
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%.
Although most large private equity firms look exclusively for job candidates with an MBA, you can still get into a smaller firm without one. Smaller firms prefer candidates with an MBA, but it's not always a requirement.
Here are some reasons why private equity is popular as a career: High Earning Potential: Private equity professionals often enjoy high earning potential. Compensation structures in the industry typically include a base salary and performance-based incentives, such as carried interest or profit-sharing.
Entry Point: Associate Role (Pre-MBA)
While analyst roles are getting more popular in recent years, the associate level is where most people start their PE career. Instead of jumping straight into PE from college, they go through a few years of investment banking or management consulting first, then switch into PE.
As big firms usually prefer to hire candidates with internships at other private equity firms, consulting or investment banking, focusing on smaller firms and jobs in these complementary fields is usually a good way to eventually get a job at a top private equity organization.
