Private Equity (PE) firms collect high-net-worth funds and invest in businesses across all the sectors. It provides the capital essential to grow and handle changes like restructuring or even a buyout. In brief, private equity investment is a high-risk venture with heavy returns.
For this, the private equity firms raise capital from outside vendors and use it for buying companies, operating and improving them. It sells the companies in hold for profit. As it largely deals with heavy money, getting into a private equity job is challenging.
Let us see the educational qualifications and skills needed for getting into private equity here.
What are the educational requirements to get a job in private equity?
Graduation or post-graduation is essential to gain a career in private equity. Graduation in finance and the related domains is highly preferred.
Also, having a doctorate degree in Investment Analysis, Econometrics, Math or Financial Engineering would be an added advantage for gaining a managerial position. Earning a certification like Chartered Private Equity Professional (CPEPTM) or Certified Public Accountant will help you keep pace with the new trends.
Some of the special skills to become a private equity professional are as briefed below.
What are the skills needed to excel as a private equity professional?
A successful private equity career requires not only mathematical but also inter-personal skills. Guy Hands, founder and chairman of private equity firm, Terra Firma says that numerical ability is the essential skill to process numbers efficiently at a faster rate. Some of the unique skills are:
As PE jobs may involve any of the industries like retail, healthcare, energy, information technology, etc., it is necessary to have field knowledge of the domains. It will help you excel in the field. In addition, there are firms that raise funds in geographic-specific regions such as EMEA, Asia-Pacific, and etc. Therefore, private equity professionals must have an understanding of the geo-political situations and business models to succeed in the job.
Data analytics skills
Being a PE professional, you might be using database tools like Bloomberg, Thomas Reuters, Factiva, etc. Further, you should analyze the funding strategy, and estimate the returns generated. Moreover, you should have a sound knowledge of Excel, Visual Basic, finance models, etc., to support your statements and model.
Negotiation, networking, and report preparation
As you reflect the company’s image, you must approach the portfolio companies with excellent communication skills and reports using charts and condensed reports. You must convey the firm’s strategies clearly, negotiate, and have a strong networking skill.
You must be in a position to analyze financial statements and estimate the private company’s value. However, you should understand the contract law as you cannot disclose the financial results. You must structure the complex deals and include everything with due diligence.
Apart from all these above-mentioned skills, you need people skills. You must empathize with owners, concern with the employees, and know when to hold onto an investment or when to cut. As certain investments take time to realize the value, it is necessary to think from long-term perspective.
So, tune your skills to succeed in private equity job.