More than 8,400 firms actively manage private equity and private debt funds worldwide, according to the 2020 Preqin Global Private Equity & Venture Capital Report. This is an increase from 6,170 in 2015. Many PE firms are headquartered in the United States—typically in big cities such as New York, Boston, San Francisco, and Chicago. Some firms specialize in a particular investment strategy (such as growth equity, leveraged buyout, distressed buyout, venture capital, and mezzanine fund), while others use some or all of these strategies. Private Equity International (https://www.privateequityinternational.com/pei300) publishes an annual list of the 300 biggest private equity firms. The PE industry is very fragmented. The largest firms hold a small portion of industry assets under management. Many firms have fewer than five employees, and even the largest firms typically have only 200 to 1,500 employees.
It’s difficult to break into private equity because the industry is so small, many firms have only a handful of employees, and fund managers like to hire people they know or who have been recommended by colleagues. With that said, there are several steps you can take to raise your profile and get noticed. Participation in private equity internships, college PE/venture capital clubs and competitions, and membership in professional associations will allow you to learn more about the industry and make networking contacts. You should also use the resources of your college’s career services office, create a LinkedIn profile and network with PE professionals and recruiters, and check out employment sites such as eFinancialCareers (https://www.efinancialcareers.com), which provides job listings for the finance, banking, accounting, and insurance industries and job-search articles. Another popular strategy is to start your career at an investment bank, consulting firm, portfolio company of a private equity firm, or other finance-related employer to obtain experience and make networking contacts. After two or three years, you can parlay this experience into a job at a PE firm.
Traditionally, pre-master’s degree in business (MBA) associates and analysts have been hired for two or three years, and then required to leave the firm to earn their degrees. According to the Wall Street Journal, some major firms are dropping this policy and promoting those without an MBA.
Talented associates and analysts can advance to become senior associates/analysts, then principals and vice presidents. Some become junior partners, general partners, and managing partners. Others start their own PE firms.
Take private equity–related classes in college to learn more about the field.
Participate in alternative investing competitions and clubs in college to build your skills and expand your network.
Improve your qualifications by working for several years at an investment bank, financial consultancy, or a hedge fund or venture capital firm.