Current Private Equity Job Climate Has Potential

October 8, 2012

While the investment banking arena struggles to recapture its lost glory, the private equity universe has bounced back in earnest. With more upside expected, those looking to land positions at prestigious private equity shops might just find a more welcoming environment than what is being seen at bulge bracket investment banks these days.

No, this is not 2007 when private equity deals could be had at nearly a moment’s notice, but it should be noted this is an environment of depressed interest rates. Those low rates make it more cost-efficient for private equity firms to engage in leveraged buyouts. With plenty of stocks still viewed as a good buys on the basis of valuation, the potential exists for the deal-making pace to increase over the next year, in turn creating new private equity jobs.

A Better Environment

For several years now, graduates from some of the country’s top MBA programs have increasingly turned to private equity firms as an employment destination over investment banks. Much of that has to do with the more entrepreneurial culture found at many private equity firms. By comparison, investment banks are known for their rigid corporate structures.

Unlike to the large investment banks, with their structured hiring process and promotion levels, private equity firms often operate as small firms – the “mom and pop shops” of the finance world.

David Kochanek, publisher of Private Equity Jobs Digest, added the responsibilities typically increase in private equity roles. “Roles, such as Senior Analyst, often include very different responsibilities depending on the firm structure. This is especially true at the many small firms, where each team member tends to wear more hats than comparable roles at larger firms.”

Prospective private equity employees should that while it is not uncommon for firms to hire new graduates, in the vast majority of cases, new hires do have some private equity experience.

Lucrative Salaries

For the same reason that so many job seekers in the capital markets space turn to hedge funds and investment banks, they also like private equity firms because of the cushy salaries. In fact, starting salaries for associates at some of the top U.S. private equity firms can easily exceed six figures.

Ares Management, Kayne Anderson and Thomas H. Lee have starting salaries for associates of just under $100,00, but Blackstone Group and Bain Capital go above the $100,000 watermark.

One graduate from Dartmouth’s Tuck Business School landed a private equity job last year with total compensation in excess of $860,000 per year. While that cannot be considered the norm for private equity compensation packages, it is clear that the number of high-quality private equity jobs is increasing, particularly for those candidates with the right pedigree.

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