Private equity (PE) refers to capital or financial investment made into companies that are in the private domain. These companies might be listed in the stock market and might be welcoming multiple investors, but they are also looking at large investments from venture capitalists.
Two key PE investment sub-fields are leveraged buyouts (LBOs) and venture capital (VC) investments. PE capital investments come from high-net-worth individuals (HNWI) and firms that purchase stakes in private companies which they think will perform well and will be able to deliver good ROI (Returns on Investments). Private equity professionals who provide consultation services and help the HNWIs to invest in companies make a good profit out of the entire deal.
The PE investors acquire the control of the public companies after making the investment and then eventually delist them from stock exchanges. Private equity firms raise capital from outside investors, such as pension funds, large PE firms funded by accredited investors like high net worth individuals (HNWI), insurance companies, banks, brokers, financial institutions, and trusts.
Private Equity Skills and Career Requirements
If you are planning to take up a private equity career, then read further. These are some of the skills which you need to have before you think about making a career in this field.
- Since PE jobs are some of the most respected and sought-after jobs in the financial sector, the competition is high. In order to be ahead of the competition, one needs to have a good network of investors and they should be aware of the market in their region. A private equity professional should understand the trends which are picking up in this field and what kinds of companies are doing good business. They should be capable of advising their investors to invest in a fruitful business that will bring high ROI.
- A good private equity professional should be able to invest long hours at work.
- A good private equity professional should have an eye for details and their negotiation and persuasion skills have to be excellent. Their communication skills have to be very good as they will need to interact with the companies, understand their business model, risks, future plans and explain the same to the investors. They need to go through due diligence before suggesting their client invest in a company.
- A private equity professional should have through knowledge about financial modeling, LBO modeling, and M&A (Mergers and Acquisitions) modeling.
- Private equity professionals need to be interested in long-term projects, as the returns mature only with time. Building a portfolio company over many years, handling its operations, and making it a cash cow is the prime goal of a PE professional. This includes company monitoring and fundraising.
Private equity certification programs
CPEP (Chartered Private Equity Professional) Certification which is awarded by the United States Private Equity Council accelerates your current position in the PE space manifolds. Along with your current qualification in business, accounting, finance, investment banking or investment management degree or diploma, this certificate will position you well in the private equity and venture capital industry.
Corporate finance institute offers a certificate program in financial modeling and valuation analysis (FMVA). You can learn about investment banking, private equity, financial planning and analysis, treasury, corporate development, and other areas of corporate finance through this program.
Imarticus has come up with a financial analysis course that will make you ready to take up a private equity career. This course is in collaboration with renowned accounting organization KPMG. There are high chances of you getting absorbed in the payroll of KPMG or any similar company or a bank.