What job do you really do in private equity?
Job titles in investment banking are pretty confusing. Luckily, for the bankers who escape to private equity, things do get a bit more straight forward – even if the names are still (a bit) misleading.
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A recent report from infrastructure recruitment consultancy One Search, however, sheds some light on the topic.
At junior levels – the associate and vice president (VP) tier – the primary concern of a private equity professional is analysis. The data behind the deal is the primary concern at this stage, with VPs leading teams of associates to perform financial due diligence, modelling, and valuations.
It's worth noting that one of the most ubiquitous ranks in banking - the "analyst" rank - is less present in private equity. But PE analysts do still exist, and they're generally recruited from summer internships, like banking analysts are. These are extremely competitive - Blackstone only accepts 1 in 400 applicants, for example. Most juniors in PE are recruited at associate level after a few years in investment banking.
As you become more senior, the role changes. At the top levels of managing directors (MDs) and partners, the role is strategic. Partners have “ultimate responsibility for designing and delivering top-down investment strategy, including marketing to LPs [investors], establishing the cadence of transaction sourcing/delivery and managing portfolio businesses,” One Search says. MDs are more involved with managing existing investors through the process; partners play a greater role in bringing on new investors.
Directors occupy an awkward position in the hierarchy between VPs and MDs. At director level, professionals begin to “take on accountability for origination [of deals] whilst taking on day-to-day control of investment processes,” One Search explains. It’s also at director level that professionals begin to be appointed to the boards of their portfolio companies.
If you’re already familiar with the investment banking hierarchy, then you’ll probably find the private equity pyramid pretty similar. Juniors grind out the visions for the seniors; the seniors solicit new clients; the middle managers manage existing ones through their processes.
Compared to banking, the hours are generally better in private equity - an analyst working for megafund Blackstone told us that she usually has work wrapped up by 9:30pm or so, which would be considered a relaxed day for a junior in banking. There's also more a more interesting workload - PE firms are more leanly run operations than investment banks, and seniors are expected to be more generally-tooled than in banking, with operations, financing, and people-management being required skills.
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