Private Equity Career Path: Hierarchy, Promotions, Salaries, and More (2024)

Table Of Contents

  1. The Private Equity Job Description
  2. Why Work in Private Equity?
  3. Private Equity Skills and Career Requirements
  4. The Private Equity Career Path
  5. Private Equity Analyst Job Description
  6. Private Equity Associate Job Description
    • Private Equity Associate vs Analyst
  7. Private Equity Senior Associate Job Description
  8. Private Equity Vice President (VP) Job Description
  9. Private Equity Principal or Director Job Description
  10. Private Equity Managing Director (MD) or Partner Job Description
  11. Careers Beyond the MD/Partner Level: Senior Managing Partner, COO, CEO, and More
  12. Private Equity Careers Pros and Cons
    • Benefits / Advantages:
    • Drawbacks / Disadvantages:
    • Want to read more?

When thinking about the private equity career path, our favorite analogy still applies: a fraternity house.

Yes, we previously compared the investment banking career path to a frat house, and private equity careers are similar in many ways.

But if investment banking is more like a “party/drinking fraternity,” private equity is more like a “business fraternity.”

The hierarchy is a bit flatter, despite seeming similar on the surface, and it’s a more intellectual environment that demands critical thinking and risk assessment in addition to sales skills.

You still have to complete certain rituals to advance, there are still levels, and you receive added benefits as you move up – but the culture and long-term trajectory differ.

In this comprehensive article, we’ll explain the advantages and disadvantages of the private equity career path, including the work, hierarchy, promotions, lifestyle, and salaries and bonuses.

But let’s start with the basics before delving into “fraternal differences”:

The Private Equity Job Description

Private equity firms raise capital from outside investors, called Limited Partners (LP), and then use this capital to buy companies, operate and improve them, and then sell them to realize a return on their investment.

The industry is called “private” equity because the companies that private equity firms invest in are private initially, or become private as a result of the investment.

The outside investors or Limited Partners might include pension funds, endowments, insurance firms, family offices, funds of funds, and high-net-worth individuals.

Imagine that you and your friends went to all your contacts, asked for money, and then decided to become “home flippers” by buying homes, fixing them up, and selling them at higher prices.

You keep some of the profits for yourselves in exchange for operating the business, but you give the majority back to your contacts for providing the bulk of the required money.

That’s what private equity firms do, but on a much larger scale and for companies rather than houses.

The job is part fundraising, part operational management, and part investing.

For more, see our articles on the private equity industry, private equity strategies and investment banking vs private equity.

Why Work in Private Equity?

If you got the “Why private equity?” question in an interview, you’d probably say that you love investing and operations, and you want to build value for companies over the long term.

But in real life, most people are drawn to private equity because it offers high compensation, somewhat better hours than investment banking, and more interesting work.

Some people also enjoy the excitement of working on large deals and interacting with “the best and brightest,” as well as understanding company operations in more depth.

Unlike investment banking, exit opportunities are not a major reason to go into private equity because PE itself is viewed as an exit opportunity.

That said, some professionals do leave the field for hedge funds and other buy-side roles (for more, see our coverage of private equity vs. hedge funds).

Private Equity Skills and Career Requirements

The private equity career path attracts people who are:

  • Competitive, high achievers who are willing to work long, grinding hours.
  • Extremely attentive to detail.
  • Interested in deals rather than simply following the markets or investing in public companies or other assets.
  • Interested in investing and operations and using critical thinking to evaluate companies rather than selling or being an agent.
  • Interested in long-term projects such as building a portfolio company over many years, and are also open to non-deal work, such as company monitoring and fundraising.

At large private equity firms (“mega-funds”), junior-level hires (“Associates”) are overwhelmingly investment banking analysts who spent 2-3 years at bulge bracket or elite boutique firms.

At smaller firms, more Associates come from middle market and even boutique banks; some management consultants and Big 4 and corporate development professionals also get in.

Firms have been hiring more students directly out of undergraduate, so there are now quite a few “Private Equity Analyst” positions in the industry as well.

Getting into private equity directly after an MBA is nearly impossible unless you’ve done investment banking or private equity before the MBA.

You could complete the MBA, use it to win a full-time investment banking job, and then recruit for private equity roles…

…but that is significantly more difficult than breaking in pre-MBA from investment banking, and it’s not an ideal path (see: more on the investment banking associate job).

To get into private equity, you’ll need:

  1. A sequence of highly relevant work experience, including transactions and financial modeling.
  2. Top academic credentials (grades, test scores, and university reputation);
  3. A lot of networking and interview preparation;
  4. Something “interesting” that makes you appear to be a human rather than a robot;
  5. The ability to think critically about companies and investments rather than just “selling” them.
  6. A strong cultural fit with the firm – PE firms are much smaller than banks, so “fit” and soft skills are even more important.

For more, see our comprehensive guide on how to get into private equity.

If you want to learn all the required technical concepts – Excel, accounting, valuation, financial modeling, and LBO modeling – from the ground up, your best bet is our BIWS Premium package, which includes several LBO and 3-statement modeling case studies:

Private Equity Career Path: Hierarchy, Promotions, Salaries, and More (1)

BIWS Premium

Learn Excel & VBA, accounting, valuation, financial modeling, and PowerPoint for investment banking and private equity - and save $194 with our most popular course bundle.

learn more

If you want to review the concepts and quickly test yourself before interviews, our IB Interview Guide includes a 120-page guide to LBO models and shorter/simpler LBO case studies:

Private Equity Career Path: Hierarchy, Promotions, Salaries, and More (2)

IB Interview Guide

Land investment banking offers with 578+ pages of detailed tutorials, templates and sample answers, quizzes, and 17 Excel-based case studies.

learn more

Finally, if you have more experience, already know the fundamentals, and want complex case studies and practice models, the Advanced Financial Modeling course has an advanced LBO model and a take-home private case study example.

If you do not have the skills and work experience mentioned above, your best bet is to gain transaction experience in corporate development at a normal company or in and use that to move in.

Or, join a PE firm’s portfolio company, work on the operational side, and eventually move to the firm itself.

Do not bother with non-deal-related jobs such as equity research, or back or middle office roles.

The CFA is the only certification that means anything at all in PE; it is marginally helpful, but it plays a small role next to everything above.

The Private Equity Career Path

The private equity career path and hierarchy vary from firm to firm, but here’s a representative example:

  • Analyst – Logistical Monkey.
  • Associate (Pre-MBA) – Deal and Analytical Monkey.
  • Senior Associate – More Experienced Monkey.
  • Vice President – Manager of Deals.
  • Director or Principal – Generator and Negotiator of Deals.
  • Managing Director or Partner – Rainmaker, Fundraiser, and Chief Representative.

And here’s a flow-chart summary:

Private Equity Career Path: Hierarchy, Promotions, Salaries, and More (3)

We’ll look at each level in detail below, but here’s a summary of the age, earnings potential, and promotion time for each one:

Position TitleTypical Age RangeBase Salary + Bonus (USD)CarryTime for Promotion to Next Level
Analyst22-25$100-$150KUnlikely2-3 years
Associate24-28$150-$300KUnlikely2-3 years
Senior Associate26-32$250-$400KSmall2-3 years
Vice President (VP)30-35$350-$500KGrowing3-4 years
Director or Principal33-39$500-$800KLarge3-4 years
Managing Director (MD) or Partner36+$700-$2MVery LargeN/A

We are not going to address the exit opportunities and hours/lifestyle for each level because PE is usually the end goal, and the hours don’t necessarily change much as you move up – expect 60-70 per week at smaller firms and 80+ at mega-funds.

The key differences at each level of the private equity career path lie in the work tasks, promotion time, and compensation.

Also, note that all the compensation figures below refer tofigures inNorth America – they will be lower, sometimes significantly lower, in regions such as Europe and Asia-Pacific.

Private Equity Analyst Job Description

Private Equity Analysts are hired directly out of undergrad without previous full-time experience.

They work on the same types of tasks as Associates: deal sourcing, reviewing potential investments, monitoring portfolio companies, and fundraising, but they complete fewer projects independently from start to finish.

For example, an Associate working on a deal might build the entire financial model and coordinate the due diligence process, including speaking with lawyers, auditors, consultants, and other parties to get answers.

But an Analyst on the same deal might help only with specific tasks such as setting up conference calls, sifting through data, and assisting the Associate with certain research or documents.

Age Range: These roles are only for students who just finished undergrad, and they only last for a few years, so we’ll say 22-25.

Private Equity Analyst Salary + Bonus: You’ll almost certainly earn less than an IB Analyst in terms of total compensation; your salary + bonus will likely be in the $100K – $150K range, with the bulk coming from your base salary.

Carry, i.e., a share in the profits from investments, is unlikely-to-borderline-impossible for Analysts, so don’t even think about it.

Promotion Time: Expect 2-3 years for a promotion to Associate, if your firm promotes Analysts (it varies widely).

Private Equity Associate Job Description

Private Equity Associates must be able to lead deal processes from start to finish without step-by-step instructions.

They spend their time on sourcing – generating new deal ideas – as well as financial modeling and due diligence for active deals, portfolio company monitoring, and even some fundraising.

The PE Associate role is an evolution of the IB Analyst role, so you still spend a lot of time in Excel, PowerPoint, and data rooms – but you have more responsibility and must act more independently in those tasks.

A typical day for a PE Associate might include the following:

  • Meet with their boss or other team members to discuss ongoing deals and potential ideas.
  • Build a financial model for an active deal or review and tweak an existing one.
  • Conduct a conference call with the owners of a private company that might be interested in selling to your firm.
  • Review customer contracts in the data room for an active deal.
  • Review a portfolio company’s quarterly financial results and speak with the CFO about them.
  • Assist with the fundraising process by setting up webinars with potential new Limited Partners (LPs).
  • Complete administrative work such as editing NDAs or conducting market research.

Age Range: You need several years of IB or a closely related field to get in, so we’ll say 24-28.

Private Equity Associate Salary + Bonus: Your salary + bonus will probably be in the $150K to $300K range, depending on the size of the firm and your performance.

Some of the large funds may pay more than $300K, but we’re using the 25th percentile to 75th percentile range as a reference here.

Carry is still quite unlikely unless the firm is brand new and you’re an early hire.

Promotion Time: Expect 2-3 years for a promotion to Senior Associate.

Private Equity Associate vs Analyst

As discussed above, the Associate tends to be more involved with the entire deal process from start to finish, while the Analyst might only help with specific tasks the Associate can’t get to.

The Associate is more of a “Coordinator,” and the Analyst is more of an “Assistant.”

Analysts are hired directly out of undergrad, while Associates join following several years in investment banking or a related field, such as management consulting.

Associates also earn more and are more likely to stay at the firm for the long term – if there’s a path to advancement there.

If there is no direct promotion path, Associates might complete an MBA or move into a different industry, such as hedge funds, corporate development, or strategy at a tech company.

Private Equity Senior Associate Job Description

“Senior Associate” and “Associate” are nearly the same.

The main difference is that “Senior Associate” is used to denote:

  1. An Associate who has been at the firm for a few years and been promoted directly, or
  2. An Associate who worked for a few years, went to business school, and then returned to the firm.

The work is not much different, but Senior Associates move closer to the VP-level, where they have more “manager” responsibilities.

Age Range: We’ll say 26-32 because at the minimum, you must have completed two years of IB or PE Analyst work, followed by two years of PE Associate work.

Some Senior Associates may be in their low 30s because they may have switched industries after undergrad, broken into IB, switched into PE, and then completed an MBA program.

Private Equity Senior Associate Salary + Bonus: These increase incrementally over the Associate level, but not dramatically so. The range might be more like $250K to $400K depending on the firm size, region, performance, etc.

At this level, a small amount of carry is more plausible. You’re not going to become a multimillionaire and retire at age 35, but it might boost your bonus a bit.

Promotion Time: You’ll need 2-3 years to reach the next level of Vice President.

It’s quite difficult to get promoted to VP because the nature of the job changes a fair amount at that level.

Many Associates and Senior Associates at larger PE firms realize there is no great path to VP there, so they end up going downmarket to advance.

Private Equity Vice President (VP) Job Description

In private equity, Vice Presidents are “deal managers.”

They need to convince the senior team members – Principals and Managing Directors – that they know what they’re doing so that the senior staff trusts them to manage deals.

VPs also lead and mentor others on the team, work more directly with clients, vet transactions, and lead due diligence and negotiations.

The VP role may sound similar to the Associate role, but it is very, very different.

Soft skills start to matter far more at the VP level, and you need to be a good talker and presenter to advance.

If you can prevent an important deal negotiation from falling through with some smooth talk on a conference call, that matters 100x more than being an Excel/VBA guru.

Very few, if any, professionals make it to this level with poor communication skills, but plenty of people with mediocre technical skills make it – as long as they talk and present well.

Age Range: The likely range here is 30-35 because you must have already spent at least ~4 years in PE at the Associate levels, you probably did something before that, and you might have gone to business school as well.

Private Equity Vice President Salary + Bonus: The likely range here is $350K to $500K, with about half in base salary and half in the year-end bonus.

Carry becomes increasingly important at this level, which could boost your bonus a fair amount – but you probably won’t see its full effects unless you stay at the firm long-term.

Promotion Time: You’ll probably need 3-4 years to advance to the Principal level.

Private Equity Principal or Director Job Description

You can think of Principals as “Partners in training.”

They have a lot of decision-making power, but they don’t have the same type of ownership in the partnership that the MDs/Partners do.

Principals leave most of the deal process management to the VPs and Associates and get involved when deals are nearing the finish line, and critical negotiations are required.

They also spend more time on sourcing deals and fundraising, and they are often the ones who convince business owners to consider a sale in the first place.

Principals also act as the go-between between the deal team and the MDs/Partners.

Age Range: It’s 33-39 here because of all the previous experience you need.

Private Equity Principal Salary + Bonus: Compensation reports indicate highly variable numbers, but the 25th to 75th percentile is in the $500K to $800K range.

Carry becomes even more important at this level and may substantially increase total compensation.

Promotion Time: It normally takes 3-4 years to reach the next level of Managing Director or Partner.

Private Equity Managing Director (MD) or Partner Job Description

Private Equity Partners or Managing Directors are the king of the hill.

They spend their time on fundraising, deal origination, and “fund representation,” which could mean attending events and conferences, speaking with LPs, and doing everything required to boost the firm’s brand name and reputation.

They still spend some time reviewing deals, but they are less involved than the Principals unless it’s an extremely important deal.

Unlike the other roles here, this one depends 100% on human relationships – not Excel, VBA, Python, or small details in documents.

That makes it the toughest job because it’s much harder to address LPs’ concerns and convince them to invest in your new fund than it is to write an Excel formula or lead a deal process.

Oh, and one more thing: MDs and Partners must also invest a significant amount of their personal wealth into the fund to ensure they have “skin in the game.”

So… if you’re a risk-averse person, this is probably not the role for you.

Age Range: You’re unlikely to reach this level before your mid-to-late 30s, so we’ll say 36+. But that’s just the minimum – most Partners are likely in their 40s or beyond.

Many MDs and Partners stay in private equity indefinitely because there’s no reason to leave unless they’re forced out or the firm collapses.

Private Equity Managing Director Salary + Bonus: Compensation here is highly variable, but a reasonable range is $700K to $2 million, with slightly less than half from the base salary.

“Senior Partners” will earn more if the firm makes the distinction.

But carry is the key driver at this level and could increase total compensation by a multiple of the range above.

For example, the senior professionals at firms like Blackstone could earn tens or hundreds of millions per year (!), largely due to carry.

However, you should keep your expectations in check: the average case for total compensation at mid-sized and smaller firms is in the low millions if you make it this far.

Promotion Time: N/A – this is the top of the ladder.

Careers Beyond the MD/Partner Level: Senior Managing Partner, COO, CEO, and More

Some firms distinguish between normal Partners and “Senior” ones; Senior Partners own a higher percentage of the partnership, earn more carry, and have more decision-making power.

At the private equity mega-funds – the likes of Carlyle, Blackstone, and KKR – there are also C-level executive positions in the hierarchy.

There is no set path for advancing into these roles, so it depends on timing, performance, and who’s planning to retire.

We’re not covering them here because there’s little tangible information about these roles, and most students and professionals won’t even make it midway up the ladder.

Private Equity Careers Pros and Cons

Summing up everything above, here’s how you can think about the trade-offs of the private equity career path:

Benefits / Advantages:

  • High salaries and bonuses at all levels, with the potential for carry to boost senior-level compensation far beyond what investment bankers earn.
  • More interesting work than investment banking and other sell-side roles.
  • Somewhat better hours than investment banking, at least at mid-sized and smaller funds, and a more predictable schedule… if you’re not working on a major deal.
  • Direct exposure to different companies, industries, and management teams, and significant responsibility even at the junior levels.
  • Firms are small, so advancement is directly linked to your performance; office politics is less of a factor than at large banks.
  • The industry is unlikely to be disrupted by technology because it’s a relationship-based negotiation and sales role at the top levels.

Drawbacks / Disadvantages:

  • 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. And even if there is a path, advancement can be challenging because Partners rarely get “burned out” and leave.
  • You could end up doing a lot of cold calling, research, or portfolio company monitoring rather than deal execution – and even if you do work on deals, you’ll be lucky to close ~1 major transaction per year.
  • You won’t gain the same network or structured training that you would at a large bank because PE firms are so much smaller.
  • You will have to contribute a significant portion of your net worth at the top levels, which is fine if the fund performs well… but a big issue if it struggles.
  • It’s extremely tough to get into the industry if you get a late start, you’re a career changer, or you did not attend a top university and then do investment banking.

So, is private equity right for you?

Rather than assuming that it is because “everyone” does the investment-banking-to-private-equity-path, you should consider these factors and be honest about what you’re looking for in a long-term career.

If you want more of a “business frat” than a party/drinking frat, then a private equity career could deliver.

But if you don’t want to be in the frat house at all, you’ll need to consider strategic alternatives.

Want to read more?

Take a look at:

  • Private Equity Exit Opportunities: How to Check Out of Hotel California
  • Venture Capital Careers: The Complete Guide
  • Private Placement Agent Jobs: Industry Overview and Recruiting
  • Mezzanine Funds: Private Equity Lite, or Top-Tier Buy-Side Opportunity?
  • Off-Cycle Private Equity Recruiting: How to Win Middle-Market Private Equity Offers
  • Family Office Private Equity: The Best Pathway into Finance for Non-Traditional Candidates?
Private Equity Career Path: Hierarchy, Promotions, Salaries, and More (2024)


Private Equity Career Path: Hierarchy, Promotions, Salaries, and More? ›

Private equity has a number of different levels and positions that look after the health and structure of the firm and overall deal flow strategies. Equity firms are usually managed by a hierarchy that starts at the bottom with analysts or interns and rises to the top with partners.

What is the hierarchy in a private equity firm? ›

Private equity has a number of different levels and positions that look after the health and structure of the firm and overall deal flow strategies. Equity firms are usually managed by a hierarchy that starts at the bottom with analysts or interns and rises to the top with partners.

How hard is it to get promoted in private equity? ›

Getting promoted in private equity (PE) is not easy. You need to demonstrate exceptional skills, performance, and potential in a highly competitive and demanding environment.

What is the path to work in private equity? ›

Overwhelmingly, PE firms hire people with experience working for top investment banks, and sometimes those with consulting, Big 4 transaction services, or related deal/valuation experience (e.g., corporate development at a normal company). That said, firms expect new hires to hit the ground running with usable skills.

What are the 5 levels of hierarchy of a company? ›

A traditional business hierarchy includes an organizational structure with the board of directors at the top, followed by the CEO, other chief executives, vice presidents, directors, managers and lower-level employees.

What are top salaries in private equity? ›

Private Equity Managing Director Salary + Bonus: Compensation here is highly variable, but a reasonable range is $700K to $2 million, with slightly less than half from the base salary. “Senior Partners” will earn more if the firm makes the distinction.

Is principal higher than VP in private equity? ›

Pay: Principals earn more than VPs in base salary, bonus, and carried interest (the last one is especially significant). Work: VPs are responsible mostly for deal execution (e.g., due diligence, financing, memo writing, managing the Analysts and Associates, etc.).

Is private equity a prestigious career? ›

While no job is perfect, it's true that private equity investing is one of the most attractive (and lucrative) career paths around. Private equity is attractive for a number of reasons: High prestige and compensation in private equity. Relatively better than investment banking hours.

How do you become a VP in private equity? ›

The primary qualifications for becoming a vice president in private equity are an MBA and several years of experience in private equity. Most vice presidents move through several other positions first, including analyst, associate, and senior associate before finally getting a job as a vice president.

How much does a principal make at KKR? ›

How much does a Principal make at KKR in the United States? Average KKR Principal yearly pay in the United States is approximately $248,270, which is 138% above the national average.

What is the average carry in private equity? ›

The ability to command higher or lower carry is based on how much LP demand there is for this specific fund (which is often based on the background of the fund managers and their prior funds' performance). This percentage can range anywhere from 15 to 30% of the profits but generally hovers around 20%.

How much does a vice president at EQT make? ›

The estimated total pay range for a Vice President at EQT Group is $156K–$253K per year, which includes base salary and additional pay. The average Vice President base salary at EQT Group is $167K per year.

Is private equity a stressful career? ›

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.

How much do private equity associates make at KKR? ›

$218K (Median Total Pay)

The average Private Equity Associate base salary at KKR is $146K per year.

Is private equity a risky job? ›

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.

What does a VP at a private equity firm do? ›

As a vice president in private equity, you oversee deals and agreements, including an overall investment strategy and daily operations.

What is the hierarchy of BlackRock? ›

The BlackRock hierarchy structure starts with the Global Executive Committee (GEC), which serves as its highest level of leadership within BlackRock. This is followed by the board of directors, the leadership team, and the CEO and Executive team. BlackRock has more than 16,000 employees spanning over 35 countries.

What is the highest position in a private company? ›

The highest position in a private company is known as chief executive officer or CEO. It is the top most and highest ranking executive in a private company. The main responsibilities of a CEO include making important corporate decisions and managing the resources and operations of a company.

Top Articles
Latest Posts
Article information

Author: Melvina Ondricka

Last Updated:

Views: 6281

Rating: 4.8 / 5 (48 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Melvina Ondricka

Birthday: 2000-12-23

Address: Suite 382 139 Shaniqua Locks, Paulaborough, UT 90498

Phone: +636383657021

Job: Dynamic Government Specialist

Hobby: Kite flying, Watching movies, Knitting, Model building, Reading, Wood carving, Paintball

Introduction: My name is Melvina Ondricka, I am a helpful, fancy, friendly, innocent, outstanding, courageous, thoughtful person who loves writing and wants to share my knowledge and understanding with you.