© Copyright Job Search Digest

An Overview of Private Equity Careers

The Private Equity Industry

© Copyright Job Search Digest

• Private equity (PE) firms invest in non-publicly traded companies– Top firms provide tremendous PE job

opportunities• PE investments can take various

forms:– Leveraged Buyout (LBO)– Mezzanine Financing– Venture Capital (VC)

Leveraged Buyout (LBO)

© Copyright Job Search Digest

• Taking control of established firm via leveraged financing techniques

• Research shows that companies with PE owners tend to outperform public industry indices– Revenues & margins improve; jobs are created

• Some top PE firms: Kohlberg Kravis Roberts & Co, Carlyle Group, Goldman Sachs, TPG & Apollo Management

Mezzanine Financing

© Copyright Job Search Digest

• Availability of capital– Challenge in PE

• Mezzanine investors– Focus on debt side– Provides more

seniority than equity shares

• Less risk & lower ROI than equity-based investments

Venture Capital (VC)

© Copyright Job Search Digest

• Focuses on growth of a company– Launch new products or services

• Funds raised by VC firms tend to be smaller than LBO

• Early stage financing– Known as “seed round”

• Later stage– Focus less on launch & more

on market expansion

VC Industry

© Copyright Job Search Digest

• Less positive reputation– Company founders not supported– Deal terms often viewed as “vulture-like”

• Founders often see their stake in company reduced significantly even when growth plans are achieved

Investor Returns

© Copyright Job Search Digest

• PE firms provide returns by successfully exiting the investments

• Achieved in one of 2 ways– Company goes public (IPO)

– Company is sold for a price higher than purchased

The PE Model is Changing

© Copyright Job Search Digest

Traditional model is breaking• Use of financial engineering (e.g. high leverage, arbitraging higher exit

multiples)

Focus will be on:• Locating good companies that are undervalued• Driving profitable growth to generate good returns

International PE Jobs

© Copyright Job Search Digest

• Will play an important role in the next decade– Especially in Asia & India

• PE investments will likely increase in rapidly growing (China & India) and resource-rich countries (e.g. Russia, Brazil, Indonesia & Australia)

PE Job Skills Needed

© Copyright Job Search Digest

• Firms backed by PE tend to value operational vs. accounting skills– Focus on cash flow

driven by operational excellence & sales growth

• Best suited for long term PE careers– Business professionals

with:• Operational experience• Leadership ability• Communication skills• Financial modeling skills• Ability to inspire teams

under pressure to perform

© Copyright Job Search Digest

Thank You

Visit JobSearchDigest.com for more information

Images used with permission from Microsoft