Working in Private Equity: where no two days are the same

What is a career in private equity like?

Beyond job security and attractive financial rewards, perhaps the most appealing feature of working in private equity is its fast-paced, ever-changing dynamism. Through managing a portfolio of different companies across a range of subsectors, the role continuously offers new opportunities and challenges. In other words, in the world of private equity careers, no two days are ever the same.

That variety keeps the job exciting. The ECI team might spend one day visiting an insurtech firm to discuss application of AI, and the next day help an IT Managed Services business round out its North American strategy.

In both cases, the central objective of working in private equity is the same. It is to build fantastic relationships with management teams and put every effort into helping them achieve their goals and deliver exceptional results.

Working in private equity is quite different from corporate finance or management consultancies. There, advisers may spend no more than a few weeks with a particular management team. Private equity investment, by contrast, typically moves through four separate stages:

• Identifying potential investment opportunities and initiating an open conversation with the management team to understand their ambitions and appetite for investment, preferably as early as possible. At ECI, the relevant leads from our Origination, Investment, and Commercial teams who would work with the management team if an investment happens are all involved from early on in this process.
• Building a fantastic relationship with the management team, and working through a deal, either outside of a formal process or in an auction process in competition with other would-be investors.
• Once the deal is complete, our three teams (Origination, Investment and Commercial) all work together to ensure that the company has access to all the relevant support and tools that will help it to drive value.
• Typically an investment period is around 4-5 years. During that time, the ECI team works with the leadership team to remove pre-existing “value drags” that may have existed at investment, unlock further top-line growth and finally work through an exit process to deliver maximum value for all stakeholders. These are the investors, management team and employees.

So, how many hours do you work in private equity?

There’s no straightforward answer. However, those different stages mean there can be times when it is incredibly busy, such as in the run up to an exit, balanced with a gentler schedule in quieter periods. People contemplating working in private equity should understand there may be those peaks and troughs.

While there’s no doubt that those working in private equity work hard, work-life balance is often better than the likes of law firms or investment banks. Similarly, while a career in private equity provides some travel opportunities, it’s highly unlikely to be excessive and keep people away from home for extended periods.

What background do you need to work in private equity?

The educational backgrounds of the people attracted by a career in private equity are as varied as the work you face on the job. At ECI, we welcome talented individuals with degrees in subjects ranging from English to engineering. Generally speaking, these graduates will have complemented their university education with three or four years of experience in the financial or professional services sectors or in industry. Over the years, we’ve welcomed ex-consultants, start-up founders, and ex-tech developers to the team. This gives our team great diversity of thought – critical to deliver the best returns to our own investors.

The private equity interview process

Interviews for positions at ECI are usually held across three rounds:

• Round One: A preliminary, getting-to-know-you series of talks, giving ECI an insight into candidates’ personalities and allowing applicants to ask questions about ECI’s culture and strategy.
• Round 2: Candidates meet more of ECI’s team and are asked more detailed questions about their career, expectations and aspirations.
• Final phase: Practical tests based on real investment case studies. In this round, applicants are given time to assess an individual company’s strengths, weaknesses and return prospects, draw conclusions on its suitability as an investment, and suggest ways in which private equity investment could add value.

Applicants progressing to the final hiring round are likely to demonstrate several qualities expected by private equity investors. These include:

• A lifelong learning mindset (there is always more to learn!)
• Lateral and structured thinking
• Commercial judgement
• Natural curiosity
• Teamwork and collaboration
• A competitive instinct
• An understanding as to why ECI might be a long-term home

How to prepare for a private equity interview

Perhaps the most important advice for candidates is to ensure that they have a thorough understanding of the firm’s investment strategy and recent investments. Increasingly, these include a commitment to sustainable investment and good ESG practice. A private equity firm’s website is usually a good place for information. ECI, for example, has detailed information about our portfolio companies, recent exits and our culture on our website.

Candidates should understand the cultural and strategic differences that distinguish a large buyout specialist, a mid-market investor or a Dragons Den-style business angel. All share the same broad objective: to generate a reasonable financial return both for themselves and for their end-investors. However, each has different risk-return expectations. This defines their culture and the way they originate, manage and exit their investments.

ECI, like many mid-market investors, aims to generate consistent long-term returns by focussing on growth. We work with portfolio companies on projects that deliver long-term, sustainable growth and help them with the challenges that arise from growing in scale. Examples may be international expansion, M&A or the launch of new products.

Culturally, we put a lot of emphasis on our values: Collaborative, Considered, Ambitious. This runs from our hiring processes to our appraisal programme, and are at the heart of every partnership.

The benefits of a private equity career

The financial rewards of a long term career working in private equity are compelling. The pay structure at private equity firms generally depends on individuals’ seniority. For junior staff, this will focus on a base salary with a bonus. As you rise through the firm, the emphasis switches to ”carry” and this is the most significant long-term economic reward of a private equity career. Carry means individuals can expect to receive a share in the capital growth of the companies that the firm invests in. It makes it all the more advisable for new recruits to take the firm’s track record into account. As well as incentivisation it may impact long-term prospects. This is because the rewards from carry, at the right firm, will likely dwarf base salary and bonus.

Private equity involvement in portfolio companies is long-term. That provides an unrivalled opportunity to work with exceptional management teams throughout the lifespan of an investment. It also gives you a unique perspective on the development of the company. It can and should be incredibly rewarding to support CEOs and their teams to implement strategic changes. Those working in private equity will see them realised, and help CEOs to achieve their business and growth ambitions.

Is a career in private equity for you?

For anyone looking for a challenge and wanting to work with a breadth of businesses, working in private equity provides them with the opportunity to have a dynamic, varied career. No two days are the same, and the diversity of the industry means private equity professionals get to work alongside some of the most interesting and exciting people and businesses.