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Private Equity Associate

Updated on May 28, 2024
Article byWallstreetmojo Team
Edited byAaron Crowe
Reviewed byDheeraj Vaidya, CFA, FRM

What Is A Private Equity Associate?

A private equity associate is a more robust job to crack in and a desirable tag in the financial services domain. It is involved in assisting other senior associates and partners to achieve a well-suited target to invest in and ripe benefits through exiting it at a lucrative price.

What Is A Private Equity Associate

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They conduct market research for suitable fund managers alongside performing duties such as overseeing due diligence, handling communication, preparing financial models, etc. They help evaluate managers and investment opportunities to frame strategies that will ensure the client’s success in getting the highest possible return on their investment. Thus, these associates provide a direction to clients regarding investment.

Key Takeaways

  • A private equity associate has a more robust job to work and a desirable tag in the financial services industry.
  • It assists other senior associates and partners in getting a suitable target to invest in and get benefits by exiting it at a cost-effective price with conducting responsibilities like governing due diligence, managing communication, making financial models, etc.
  • A job seeker must have a bachelor’s degree in Economics, Statistics, Accountancy, Mathematics, etc.

Private Equity Associate Explained

A professional with a private equity associate degree is responsible for handling the due diligence of any investment options along with helping the client with their portfolio management and closing deals successfully. But unlike investment banking responsibilities taken by banks, these associates have smaller hierarchies or layers.

Private companies are generally smaller than other similar players in the investing industry. For example, investment banking organizations, the big ones, such as ABN AMRO, Goldman Sachs, Morgan Stanley, etc., have various verticals in the investing domain. In contrast, private equity players invest funds (acquired by clients) across multiple investment options in public or private entities.

Although the private equity associate jobs private equity associate role have cons some problems, it is an excellent opportunity to work in a private equity firm to achieve a holistic knowledge of investing and funding. In addition, it unveils the opportunity to grow faster in the mentor-ship of wise, refined, and seasoned senior partners.

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Roles & Responsibilities

A private equity associate job description involves a plethora of work depending upon the respective area of specialization of the firm. But generally, an associate is responsible for receiving and sending communication teasers to clients, investment bankers, and other sell-side partners. This role also requires monitoring the financials and updates related to entities in which the firm is already invested. Meanwhile, they must fulfill the tasks assigned by seniors of any domain, check the due diligence report, and contact prospective clients and companies.

As private equity firms are smaller in investments and have several employees concerning investment banking firms, a strict corporate culture and hierarchy levels are amiss. An entry-level professional with a private equity associate degree could also collaborate with the seniors, such as the Principal or Vice President, and avail a thorough knowledge of the deal from the origination till the end.

Private Equity Associate - roles

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  • Associate or Entry-level Positions – It is the lowermost position in the hierarchy of private equity firms, though a flatter hierarchy career prevails. The work involves tedious and rigorous ones, such as preparing models of entities, doing initial screening, due diligence reporting, assisting higher management in acquiring new opportunities, and filling up on everything seniors require.
  • Principals or Senior Analyst – This position is of mid-senior level, and apart from handing over various tasks to associates or analysts, they are involved in deal sourcing, internal due diligence, strategic policies, negotiations, communicating with partners, and using their connections to gain insight or new deal for the firm. This position mainly consists of MBA graduates from top business schools and MBA colleges with an experience of somewhat 3-6 years.
  • Partner or Managing Director – These are the senior-most persons in the organization and authorize the entity’s ultimate controls. These involve communications, sourcing deals, negotiations, and investments for private equity firms. Being in constant touch with investors, investment bankers, and portfolio companies is some of the most crucial tasks headed by the organization’s partners.

How To Become A Private Equity Associate?

An esteemed job seeker should have a bachelor’s degree in economics, statistics, accountancy, mathematics, etc. There are three most vital requirements have been listed below: –

  • A lot of firms hire pre-MBA students for the role of junior analysts. The prospective analysts employed through this route are involved in cold calling, emailing, investment analysis, etc. Later on, after taking experience for two or more years, the students either leave to do MBA or shift to an organization of similar standing and maybe to different domains such as Hedge Funds, etc. The experience gained from private equity associate jobs help a lot once they return after finishing the MBA from top-tier MBA colleges or B-schools and could fast-track their way to senior positions.
  • Unlike MBA aspirants, very few undergrads get an opportunity to attain entry-level posts in comparatively smaller PE funds. It is quite an arduous task to take entry as it broadly requires some personal connection in the organization and an intense passion for the work to land a chance.
  • Private equity firms open gates for graduates too, but the chances are quite slim. Most companies prefer the candidate to have relevant experience of at least 2-3 years in a similar domain, either in the banks or private equity firms. In addition, financial modelling, valuations, impeccable writing, and excellent communication skills are relevant factors considered while hiring a freshly graduated entrant and thus, average private equity associate salary will vary accordingly.
  • MBA students from B-schools or top-tier colleges possess the best chances. Suppose the MBA-qualified student has experience working in private equity firms. In that case, it becomes an exceptional opportunity to enter the lower senior positions, too, as the cumulative experience becomes more than two years (considering a job or internship in the past for 2-3 years). Although the MBA fresher lacks the relevant exposure, entry into the private equity firms would not be difficult given that they have a solid knowledge of finance. Most firms in this domain maintain an MBA degree as a prerequisite for a senior position.
  • Other ways to enter pivate equity firms, include engineering, accounting, and consultation profiles. For migrating from other posts to the private equity domain, the primary lookout in private equity associate job description is the relevant experience for the job and what the prospective employee could add from his side. Mostly, employees from the top accounting firms(involved in private equity deals), engineers with a strong understanding of finance (either acquired through the courses or otherwise), experience in the investment banking vertical could elevate the chances of getting hired because of their knowledge in different fields, contacts in the industry, and habituated behavior towards the required work.

Advantages

  • Due to the smaller size, like funds invested and employee counts, private equity firms offer affluent domain knowledge, even an entry-level associate. As a result, a new entrant could quickly expect to see a deal from end to end, even in their first year.
  • Principals are generally responsible for deal-making, investing decisions, and allotment of work amongst employees. There is also the active participation of the most seasoned employees in the organization. The effortless and non-obstructive communication flow allows the newcomers to mingle with seniors and a steep opportunity to learn and showcase their talent and effort rendered along with earning a decent average private equity associate salary.
  • Despite such a rich experience, a private equity associate lives a peaceful life compared to an investment banker. It is not a 9 a.m. to 5 p.m. job but mainly offers an enjoyable weekend to live on and enjoy an excellent work-life balance to catch up on family, friends, and other hobbies.

Disadvantages

As private equity firms are small, it is challenging to join them. Even once crossing this barrier, in public opinion, it is complicated to switch to other roles as there is a flatter hierarchy since leading to the position could become severe. Though it is a less stressful job than investment banking, it could still be tiresome at times.

Frequently Asked Questions (FAQs)

How much do private equity associates make?

As a Private Equity Associate, one may make $1,23,825 in the United States. The profit private equity firms can make from their investments determines how much they are paid. They receive “carry,” or a share of this profit. Less than 1/5 of investors receive carry-in giant funds, which is practically unheard of.

What is KKR private equity associate salary?

The KKR private equity associate’s salary is $225,256. Therefore, the approximate annual pay for a Private Equity Associate at KKR is $225,256.

How many hours do private equity associates work?

In major smaller funds and middle-market funds, one may require to work 60-70 hours per week on weekdays, with occasional weekend work if the deal happens.

Do private equity associates get carry?

Private equity firms’ pay depends on the profit they may generate from the investments. In addition, they may also get a profit portion, called “carry.” But the fact is that most associates do not obtain carry.

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