Is private equity high paying?
The “all-in” combined salary is approximately $275k to $390k at top PE firms, but this figure can be much lower for smaller-sized funds and exceed $400k for firms with reputations for being the highest-paying (e.g. Apollo Global).
Private equity is a very lucrative career. As an asset class, private equity has enjoyed tremendous success over the past decade. Investors around the globe continue to pile their money into private equity firms.
You may be aware of the longstanding question about whether private equity returns have historically outperformed public equity. The simple answer is: yes, by a significant margin.
Private equity owners make money by buying companies they think have value and can be improved. They improve the company or break it up and sell its parts, which can generate even more profits.
Is It Hard to Get Into Private Equity? Yes! Private equity is one of the most competitive jobs to get – period. Not just in finance, but across the board.
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.
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.
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.
Another con of private equity is the high fees charged by PE firms. These fees can eat into returns and make it difficult for investors to realize a profit on their investment. Additionally, private equity firms typically require a large initial investment, which may be beyond the reach of many individual investors.
However, you also have a greater chance of losing your money, given that private equity often invests in startups. Private equity funds also tend to have high fees, which can cut into returns. Additionally, private equity funds are highly illiquid.
Can you become a millionaire from private equity?
One way is to sell the company at a profit after making improvements to its operations. Another way is to take the company public, which can generate a large capital gain for the private equity firm. Some of the world's richest people have made their fortunes through private equity.
Private equity firms usually seek someone with a strong sense of numbers. As such, the majors they generally look for include Finance, Accounting, Statistics, Mathematics, or Economics. GPA will, of course, be a factor here.
To break into private equity, a strong educational background is essential. Most professionals have degrees in finance, business, or related fields. Relevant experience in areas like investment banking or consulting is highly regarded.
Private Equity Associate Lifestyle and Hours
At many smaller funds and middle-market funds, you can expect to work 60-70 hours per week, mostly on weekdays, with occasional weekend work when deals heat up.
Private Equity Career Training
PE firms are small, tight-knit, and full of extremely smart and highly motivated people.
Those who wish to broaden their horizons or simply desire a change of pace will often migrate to similar sectors such as hedge funds or portfolio management. Additional exit options include: Being hired as a chief analyst by another firm.
Private-equity firms typically run leaner operations than banks and so have less need to cut jobs during slowdowns. But some have laid off about 5% to 15% of their staff, said Sasha Jensen, founder and chief executive of Jensen Partners, an executive-search firm for alternative-asset managers.
Both investment banking and private equity are demanding careers that require long working hours, although private equity firms tend to have a more relaxed work environment and offer a more flexible schedule.
Prospective private equity employees should understand this motivation and have a true interest in the process. Private equity careers present a prime opportunity for finance professionals to work with concepts on a long-term basis rather than in the context of “one and done” deals.
Rising operational costs
Private equity firms have been dealing with rising operational costs for some time now, and 2024 won't be an exception. Firms are still facing inflation and a high-interest rate environment.
What is cool about private equity?
Private equity investors believe that the benefits outweigh the challenges not present in publicly traded assets—such as complexity of structure, capital calls (and the need to hold liquidity to meet them), illiquidity, higher betas than the market, high volatility of returns (the standard deviation of private equity ...
The Rule of 72 is a convenient method to estimate the approximate time for invested capital to double in value. By merely taking the number 72 and dividing it by the rate of return (or interest rate) expected to be earned, the output is the approximate number of years for an investment to double.
The typical split in profits between LPs and GP is 80 / 20. That means, the LP gets distributed 80% of the profits on an exit (after returning their initial capital) and the GP keeps 20% of the profits.
While ZipRecruiter is seeing annual salaries as high as $143,000 and as low as $47,000, the majority of Private Equity Associate salaries currently range between $69,000 (25th percentile) to $120,000 (75th percentile) with top earners (90th percentile) making $138,500 annually across the United States.
According to the H1B Database, which compiles the base salaries of all U.S. employees under the common H-1B visa, in 2019, the firms that paid the highest figures for an associate position were Apollo Global Management, KKR & Co., and Brookfield Asset Management.
