Last time we looked at some of the more familiar entry-level starting points for a career in private equity or venture capital. Now we’ll take a look at what you might be doing on the job.
Landing a private equity associate’s job requires outstanding analytical and personal communication skills. A background in M&A or leveraged finance with one of the top investment banks can be a big help, too.
As we noted before, associates will often focus in great depth in a particular industry that relates to the private equity firm’s area of investment. For example, a rare “pre-MBA” associate position in the Northeast U.S. focuses on the energy sector. This job would involve identifying up-and-coming energy companies, assisting the PE firm’s partners in evaluating their potential, conducing due diligence on potential investments, and doing extensive industry research on the market. The PE firm may even partner with their investment companies, providing operational and management expertise. For a job like this, prior energy industry or strategic consulting experience is a must.
When it comes to senior associates, members of the private equity firms are really looking for professionals who have the personality and motivation to develop into a VP, Director, Principal or Partner, depending on the titles used at the firm. This person will need work experience that includes all aspects of deal execution. He or she would likely have an MBA from a top business school, several years of investment banking training or experience working at another private equity firm.
At a venture capital firm, an associate would be involved in identifying attractive industry sectors, and specific companies within those sectors, for possible investments. You would attend trade shows, review industry journals, develop your own database of private companies, and speak with dozens, if not hundreds, of entrepreneurs each year. All this would be to identify perhaps two or three stellar companies that merit investment by your firm. Before that investment takes place, of course, you would be involved in due diligence on the firm, quantitative analyses of the industry in which it operates, and you would be working closely with senior management of the start-up firm.
A senior associate in venture capital would have an MBA from a top-tier school or perhaps a MS or Ph.D. in a field related to the VC firm’s specialty, such as engineering, computer science, biology or chemistry. Experience in the VC firm’s industry sector, such as at a leading research institution, consultancy or government agency, is often more relevant than previous venture capital work. Senior associates must also possess outstanding networking and communication skills (both written and verbal presentation skills), and have the ability to articulate insightful judgments about people, technology and markets.
Ultimately, the top management of most private equity firms will come from those who can identify potential deals and close those deals. An associate at a private equity firm who can develop these skills is on track to earn huge income, with the average compensation package for experienced team members climbing well over $230,000 and many partners earning millions of dollars annually.
References:
UCLA Anderson School of Business http://www.anderson.ucla.edu
Tuck School of Business, Dartmouth Unversity
http://mba.tuck.dartmouth.edu
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