Why investment bankers want to work in private equity (2024)

FAQs

Why investment bankers want to work in private equity? ›

On the whole, investment bankers are drawn to private equity for its long-term focus, greater control over investment decisions, higher compensation, entrepreneurial opportunities, and the opportunity to develop a more diverse skill set.

Second, you can say that you want to work in private equity because you'll gain much more exposure to the deal process. You'll learn significantly more by being at the frontline of the due diligence work. Third, you can say that you want to be actively involved with post-investment operational work.

“I don't like the hours in banking, and I want a better lifestyle.” “You can make much more money in PE because you're an investor rather than an advisor!” “Well… all my friends are doing it!” “I want to control companies rather than taking orders from my MD all day.”

Since private equity funds have far more control in the companies that they invest in, they can make more active decisions to react to market cycles, whether approaching a boom period or a recession. The result is that private equity funds are more likely to weather downturns.

According to the data presented by Glassdoor, the salary range for private equity and investment banking associates is pretty similar. However, the compensation ceiling is much higher in private equity than in investment banking — $2 million per year compared to $600,000 per year.

On the whole, investment bankers are drawn to private equity for its long-term focus, greater control over investment decisions, higher compensation, entrepreneurial opportunities, and the opportunity to develop a more diverse skill set.

Express an interest in a sector that the PE firm invests in. Position yourself as a long-term thinker or investor. Show that you know what the PE firm has invested in. Express a desire to work with portfolio companies to create value.

Both investment banking and private equity are demanding careers that require long working hours, although private equity firms tend to have a more relaxed work environment and offer a more flexible schedule.

Yes! Private equity is one of the most competitive jobs to get – period. Not just in finance, but across the board. Private equity firms have very specific requirements for their hire candidates, both for entry-level analyst positions and for higher-level job openings.

Unfortunately, you have a very low chance of getting into private equity from these fields. Overwhelmingly, private equity firms hire: Investment Banking Analysts at bulge bracket and elite boutique banks, as well as a few In-Between-a-Banks.

Why are people in private equity so rich? ›

Private equity owners make money by buying companies they think have value and can be improved. They improve the company or break it up and sell its parts, which can generate even more profits.

Increased Competition

This growth is largely due to the abundance of capital, search for higher yields and the globalization of the industry. As more firms begin vying for fewer investment opportunities, private equity firms will be forced to find ways to differentiate themselves.

So, after learning how much work you'll be putting in, you'll be happy to know that it's not all for nothing. As many people know, working in private equity can be very lucrative. While the long hours can be a deterrent, it's safe to say that you are well compensated for your hard work.

Investment banking is all about providing capital to companies who need it. Private equity, on the other hand, is about buying companies and then growing them. So, if you're interested in finance and deal-making, investment banking is the way to go.

Goldman Sachs Asset Management Private Equity (previously Goldman Sachs Capital Partners) is the private equity arm of Goldman Sachs, focused on leveraged buyout and growth capital investments globally.

In private equity, you'll also be responsible for a lot of different tasks. The deal teams are lean and your decisions will have a high degree of permanence, which is why I'd say the stress level is overall higher in private equity than in banking. Very importantly, there's also no one around to check your work.

You might say you want get into private equity because you're interested in investing and going deeper into finance. That's fine. But the answer would be much better if you could mention that you want to learn more about investing because you've loved it since college when you part of your school's investment club.

Additionally, highlighting any experience you have with financial modeling or analysis can be a major plus. Private equity firms heavily rely on financial analysis to make investment decisions, so showing that you have a strong foundation in this area can make you a more attractive candidate.

A career in private equity is one of the most desired professional pathways for a number of reasons – it can be extremely lucrative, it's intellectually rewarding, and in general provides a better work/life balance than other highly competitive areas in finance such as investment banking.

Working for a private company is a great option for people who enjoy the benefits of working for a company that doesn't have to answer to shareholders, doesn't have to publicly report their earnings and can adjust quickly.