What Kind of Qualifications do Top Equity Firms Want?
Private equity firms are notorious for their exclusivity in the financial industry as it is a highly competitive field where firms pick only the most promising and bright bankers who might have what it takes to make the significant investments to grow. It is a source of acquiring large amounts of capital resources from wealthy institutions and organizations with the purpose of investing and acquiring equity ownership in operational companies. The prime objective of investing in private equity is to gain favorable returns over a given segment of time. The deals take up to 3 to 7 years to reach maturity. Usually, investments are realized through an initial public offering, sale, merger or recapitalization. While venture capital firms prefer to invest in earlier stage growth companies, private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to the transaction. This has become increasingly more relevant, and there has been a rise in the number of private equity firms, and as a result, the career prospects have begun to skyrocket. A shift in banking careers towards private equity has been observed as a result of the opportunity in the industry.
The entry-level position in a typical private equity firm is the analyst or associate. The roles and responsibilities are somewhat rigid and defined due to the complicated nature of the work. While the firms themselves have a simple structure and are smaller than investment banks, private equity remains one of the most sought after sectors of banking. As a result, there is tremendous opportunity for new joiners to work and learn through direct interaction with the seasoned professionals within the firm. It is vital to identify the qualifications that are likely to get you placed with top private equity firms. An undergraduate foundation in a financial field is an essential but there are professional certifications and degrees that effect one’s career trajectory significantly.
The largest asset one can have at their disposal is a Masters’ degree in Finance. According to Financial Careers, the largest number of private equity firms have their positions filled my M.A. (Finance) holders, followed closely by M.B.A.s, each constituting 27% and 23% respectively. The more traditional degree is the M.B.A. of course so this appears to be an interesting trend in the industry. A Masters in Finance seems more appropriate for investment or reporting positions at equity firms while MBAs are suited to associate level hires, combines with additional experience and/or expertise.
The CFA also appears to be popular in the alternative investment sector, coming in at 22% and at 18% with private equity. UK mid-market equity firms also tend to have a bias to those with an ACA accounting qualification, picked from the Big Four, largely because senior partners at these firms also possess this particular qualification. However, data suggests that just 2% of private equity professionals have an ACA.
