Private equity is an increasingly popular investment option for investors looking to diversify their portfolios. With a steady upward trend and a consistent history of higher returns than the public market, it’s no wonder that investors around the globe are eager to tap into the potential of the private equity space.
However, private equity is an extremely competitive field with limited entry opportunities for those considering it as a career. Without the right kind of background, breaking into the industry can be extremely difficult.
That said, there are still incredible opportunities around the country for aspiring investors. With the right kind of portfolio, you could consider partnering with firms like First National Realty Partners (FNRP), a leading private equity firm in the commercial real estate sector. You can check out FNRPUSA reviews to have a better idea of what this investment hub offers.
If you’re an investor looking to branch out, this guide is for you. Here, we explain all you need to know about career opportunities in private equity, what it takes to get started, and how to figure out if it’s the right career for you.
What You Need to Know About Private Equity
Private equity firms are usually much smaller than investment banks, with as few as five to ten employees in a company. Regardless of its size, associates employed by these firms use funds that are usually raised from wealthy individuals and investment companies. Unlike hedge funds, private equity firms hold on to their investments for an extended period (usually more than ten years) before selling for profit.
Considering the compact nature of the private equity space, gaining entry can be highly competitive. That’s because firms typically hire from only one place—large, multinational, and elite banks. However, in recent years, megafunds have been hiring recent college graduates for junior-level analyst positions, which is starting to open the door to the industry.
This trend is also making it possible for consultants (especially those from McKinsey & Company and Boston Consulting Group) and other finance professionals to be recruited by private equity groups, although there are still a relatively limited number of spots for these professionals.
Is Private Equity Right for Me?
Starting a career in private equity is competitive and requires relevant experience and background, as well as a robust set of personal skills. The typical requirements for gaining entry in this field are:
- Previous experience: Experience and strong networking skills are very important to land an interview with a competitive private equity firm. Firms usually look for entry-level associates with at least two years of experience in the banking industry.
- Relevant training: Training from a top-tier investment bank, or relevant experience from a leading management consultancy, is required.
- Excellent academic record from a top-tier university: A bachelor’s degree in accounting, finance, or a related program is typically the minimum requirement. The most competitive firms don’t hire anyone without a Master’s degree in finance.
- Other certifications: Chartered Financial Analyst (CFA) or Chartered Alternative Investment Analyst (CAIA) and Associated Chartered Accountant certifications are sometimes also considered.
Private equity firms are typically looking for individuals with strong analytic, technical, strategic, and commercial decision-making skills, as well as people who are assertive, self-confident, and have an entrepreneurial mindset.
To get your foot in the door, it is recommended to take an internship with a private equity firm or explore a related career path (e.g., investment banking) to expose yourself to this business environment early on. As you gain more experience and connections, you may want to consider starting a private equity real estate fund.
Private equity is an incredibly demanding profession, and a solid financial background is a cornerstone for tapping into this sector. If you have the necessary credentials, know how to network, and have a strong desire to break into this market, you have every chance of success.
If you have an interest specifically in the real estate sector, check out our post on the best commercial real estate investing apps that can keep you up to date on the latest trends and information!