Private Equity.
When someone says they work in Private Equity, there's typically a vague mystique to it. Unless you work within the industry, you likely don't know all that much about what the Private Equity markets really are.
Here's a high level summary:
Private Equity is a type of investment that is considered to be within the "Alternative Asset" space.
When you invest into private equity, you are purchasing shares of a privately-held business.
The difference of buying shares of a private company, is that the company does not have to report to shareholders like Apple or Disney does each quarter.
Typically Private Equity investing is not as accessible to everyday investors like the US stock market is.
Most investors within the PE markets are considered "accredited" investors, or are investing through a PE fund that specializes mostly in buying out companies in the private markets.
The advantage of a firm to utilize Private Markets for investment is that they do not need to seek traditional funding like higher interest bank loans or appease to shareholders.
From 2000-2020, PE investments have outperformed the S&P 500 on a rolling 10-year average:
The disadvantage of PE investing for companies is that the true value of a company held in the private markets can be much harder to evaluate.
The value of a firm held in the private markets is determined by what investors and founders agree upon as "fair value". Typically this process incorporates looking at the average annual cash flow, expected future returns, profitability, and more.
This is very different than a publicly traded stock that has the exact stock price and total market cap value updated in real time every trading day.
It is also worth noting that Private Equity investing is generally considered to be higher risk than many other investment classes such as Bonds, Stocks, and Real Estate.
Who are the big players in Private Equity?
The largest and most recognized PE firm in the world is Blackstone, who manages around $100 Billion in AUM. (Assets Under Management).
Check out the graphic below showing the 25 largest Private Equity firms in the world today:
*(If you are interested in working at any of these companies, many of them happen to be my clients at Michael Page, and I would be happy to connect you with those I know in my network!)
Working in Private Equity:
I specialize in recruitment for just one small fraction of the Private Equity market. Just like in public markets, there are roles at all levels of the transaction landscape within private equity.
There are the deal makers, otherwise known as "Front Office". These people usually carry titles such as Deals Associate, Equities Analyst, or Research Associate. Typically, those who hold these roles in the Private Equity industry come from similar roles within the Investment banking and public equities world.
There are also roles within the "Middle Office". These people typically support those working in the front office with roles such as managing market risk, preparing reports and analysis on the investments, managing liquidity and some of the more operational tasks of the firm.
Finally there is the "Back Office". These roles tend to be more process and reporting oriented. Typically, you will see the majority of those working in the back office with accounting degrees, who are more specialized in process improvement or financial reporting. The back office also houses any roles that are "non-revenue oriented" such as Human Resources, IT, and Compliance. Some role titles that you will see in the back office will be Accountant, Controller, Regulatory Reporting Manager, HR Manager, Audit Manager, Etc.
How much do you make in Private Equity?
My colleagues at Michael Page developed a fully extensive Salary Guide across the Financial Services industry in New York City,
In it, you will find the average salary ranges at all experience levels for the Financial Services industry.
Risk
Audit
Compliance
Middle Office & Operations
Asset Management
Accounting & Finance
Tax
Front Office
Technology
Legal
Human Resources
Admin and Office Support
For example, see below for a view on the average salary ranges for Accounting professionals in the financial services industry:
Check out the full guide by downloading the .PDF file below for FREE!
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I specialize in the recruitment of primarily "Back Office" and "Middle Office" roles within the Private Equity industry in NYC. If you or someone you know is looking to make a move, feel free to shoot me an email at:
or connect with me at: