Private Equity Analyst Roles: The Best Way to Skip Investment Banking?

What is Private Equity?

Before jumping into the private equity analyst role segment, it’s paramount that we understand the concept of private equity on a more grass-root level. Private equity, the name is very suggestive that this has got to do more with the private companies that are not listed on public domains.

In simpler terms, private equity represents stakes or interest in the companies that are yet to be publicly listed, most likely companies that are still in the nascent stage of business which require more of private funding given the stage of its development.

Private equity provides new and emerging businesses with a source of capital, generally, private equity stakes in a company are held by high net worth individuals who have an interest in having some control over the operations and functioning of the enterprise by investing the capital required.

The motivation for investors to invest such a huge chunk of money is more than just gaining a substantial interest to have control over the business, it is more about gaining multiple fold returns on the investment. This kind of exponential returns is only present in private equity or some other alternative investments.

 Getting into Private Equity

From a career perspective, the role of a Private Equity Analyst is hard to land, given the level of commitment and the grip over the financial industry require to sustain the deliverables, it’s a tough nut to crack.

How can you get into the private equity segment of the financial industry? This is the mainstream questions from people aspiring to make a career in the private equity domain. How difficult it is to get into the private equity field is contingent to a high degree on your educational and professional qualifications.

If you have just completed your undergrad in finance or economics streams, getting an entry-level position would be easier as you already have the competency judging by your area of specialization.

Today the employers are more concerned about the skills you’ve honed rather than the degrees you carry. If we talk about getting into private equity based on the skill set required to perform the daily chores as a private equity analyst, you should have strong analytical & technical skills for research and analyzing the data for comparison.

In addition to this strategy building and a sound understanding of business finance is a must-have. Capital market courses are of great help when it comes to building a good knowledge base for entering the industry.

Working as a Private Equity Analyst

When pursuing a career in finance, generally people are more inclined towards getting the role of an investment banker, often ignoring more meaningful and equally rewarding opportunities that are highly significant.

Landing a job as a private equity analyst is one of the most prominent ways to enter the finance industry. The private equity analyst career has a lot to offer. The private equity firms that manage investment funds or portfolio of private companies are the prime employers of equity analysts.

The day to day assignments includes doing complex research and analysis on companies in the private space, using the financial modeling techniques to find out about the pros and cons of investing in a particular private company.

The research is based on certain assumptions about the economy and the business segment in general, the probability of earning a return while investing in the stocks is computed and then it is compared with the results derived from other companies.

In addition to this, the PE analysts also perform due diligence and multifaceted valuations of the companies where the investors are willing to invest. The main objective of this job is to decide whether an investment by the private equity firm in the said company would help fulfill the investment goals of the firm or not.

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