Working for a Private Equity-backed business can provide an enormous amount of financial reward if successful, and is the driving factor behind many executives’ decision to pursue senior PE opportunities. Taking a senior position in a PE-owned company is a decision that should not be taken lightly, however. Although an extremely lucrative sector, it is also highly pressured, competitive, and comes with its risks.
Private equity is when pools of capital are raised from accredited investors for a non-publicly traded or listed company. The aim of the investors (also known as Private Equity Houses) is to grow the value of the company within a short period of time (usually 4-6 years) and sell their equity stake for a profit.
6 tips to consider before working for a PE-backed business
Leadership experience
If you’re aspiring to work in a senior position for a PE-backed company, focus on gaining as much leadership experience as possible, in which you’re held accountable for company strategy and growth.
Understand the investment type and end-goal
PE-backed companies come in all shapes and sizes, each presenting their own unique goals and challenges. Therefore, it is important you take the time to understand the nature of the project and the end-goal of the PE firm to discern if it is a realistic goal, and also if it is one that excites you. Their goal may be to transform and turn around a distressed business in a short period of time, or it may be a longer-term growth plan. Either way, this will determine the nature of the work ahead, and so it’s important you feel a strong desire to undertake the challenge at hand.
Expect change
Becoming a senior leader for a PE-backed company is going to be a turbulent journey, no matter how experienced you are. Working to such clear and time-specific goals, you will be expected to make impactful changes surrounding strategy, people, organisational design and processes. Private equity investors usually plan an exit between 4-6 years therefore, it is paramount you understand that speed is a key element, and you have been hired to quickly implement changes and achieve goals with Private Equity Houses who want the fastest route for gaining a profitable return on their investment.
There are no guarantees
It is no secret that the vast majority of PE-backed companies fall short of their endeavours. All begin with the same level of ambition and vision, yet in reality, very few actually work out as planned. Although the rewards can be great if successful, you must take into consideration that the end-goal is not guaranteed. Although you’ll have a significant level of influence over the success of the project, other factors, such as market changes or a failure to meet debt obligations, can terminate the venture.
The expectations are high
Although your level of success won’t be defined by quarterly results, your action, changes and strategy will determine how you’re received by the equity panel, and how much confidence they gain in you.
Collaboration is key
As an executive for a PE-backed company, you will need to build a collaborative relationship with the Private Equity House. They usually like to be heavily involved in the strategy, operation and key decision-making. A large part of your role will be balancing the various input and suggestions of the equity partners involved and ensuring that you provide a transparent view of any challenges or business shortcomings. You are expected to bring innovation and will have a great deal of autonomy over the role, yet at the same time being the bridge that aligns the vision of all parties involved.
The key to Private Equity backed opportunities
There is no doubt that obtaining an opportunity as a senior executive for a PE-backed company remains an extremely competitive sphere. Notwithstanding the risks associated with PE-backed companies, they offer a great deal of autonomy and one of the most financially rewarding career opportunities on the market. To succeed, you must be extremely resilient in nature, have strong business acumen to take visionary action, and must be akin to speed, pressure and change. Leading a PE-backed company is not for the faint-hearted but for the few who are able to do so successfully, they will experience great financial rewards and a fulfilling, albeit challenging, career.
For more information on this topic, or to discuss how we can support with your career move into private equity, please get in touch with a member of our executive team or email info@grgexecsearch.com
PE-backed companies come in all shapes and sizes, each presenting their own unique goals and challenges. Therefore, it is important you take the time to understand the nature of the project and the end-goal of the PE firm to discern if it is a realistic goal, and also if it is one that excites you.
To sum things up, the deep experience and network gained by operating executives working in an investor-backed role are incomparable, enriching themselves in knowledge, abilities, and financial gain - but only if they are willing to pay for it with hard work during, and the many years of experience in the respective ...
This is a warning to all the job seekers in the Never Search Alone community and beyond: be careful in taking a job at private-equity owned companies. Why? Many (though not all!) have too much debt on their balance sheets creating increased risk for bankruptcy.
To break into private equity, a strong educational background is essential. Most professionals have degrees in finance, business, or related fields. Relevant experience in areas like investment banking or consulting is highly regarded.
A role in private equity is a very competitive yet rewarding career path. Getting started in a profession in private equity (PE) requires strong analytical and networking skills to jumpstart a career at a PE firm.
Still fairly long hours and an intense work environment, and significant travel may be required, especially as you advance. There may not be a clear path to advancement at your firm, depending on the firm's size and policies and your level.
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.
Not only do private equity firms have extremely particular job requirements, they also offer relatively few roles. To get into a private equity firm, you not only need the “right” background and education, you also have to be a solid fit with the existing team, and be ready to ace the private equity interviews.
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%.
While candidates should not expect a normal 9 to 5 hours, the work-life balance is usually also better than investment banking (subject to the individual company).
Investors need to know they can rely on what you say and the analysis you're producing. The average during a busy time for associates and analysts is usually around ~60-70 hours per week. But it's all dependent on how many deals and investments are on the go. The above hours will vary based on if there's a live deal.
In private equity, you'll also be responsible for a lot of different tasks. The deal teams are lean and your decisions will have a high degree of permanence, which is why I'd say the stress level is overall higher in private equity than in banking. Very importantly, there's also no one around to check your work.
Professional development: Private equity firms may bring in experienced professionals and resources to help improve the operations and efficiency of the company. Employees can benefit from exposure to new processes, best practices, and management strategies, enhancing their professional development.
Although publicly traded companies are seen as aspirational places to work, the Deloitte Private leader highlights some advantages of working for a privately held company. According to Tone, private companies have more flexibility in their management and decision-making processes due to fewer regulatory constraints.
Private Equity backed (PEB means companies whose shareholders have included − for at least 2 years − one or more venture capital institutional investors with a holding of at least 30%, including in jointly-held form.“
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.
Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.
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