Why is private equity so prestigious?
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.
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.
Private equity is the tier 1 among finance careers, so there are few exit opportunities more prestigious than private equity. Not to mention, private equity firms are less well-known outside finance.
The private equity industry has grown rapidly; it tends to be most popular when stock prices are high and interest rates low. An acquisition by private equity can make a company more competitive or saddle it with unsustainable debt, depending on the private equity firm's skills and objectives.
Private equity is an alluring career goal for those drawn to the financial world. These companies pay big salaries, plus incentives and bonuses. The potential is there to make a lot of money, even in your first year. And, the career carries a lot of prestige in the finance world.
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.
Private equity is a core pillar of BlackRock's alternatives platform. BlackRock's Private Equity teams manage USD$41.9 billion in capital commitments across direct, primary, secondary and co-investments.
The bottom line is that yes, the pay ceiling is higher in private equity, and there are MDs and Partners who earn many times – sometimes hundreds of times – what MDs in banking earn.
Highest salary that a Private Equity Associate can earn is ₹44.0 Lakhs per year (₹3.7L per month).
These odds are similar to or worse than playing any of the professional sports. Less than 1% of the population size pursing any competitive field is likely to compete at the elite level. In the highly competitive world of finance like hedge funds or PE, less than 1% of students break into one of the top 10 firms.
What is cool about private equity?
Unlike public equity, private equity managers take an active and strategic role in the companies they invest in. They are far more in control of the directions and destinies of the companies in which they invest.
Disadvantages. Illiquidity: PE investments are typically illiquid, meaning that they cannot be easily bought or sold. This can make it difficult to exit an investment if you need to do so. High Fees: PE investments typically have high fees, which can eat into the returns.
As of Feb 6, 2024, the average annual pay for a Vice President Private Equity in the United States is $157,532 a year. Just in case you need a simple salary calculator, that works out to be approximately $75.74 an hour. This is the equivalent of $3,029/week or $13,127/month.
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.
The average base compensation among US CEOs surveyed for this report was $510,000 in 2023, and the average cash bonus received in 2022 was $390,000, for a total average cash compensation of $908,000.
| Private Equity Salary Data (2023) | ||
|---|---|---|
| 1st Year Associate | $135k – $155k | $140k – $230k |
| 2nd Year Associate | $160k – $180k | $170k – $270k |
| 3rd Year Associate | $180k – $200k | $180k – $300k |
| Senior Associate | $200k – $220k | $210k – $390k |
Private equity is a highly competitive and sought-after field. PE firms are small, tight-knit, and full of extremely smart and highly motivated people.
In private equity, you'll work hard, but the hours are not nearly as bad. Generally, the lifestyle is comparable to banking when there is an active deal, but otherwise much more relaxed. That said, there is some upside other than money and career prospects.
The four largest publicly traded private equity firms are Apollo Global Management (APO), The Blackstone Group (BX), The Carlyle Group (CG), and KKR & Co.
Some sources expand this definition and state the “middle market” includes deals for as little as $25 million and as much as $1 billion. Meanwhile, others say that there's also a “large” category for deals between $500 million and $5 billion.
What is the minimum investment for private equity?
The minimum investment in private equity funds is relatively high—typically $25 million, although some are as low as $250,000. Investors should plan to hold their private equity investment for at least 10 years.
Investment bankers want to leave for private equity firms and hedge funds because the money is better and the hours are shorter. Plus, the office environments aren't nearly as stuffy as the ones at investment banks.
Private Equity Analyst Hours
To be conservative, I'll say the average range is 60 – 80 hours per week, with numbers at the top end of that range (or even above it) when a deal is in its final stages. Weekend work tends to be minimal, but it does come up when deals are in their final stages.
Private equity employees are compensated for making good investment decisions. The larger and more successful the investment, the more money there is to go around. Mega funds offer large salaries in part because they manage large quantities of money.
KKR is one of the oldest and most prominent private equity investors in the world and is often credited with popularizing the leveraged buyout as an investing strategy.
