Private equity analysts do research and analysis on private companies. They work with private firms to determine the positives and negatives of investing in certain stocks. Private equity analysts use different financial modeling techniques to determine if the investment firms they are working for should invest in another company.
This job can be difficult, but rewarding. It’s the perfect financial career for those who don’t want a mundane accounting career. There are a lot of skills required for the job, like superior problem solving and analytical skills. If you think you could make the perfect private equity analyst, we’ve gathered all the information you need to know to get into this exciting career.
Salary
According to the Bureau of Labor Statistics, financial analysts make an average of $81,760 per year. The term ‘financial analyst’ is more of a broad term, with private equity analysts making anywhere from $40,000-$100,000 per year.
Beginning Salary
Private equity analysts should expect to start out around $40,000-$50,000 per year. Helpful in earning a larger beginning salary are:
- college education degree
- internships
- Â experience
Key Responsibilities
A private equity analyst makes accurate valuations of private companies. Companies that the equity firm will target are private, so their stock price is not determined. This is where the private equity analyst comes in. They provide that valuation of the company’s shares for the equity firm.
They must use their analytical skills to determine whether these particular companies would meet the goals of the equity firm. Analysts use many different methods to come up with an estimated projection of the company’s earnings. The equity firms use the data to determine whether or not to invest, and which terms would be needed to invest.
Necessary Skills
To be a good private equity analyst, you must have first and foremost superior analytical skills. You be good with numbers. You must be able to multi-task and use your logical/analytical reasoning to create creative solutions. You will be expected to prepare financial models and use different methods to find answers.
As a private equity analyst you will interact with a lot of different people. You must have good communication and social skills. You should be well-versed in the industry and be able to work both by yourself and as part of a team.
Degree and Education Requirements
According to Wall Street Mojo, you must at least have a Bachelor’s degree, but a Master’s degree is preferred. The degree should be in:
- Finance
- Economics
- Investment Analysis
- or Accounting
Master’s in Business Administration (MBA) specializing in finance or a Chartered Financial Analyst (CFA) is always a plus.
Your education should be focused around finance and accounting. Additional courses in business, math, and statistics are certain to help any degree as you move towards becoming a private equity analyst. Many employers recommend an employee strive to receive their MBA.
Most entry-level jobs require an undergraduate or graduate degree. In the financial industry, those who move up in the company do so because of experience. Participating in financial internships during college can help significantly in landing a first-time private equity job.
Pros and Cons
It may sound cool to help decide whether companies will invest in others, but that also means long hours. Many analysts work a minimum of 50 hours, but typically work more. Because you will influence investments, your job is very important. It takes a lot of time to put together an investment portfolio, but you’ll be the reason your employer makes a decision.
There is a lot of responsibility, and therefore pride, in helping your company make decisions. It is your research and analysis that helps your employer to decide whether they will invest or not. In a way, you may heavily influence the financial sector of the company.
Private equity analysts can go far in their careers. They can start out for a small company and end up working for a huge, million-dollar company. Experience and hard work can help you move quickly up in the company, earning respect and a higher salary as you go.
Getting Started
When it comes to college, you’ll want to focus your degree and classes around finance and accounting. You should also take business classes to familiarize yourself with the industry. Any math and statistics classes will only help. If it’s possible, you should strive to receive your MBA.
While you’re in college you should consider applying for finance internships. Internships in finance or accounting can be found at:
- tax agencies
- banks
- investment firms
The more experience you have in the industry when applying for your first private equity analysis job, the better. Those who have experience will not only look better on applications, but will typically move up the company ladder quicker.
You must also be sure to refine your written and oral skills. Those are essential to the job. Take time hone your organizational and problem-solving skills as well.
Future Outlook
Careers in the private equity sector are only expected to grow, as companies continue to grow. In fact, the Bureau of Labor Statistics expects financial analyst employment to grow “12 percent from 2014 to 2024, faster than the average for all occupations.” The world of finance is becoming more and more complex, requiring more and more analysts to evaluate it.
There are also many new markets emerging throughout the world, giving way to more opportunity for private equity analysts. These new industries and companies will need expertise for investment purposes.
The industry is expected to grow. Competition for this type of career is also expected to grow. There are many people trying to enter the financial industry, so it’s important to have the right qualifications for the job. It’s even more important to set yourself apart from the pack through experience and skills.
Conclusion
Private equity analysts work in a complex, fast world. They are responsible for important investment decisions and are an essential part of the private financial world. Becoming a private equity analyst could be perfect for you if:
- you’re ready to do the work
- you’re fascinated by numbers
- you want an exciting work environment.
Related Resources:
