How To Get Into Private Equity

Learning how to get into private equity can increase the odds of you having a lucrative and rewarding career in the field. Regardless of what private equity position you are after, knowing all the ways you can get it is likely to have a direct impact on your odds of success. Getting into private equity is a major career move, but it requires work ethic and ambition. In this article, we discuss what private equity is and the ways you can start a career in the industry.

What is private equity?

Private equity represents ownership of an institution that is not listed or traded publicly. It is a way for high net-worth private individuals and organizations to invest their capital by purchasing major stakes in private companies or by buying enough shares of a public company to gain its control and then delist it from stock exchanges and make it private.

The people employed in the private equity industry usually work for investing organizations, such as pension funds and large private-equity firms. The hiring organizations in this field are usually backed by large investors because investing enough to gain control of an organization requires large amounts of money. Given the fact that the private equity business involves very large sums of money and complex decisions, those who work in the industry are usually top performers from a number of different fields.

Related: What Are Private Equity Firms?

How to get into private equity

Consider these ways to get a job in the private equity industry:

1. Get into private equity right out of college

Although most private equity firms prefer not to hire and train graduates, but instead get someone with a few years of investment banking experience, you can still find a private equity role as an undergraduate. Internships could be a very effective way of getting to work for a major organization in the industry, but not all private equity firms have open internships so the ones that do are very sought after by students. A finance degree is usually the most valued in the field.

If you can't get a job or an internship in private equity during or right after college, consider getting one in a complementary field, like investment banking, venture capital or asset management. Although internships in these fields are also limited, especially at top companies, getting one is usually significantly easier than going straight into private equity. After a few years, you can start looking for jobs in private equity, as you would have acquired enough experience to no longer be seen as an employee who needs basic training.

2. Get a master's degree

Many people who work in private equity have master's degrees in finance or MBAs from top institutions, so even if you can't directly enter the field after graduation it can still help you later on, after accumulating a few years of experience in a related field. Getting enough work experience and then completing your master's degree is usually a good way to get into private equity, but it requires careful planning, as most top private equity firms prefer to hire entry-level employees that are as young as possible, so they have much time to gain experience and fulfill their potential.

The most challenging part of getting a private equity job straight after earning a master's degree is finding any available open positions. This typically requires extensive cold-calling and networking, as well as the ability to self-educate on many issues that were not covered during your college years. As big firms usually prefer to hire candidates with internships at other private equity firms, consulting or investment banking, focusing on smaller firms and jobs in these complementary fields is usually a good way to eventually get a job at a top private equity organization.

3. Transition from an engineering career to one in private equity

People with an engineering background can switch careers and work for private equity firms, with the best way of doing so being to get a job in investment banking or consulting first. Engineering graduates are usually sought after for banking jobs, because of their reputation of being hard workers. However, the transition can usually only be done if the engineer earns an MBA or a master's degree in finance as early as possible into their engineering career. This can help them get a top banking or consulting job, which can then facilitate a lateral move into private equity.

Related: How To Change Careers From Engineering to Finance

4. Transition from a consulting, accounting or investment banking role

Most employees at highly-rated private equity firms are hired after earning at least an MBA or master's degree in finance and then spending a few years working for a top organization as a consultant, accountant, investment banker or any other similar role. Major firms prefer to hire such individuals because working in private equity involves high degrees of responsibility and hiring people who have already spent a few years learning the basics elsewhere are less likely to commit costly errors.

Related: Investment Banking vs. Private Equity: Key Differences

The required skills for getting into private equity

The most important skills for someone looking for a job in the private equity business are:

• Networking skills: Having good networking skills is crucial for finding and getting a job in the private equity industry, but also for excelling afterward. Knowing enough people in the field is likely to help you identify any open positions, and your networking skills can also be useful after getting the job, as the role implies constant communication with fellow private equity professionals and with clients.

• Cold calling skills: Being able to constantly make a large number of phone calls in a short period of time without losing concentration or enthusiasm is arguably the most important quality for those looking for private equity jobs. The reason is that the chances of you contacting a major private equity firm and getting a response from a senior employee is usually very low, so you need to be persistent and keep calling companies until you eventually hear back.

• Technical skills: Knowing enough people in the field and staying focused while making large numbers of phone calls are crucial if you want to get noticed, but once you do you need to prove that you have the technical skills required to succeed in the industry. This usually implies having extensive knowledge on topics such as financial modeling, valuations, financial analysis, deal structuring, LBO modeling and other similar concepts.