Today, I thought we could take a look at one of the more junior positions at a private equity firm: the private equity associate. A private equity associate is a junior level employee at a private equity firm and will usually have only a few years of experience in finance and may have little to no experience in private equity, sometimes coming straight out of an MBA program or, more commonly, out of a stint in investment banking. For more private equity career training, see our private equity training program.
The Private Equity Associate Career Path
A private equity associate is a relatively junior-level professional at a private equity firm, often having limited private equity experience of only a few years and many may have no direct private equity experience at all. A common path into the private equity associate job is through investment banking or another are of finance and then after garnering some experience, the individual then applies to a number of private equity firms.
Private equity associates come from top-tier business schools and have excellent resumes and excellent marks in school–often they have completed at least an internship or a summer working in business and finance.
The associate position, or less commonly the analyst position, is the most common way to start a career within a private equity firm. An associate will often lack an MBA, but as the private equity professional climbs the ladder at a private equity firm, it is expected he/she will eventually obtain an advanced degree.
The associate is junior to almost all other employees at the firm but many associates are still thrilled by the opportunity to participate on multi-million dollar deals and have a chance to work with top financial talent. This is often a career track to a higher position at the firm, or at another private equity firm, such as a senior associate who have greater responsibility in the execution and negotiation of private equity deals and receive higher compensation.
A private equity junior-level associate will often make good money although will share in significantly less of the incentive-based compensation from the carry than higher-ranked professionals like senior associates and more so the executive management team. Still, private equity compensation has always been highly competitive to that offered at investment banks and associates at the larger private equity firms will make over $100,000 in salary and sometimes much more from a bonus in a good year. At mid-market and smaller private equity shops salaries can be anywhere from $50,000 base to $100,000.
Today’s Job Market
I recently spoke with an Italian private equity professional who noted how extremely competitive the private equity job market is today, even for relatively low-rung positions like that of an analyst. He said that in Europe (and this is true in the U.S. as well) there are so many talented professionals looking to work in private equity that it becomes a race to distinguish yourself from your job competitors. In Europe (which is admittedly more diverse than North America) he says many private equity employers will not consider a candidate who is at least bilingual, and many candidates are proficient in several languages (a nice asset for private equity firms doing deals across Europe and into Asia).
For many of the private equity associates I’ve spoken with, finding a job today is a lot about who you know. This isn’t to say that private equity firms are hiring as favors to those in their personal network, rather the competition for these coveted jobs is so strong that the distinguishing factor for a candidate may be a favorable recommendation from a past employer or an introduction from a previous employer or associate of the private equity firm hiring.
Beyond this, today’s job market is becoming ever more competitive as the applicant pool swells with former investment bankers and other financial professionals who have been laid off or simply quit the shaky banking sector. This makes private equity career training even more important to a candidate’s chances of success in the private equity industry–you can learn more about our training program here.
I hope you’ve gained a better understanding of the private equity associate job and the role at a private equity firm. For more information, including interviews with private equity professionals, videos and more on a private equity career, visit the Certified Private Equity Professional designation.
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