How To Become a Private Equity Associate: a Complete Guide

By Indeed Editorial Team

Updated 19 January 2023

Published 30 November 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Private equity associate positions can be a great option for those looking for a career in the financial sector. Using their extensive knowledge and experience, private equity associates help investment firms create deals. Understanding how to become a private equity associate may help you develop the skills and experience needed to launch a career in this field. In this article, we explore what a private equity associate is and the steps to take to become one.

How to become a private equity associate

If you're wondering how to become a private equity associate, follow these steps:

1. Complete a bachelor's degree

The first step to becoming a private equity associate is earning a bachelor's degree. Qualifications in finance-related majors are the most desirable, such as economics, mathematics, statistics, accounting or finance. Attaining an exceptional grade at university, such as a first, may also impress future employers.

Related: 10 Essential Finance Manager Skills

2. Gain experience

Since most companies don't usually hire recent graduates directly into private equity associate roles, you can gain experience as an investment banking analyst or in financial services for at least three years after graduation. You can also consider doing some unpaid work experience while at university to help speed up this process. Having some experience ensures you stand out from your competitors, but it also enables you to do a better job once you secure a position.

3. Develop technical skills

Prepare for a job as a private equity associate by improving your technical skills. This includes financial knowledge, such as investment and accounting processes. Having these skills in place enables you to hit the ground running once you begin working for a private equity firm.

4. Earn a certification

To further your education after university, consider gaining a certification. Earning such certifications can expand your knowledge base and can give you a competitive edge over other candidates. Some of the best certifications for an aspiring private equity associate to achieve include:

  • Associate Chartered Accountant (ACA)

  • Certified Financial Planner (CFP)

  • Certified Public Accountant

  • Chartered Alternative Investment Analyst (CAIA)

  • Chartered Financial Analyst (CFA)

  • Chartered Private Equity Professional (CPEP)

  • Financial Risk Manager (FRM)

5. Continue your education

Many private equity associates give themselves a competitive edge by undertaking a master's degree. A business administration degree paired with a finance degree is an extremely desirable combination of qualifications in this industry. Having an advanced level of education can be highly advantageous because it equips you to do the job better due to your enhanced knowledge and makes you a more valuable prospect to companies.

6. Use a headhunter

Employing the services of a headhunter or an employment recruitment expert can help tremendously in securing a position because the field is extremely competitive. A headhunter might interview you to gain an insight into how suitable you are for this line of work. If you impress them, they could pass your CV along to firms that are hiring.

7. Prepare for the LBO modelling test

After completing interviews with members of a firm, you may take the Leveraged Buyout (LBO) modelling test. During this timed test, you work on building a financial model for a fictitious company from scratch. Employers grade you based on your accuracy and speed in creating your model.

Related:

  • 35 private equity interview questions (plus sample answers)

  • Common Finance Interview Questions and How to Answer Them

What does a private equity associate do?

A private equity associate is a business professional who works in the investment banking sector. In this role, you would identify prospective investors, help with acquired investments and undertake due diligence with existing customers of an investment bank.

Private equity associates search for potential business deals for the investment firms that they act on behalf of and assist in making financial models for existing deals. Depending on the size of your firm, your responsibilities may vary, but your duties would typically include:

  • analysing portfolio companies and reviewing indicators of their financial health on a quarterly basis

  • providing analytics to help principals and partners make informed decisions on a deal

  • preparing preliminary due diligence reports

  • assisting with raising price-to-earnings (PE) ratios and meeting financial performance objectives

  • screening confidential information memorandum (CIM) documents for opportunities that fit with the firm's framework and composing a one-page summary

  • closing deals with private investors

  • responding to a potential investor's questions and enquiries

  • researching the market to find opportunities for investment

  • discussing ongoing ideas with their employer and team members

  • reviewing customer contracts in the firm's database

Related: 14 of the Best Paid Jobs in Finance

Skills for a private equity associate

Below are some skills you can develop that may help you become a private equity associate:

  • Communication: Communication skills are essential to present ideas to companies and sign deals. Good private equity associates are often effective communicators, both in written and verbal language.

  • Data analysis: When creating finance modelling, private equity associates can review, translate and explain data.

  • Networking: Networking with potential investors is a good way to discover potential deals and opportunities. It may also help you secure a job in the first place.

  • Financial modelling: Private equity associates try to predict the future financial performance of a business by looking at their revenue and expense history through modelling exercises.

  • Research: To find new deals, private equity associates work to gather data and research the market.

  • Negotiation: To help close deals, private equity associates negotiate with potential investors.

Related: What are private equity funds?

Private equity associate vs private equity analyst

Private equity associates and private equity analysts are quite similar roles in that they both involve searching for clients from whom your firm can make a profit, but there are key differences. Some of the main differences between the two positions include:

  • The part of the process they work on. A private equity associate works through the entire process of the deal, while a private equity analyst typically helps with a particular part of a deal.

  • The amount of experience needed. Private equity analysts typically begin working right out of university, whereas a private equity associate gains work experience first before taking on their associate role.

  • The amount of money they make. Because private equity associates have more experience, their wages are usually higher than private equity analysts.

Related: How to Write a Finance Cover Letter

Private equity associate salary

The salary for a private equity associate can depend on your location and the size of the firm you work for. On average, a private equity associate makes £67,628 per year. Private equity associates may also receive a bonus from closed deals they make, so salaries can vary significantly. Senior employees usually receive a higher bonus percentage compared to entry-level associates.

What does a private equity associate's CV look like?

To make sure that you stand out from the crowd and show private equity firms that you have the right skills they are looking for, take note of the following tips:

Contact information

Make sure your contact information is up-to-date and clearly visible. This includes at least a phone number and an email address. Some recruiters also appreciate a photograph so they can see whose CV they are looking at.

Summary of qualifications

Summarise your proudest achievements and show the employer that you have the right qualifications to fill the position, showcasing your most relevant experience. Private equity firms are looking for people who can handle stressful situations, maintain attention to detail, close deals and formulate a sound investment thesis. Private equity professionals and investment bankers train to spot errors in written materials, so make sure you've checked your CV for grammar and spelling errors.

Work experience

List a minimum of five years of previous work experience. Be sure to give the names of the companies, the duration of your employment and your duties while employed. You can also take the opportunity to summarise your key achievements.

Education

Include your qualifications and the grades you achieved through your education. This includes the names of the awarding organisations, the location of the organisations and the dates you received your qualifications. You can also mention any informal training you have received.

Key skills

Bullet point your key skills so that employers can see if you are suitable for the position even if they only glance over your CV. Skills that private equity firms are looking for are strong quantitative/analytical, communication and teamwork skills. It is a good idea to feature this section prominently to show off your skills.

Certifications

List any relevant certifications that you have achieved. These may include an Associate Chartered Accountant (ACA) certificate or a Chartered Private Equity Professional (CPEP) qualification. If you don't have any, you can leave this section out.

Is it hard to become a private equity associate?

Since private equity firms don't hire recent graduates, it can be difficult to obtain a private equity associate position. The job is also fast-paced, exciting and hugely financially rewarding, so people are competitive in seeking these positions. It is normal for such desirable jobs to be relatively difficult to obtain, but you can certainly still get one if you have all the right skills, qualifications and determination.

The best route would be to secure some work experience straight after university, possibly offering to do unpaid work through the summer to gain the valuable experience you require. Make sure to show how this experience is relevant and applicable when applying. You could also transition into the field from investment banking or management consulting, as these jobs can give you relevant insights, skills and experiences.

Salary figures reflect data listed on Indeed Salaries at the time of writing. Salaries‌ ‌may‌ ‌‌vary‌‌ ‌depending‌ ‌on‌ ‌the‌ ‌hiring‌ ‌organisation‌ ‌and‌ ‌a‌ ‌candidate's‌ ‌experience,‌ ‌academic‌ background‌ ‌and‌ ‌location.‌ Please note that none of the companies mentioned in this article are affiliated with Indeed.

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