Private equity

Experience in private equity is highly regarded by the rest of the finance industry. Skills learnt are easily transferable to many other specialistations and you will likely find no shortage of roles.

What is private equity?

It is common in the property market for investors to look for that ‘diamond in the rough’ – the renovator’s dream that you can fix up and sell again for a tidy profit. In many respects, this is what happens in the world of private equity. Private equity firms use money from investors plus debt to buy mature organisations that may be deteriorating or not making the profits they should be.

This is based on the belief that the private equity firm can unlock the organisation’s potential and increase its overall value, through means such as reducing costs, improving operations or investing in new technology.

Private equity firms do not intend to manage these organisations forever, but instead seek to sell them or take them public on the stock exchange. Investors who commit to private equity funds typically do not see a return for many years.

The private equity industry in Australia is relatively small, with key players including Archer Capital, CPE Capital, Quadrant Private Equity and Wolseley. The size of these funds varies – Australian firms typically manage funds in the hundreds of millions, while those in the US are much larger, managing billions of dollars in assets.

What is the graduate experience like in private equity?

It is rare for an undergraduate to enter private equity straight from university. Private equity firms prefer to hire the talent they need rather than develop it themselves. A typical route into private equity is through a few years’ experience in management consulting or investment banking. MBA graduates from top-tier universities may also be considered for roles.

In Australia, finding roles in private equity may be difficult, simply given the size of the industry as well as the small size of the firms themselves, which often have less than a dozen employees. If you do join a private equity firm, however, its small size may be an advantage. There are often fewer managerial layers compared to investment banking, and you will likely have plenty of opportunity to work with senior directors.

Most private equity firms have roles that mirror the fund’s lifecycle – raising funds, buying and managing companies and then selling them.

Senior directors are typically responsible for creating the initial fund as this relies on strong relationships and networks. Once a fund is created, investor relations specialists help to manage existing investor relationships while marketing to prospective ones.

At the more junior level, you will likely be involved in researching potential organisations to invest in. You may need to investigate a target’s operations and financial health as well as make recommendations for strategies to improve its performance.

Once the deal is negotiated, you may work directly with the target’s management to meet agreed objectives. This is an excellent opportunity to improve your communication skills as communicating and selling a vision for the organisation is critical.

What are your career prospects in private equity?

Private equity firms are meritocracies at heart. Often there are no set number of directors at an organisation and in most cases, if you do good work, you will be rewarded in both pay and increased responsibility.

Experience in private equity is highly regarded by the rest of the finance industry. Skills learnt are easily transferable to many other specialisations and you will likely find no shortage of roles. For example, if you have experience in fundraising and investor relations, you may want to work on the ‘other side’, such as with a superannuation fund, evaluating how to invest their money.

Given private equity firms recruit more experienced hires, further education is not a common experience, however this will vary according to the individual firm.

Choose this if you have:

■ Excellent analytical skills and the ability to interpret large amounts of information ■ Strong communication and interpersonal skills ■ A love of dynamic, project-based work.

Interested in this specialisation?

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