Navigating a Career in Private Equity: The Complete Guide to Getting into Private Equity

Private equity (PE) is a dynamic and lucrative field that offers unique opportunities for professionals looking to work with investments in privately held companies. Whether you're a seasoned finance professional or a recent graduate, understanding the work hours, culture, and skills needed to succeed can help you decide if this field aligns with your career goals.

Private equity is a highly competitive industry. Before you land your first job in PE, you often need to get into the right undergraduate and MBA programs. 

According to Peak Frameworks’ analysis of 16 NYC-based PE firms, the top five undergrad feeder schools were,

• The University of Pennsylvania (Wharton)
• Harvard
• Dartmouth
• Ivey Business School
• Yale

But it’s not just where you go to school. It’s where you work after college. The typical PE track for recent college graduates is to work in investment banking or consulting for a few years before joining an MBA program or jumping into PE. 

The top 3 feeder firms for PE are Goldman Sachs, JP Morgan, and Morgan Stanley.

Is it possible to break into PE without attending an Ivy League school or enduring years of grueling work in investment banking or consulting? Yes, but the data shows it’s not likely.

What is private equity? And why is it so competitive? 

Private equity involves investing in privately held companies with the aim of increasing their value and eventually realizing a return on that investment. Unlike public equity markets, where shares are traded openly, private equity firms work directly with businesses to implement strategic changes, improve operations, and drive growth.

The interest in private equity positions comes from these benefits:

• High Earning Potential: Private equity professionals often earn significant compensation, including base salaries and performance-based bonuses.
• Impactful Work: PE firms actively participate in shaping the success of the companies they invest in, which can be highly rewarding.
• Intellectual Challenge: Analyzing complex business models, evaluating potential investments, and devising strategies to enhance value require sharp analytical skills.
• Exit Opportunities: Successful professionals in private equity can transition to various roles, including top-level management positions in portfolio companies or starting their own firms.

Job Descriptions at Each Career Stage

There is a typical career path in PE that starts at the analyst level with the top role being that of Partner at a firm. Here are the job descriptions at each stage of a private equity career.

PE Analyst: This entry-level role is expected to have extensive knowledge of financial modeling, due diligence, and supporting deal execution but their day-to-day tasks are focused on business development and sourcing new targets for the firm. 

Analysts are responsible for,

• Conducting proactive, first-touch outreach to CEOs
• Market and early company diligence

PE Associate: Associates take on more responsibility in deal sourcing, analysis, and monitoring of portfolio companies. Associates play a more active role in deal origination, how firms source potential investments.

Associates are responsible for,

• Financial due diligence
• Passively sourcing (when not on active deals)

VP/Principal: VPs play a key role in deal origination and lead deal teams, as well as contribute to the strategic direction of portfolio companies. VPs lead deal teams, conduct negotiations, and play a significant role in shaping the firm's investment strategy.

VPs/Principals are responsible for,

• Managing the end-to-end deal process
• Coordinating all third parties: bankers, lawyers, accountants, consultants
• Deal sourcing through bankers and advisors

Partner: The highest-ranking professionals in a PE firm, partners are responsible for overall fund performance, investor relations, and setting the firm's strategic direction.

Partners are responsible for,

• Deal sourcing through personal network
• Raising capital
• Managing portfolio companies and sitting on boards

For more on the structure of a Private Equity firm, check out our breakdown of Private Equity Structure 101.

Private Equity Salary Ranges

How much do people in private equity make? What is the standard private equity base + bonus salary? 

A career in private equity typically follows a structured trajectory, progressing from an analyst position to the coveted role of Partner. Here's an overview of the common private equity salaries:

• Analyst = $80-120k+ base salary
• Associate = $120-150k+ base salary
• VP = $150-200k+ base salary
• Principal = $200-300k+ base salary
• Partner = $600k-1M+ base salary with a bonus of mostly carried interest. The exact amount varies widely based on fund performance

In addition to base pay, VPs and above can earn carried interest. Carried interest can be very lucrative because the Partners at the PE firm might contribute only 1-5% of the fund’s capital, but if it performs above the hurdle rate, they can claim 20% of the fund’s profits. You read more about the exact mechanics of carried interest in “Private Equity Salary, Bonus, and Carried Interest Levels: The Full Guide” by Brian DeChesare.

‍Private Equity Hours and Culture

The private equity industry is known for its demanding hours, especially during deal execution. Professionals often work long hours, including evenings and weekends, to meet tight deadlines. The culture in PE firms can be highly competitive, with an emphasis on results, but it can also be rewarding.

The hours will vary depending on your role in the firm. Typically, analysts and associates can expect 80 hours per week, while VPs, Principals and Partners typically work 50-60 hours per week. 

• Analyst = 80+ hours per week
• Associate = 60-80 hours per week
• VP = 60-80 hours per week
• Principal/Partner = 50-60 hours per week

PE firms are located in cities throughout the world, but no matter where a firm is based, travel is likely to be required. Here’s a breakdown of travel expectations for each role:

• Analyst = Little to no travel
• Associate = 2 trips per month
• VP/Principal = 2-3 trips per month. Likely these are day trips for management meetings. 
• Partner = 4-8 meetings per month. Likely these are a mixture of board meetings and management meetings. 

Soft Skills Required to Succeed

To excel in private equity, professionals need a combination of soft skills, including these four key attributes.

Communication. Effective communication is crucial for building relationships with colleagues, investors, and portfolio company management.

Affability. Unlike hedge funds, where deals are decided behind a desk, PE firms have to source deals and convince CEOs to sell their business. This line of work requires charisma and drive. 

Problem-Solving. The ability to analyze complex situations and devise creative solutions is essential in deal sourcing and execution.

Leadership. As professionals advance in their careers, leadership skills become increasingly important for managing teams and guiding investment strategies.

Hard Skills Required

In addition to soft skills, private equity professionals need strong hard skills, such as financial modeling, financial due diligence, and valuation techniques. What does this look like in practice? PE professionals are expected to show proficiency in building complex financial models to forecast performance and knowledge of various valuation methods, such as discounted cash flow (DCF) analysis and comparable company analysis.

Deal Sourcing Across Career Stages

Deal sourcing is a core function in private equity, and is relevant at every career stage. 

Analysts and associates focus on screening potential investments, while VPs and principals often take a more active role in originating deals and negotiating terms. Partners, at the highest level, are responsible for setting the firm's overarching investment strategy and maintaining a strong deal pipeline.

Get Started with Grata Scholars

Working in private equity is incredibly lucrative and incredibly competitive. It’s hard to break into the industry without the right connections, especially when you are early in your career. 

If you’re an undergraduate looking to get your foot in the door, join the Grata Scholars community. 

Grata Scholars is a 5-week course where top students get the opportunity to compete for M&A internships, helping you bulk up your resume before you graduate. Learn more about Grata Scholars.

FAQs

How much does a PE analyst make? What are the typical hours?

A PE analyst makes an approximately $80-$120k+ base salary. An analyst will typically work 80+ hour weeks. 

How much does a PE associate make? What are the typical hours?

A PE associate makes an approximately $120-150k+ base salary. An associate typically works 60-80 hours per week.

How much does a PE Vice President (VP) make? What are the typical hours?

A PE VP makes an approximately $150-200k+ base salary. A VP will typically work 60-80 hours per week.

How much does a PE principal make? What are the typical hours?

A PE principal makes an approximately $200-300k+ base salary with a bonus of mostly carried interest. A principal will typically work 50-60 hours per week.

How much does a PE partner make? What are the typical hours?

A PE partner makes an approximately $600k-$1M+ base salary with a bonus of mostly carried interest. A partner will typically work 50-60 hours per week.