Even from a prestigious university, a degree carries only so much weight and is merely a qualification that aids in the first screening process. Nonetheless, your degree should demonstrate analytical skills; finance and scientific degrees are typically preferred. Recruiters look for candidates with experience in investment banking, strategy consulting, corporate growth, or restructuring.
Private equity is money invested in non-public, private enterprises that have a high long-term return on investment. High-net-worth individuals, pension funds, philanthropic endowments, and sovereign wealth funds are investors. Private equity funds get frequently organized as limited partnerships, with members participating actively in portfolio company operations. A combination of technical and interpersonal abilities gets required of successful private equity fund investors.
The work is exciting. However, it is time-consuming and requires long hours. Though you may be at a junior level, you will engage with not only bankers, consultants, and legal representatives as part of your duties. But also CEOs and top management teams.
Financial abilities, such as assessing financial accounts and estimating the worth of private enterprises, are required for equity fund management. Because enterprises are not obligated to report their statistics, this can be a complex task. Because you’ll be involved in arranging potential deals, including conducting the appropriate due diligence, you’ll need to know contract law. Because private equity funds typically invest in firms across multiple industry sectors, having an instinctual feel for, or direct expertise in, different industries is also a beneficial ability.
Negotiation and networking abilities get required of private equity investors, according to Joseph Stone Capital. To develop leads for possible agreements, you must meet and chat with investment bankers, venture capital investors, and other market participants. Because you will need to deal with business owners and executives before and after closing agreements, you must create a level of trust with them.
Because you must persuade business owners that your private equity firm can increase shareholder value while protecting organizational values and culture to the greatest extent possible, you will need negotiation skills. To put together the finance for significant deals, you may need to negotiate with other institutional investors. To boost the profitability and cash flows of your portfolio companies, you may need to work with labor unions to execute cost-cutting strategies.
In terms of board governance and operational management, private equity investors are hands-on. This method is essential to turn around financially distressed or undervalued enterprises and maximize shareholder value. Board and senior executive management positions get filled by senior associates and managing directors, according to Joseph Stone Capital. They look over quarterly financial reports, put operational restructuring measures in place, and participate in long-term strategic planning.
Other intangible human skills are required for successful private equity investing. You must empathize with both owners who have spent their entire lives building their businesses and employees who are worried about their jobs. When it comes to investments, you must know when to hang on to them and sell them. Most essential, you must have a long-term perspective, as it takes time to appreciate the true worth of investments.