Getting a job in private equity is often seen as the holy grail of finance. However, once you have made your way into a private equity funds, how is your career going to evolve, and how do you make it to partner? The traditional career progression in private equity is detailed below.
Analyst or Pre-MBA Associate
-Those are typically pre-MBA candidates hired from the Investment Banks, Strategy Consulting firms or Accouting firms. They usually have 2 to 4 years experience maximum
- The job involves mainly prospecting (cold calling, screening sectors for interesting companies, etc.) as well as investment analysis. This involves reading Information Memoradum and other company data, working on financial models and writing investment memos the investment committee.
- After 2 years, sometimes promoted to the senior associate level but often the analyst/pre-MBA associate will leave to either pursue an MBA at a top school or change career path (i.e. entrepreneurship, hedge funds, corporate development, or another PE fund)
- Compensation mostly consists of base pay + bonus
Post MBA Senior Associate
- Often hired right out of business school or 1-2 years after graduation from business school. Those are professionals with 3-6 years work experience in investment banking, consulting and private equity.
- Senior Associates can expect to reach Managing Director/Partner level within 6 to 8 years
- The work includes taking full responsability for deal screening and modelling during the execution of a deal. Most of their time is spent managing advisors such as investment banks, lawyers, accountants
- Compensation mostly consists of base pay + bonus, sometimes with a small share of profits of the investments
Vice President / Principal
- Position usually reached after 2-3 years in the private equity fund
- They are expected to be able to lead the execution of transactions and be able to source their own investments and ideas within their area of expertise
- They also spend a lot of time managing the portfolio companies
- They get promoted to partner if demonstrate a good ability to generate money for the firm
- Share of profits of the investments is an increasingly large portion of the compensation
Managing Director / Partner
- In charge of leading the firm's investment focus and strategy
- Also in charge of managing relationships with investors and raising new funds
- Participate in investment decisions and sit in the investment committe
- Sit on the portfolio companies board
- Compensation largely driven by profits of the firms. Partners are also expected to invest a significant proportion of their wealth in the fund