How to Become a Private Equity Analyst

Private Equity Analyst
Private Equity Analyst

A Private Equity Analyst or PE Analyst is a person who does research and analysis on private companies.

Financial modeling techniques are used by the analyst to determine the merits and demerits of investing in the stock of a certain private company.

As the term implies, a private equity analyst works with private equity firms.

These private equity firms manage investments funds or portfolio of private companies.

They perform due diligence, financial modeling and valuation of the companies where investors are willing to invest.

In valuation techniques, Discounted Cash Flow (DCF) and Internal Rate of Return (IRR) techniques are frequently used.

Since there are no fixed determinants of the stock value of a privately held company, it becomes the most essential factor for a private equity analyst to accurately value the common stock of a business before delivering investment recommendations.

Private equity firms hire equity analysts to help them maximise their investment portfolio.

As such, the firm may wish to allow another corporation to acquire the company, recapitalize the enterprise or even venture into an Initial Public Offering (IPO). The tasks performed by an equity analyst depend on the selected investment strategy of the private equity firm.

Private Equity Analyst Job Description

The private equity analyst provides analytical and asset valuation support for company’s Private Equity and Trading groups.

The analyst provides input for strategic development and acquisition opportunities within the specific industry.

The person develops and implements specific hedging strategies for various regions to maximize profits and minimize price volatility.

A detailed review of the financial statements of the company under consideration is undertaken by the private equity analyst.

The main objective is to determine whether an investment by the private equity firm in the company would further the investment intentions of the firm or not.

Effective management of industry specific trading activities to insure compliance with company’s financial, risk, and strategic objectives are part of the job description too.

The private equity analyst has the function to review and process potential new private equity investment opportunities.

The analyst conducts in-depth research, monitors portfolios, reports development and monitors business growth.

Further, if the intention of the private equity firm is to change the capital structure of the company through its investment, then the work of the analyst involves assuming a set of financial variables and preparing financial scenarios.

As such, it becomes the task of the analyst to recommend strategies for highest return on investment (ROI) and an apt mix of equity and debt instruments.

Lastly, reliable valuation measures are used by the private equity analyst to assess stock value and ensure fulfillment of expected profit margins.

Now, let’s look into what a private equity firm would look into before hiring an equity analyst.

Skills and Education of a Private Equity Analyst

Breaking into the private equity sector is tough.

It is nonetheless challenging to get a job and the sooner you accept this challenge, it is better for your career.

A background in commerce or to be specific, finance is recommended.

Getting MBA degree is recommended as well.

In London and USA, a person with a Bachelors’ degree can gain a break into the equity sector.

At the starter or fresher level, experience can be bypassed if the candidate shows good skills.

You should possess strong knowledge of different industries and business models.

You should be adept at handling multiple tasks, logical reasoning and analytical reasoning.

You should have high energy level as the work hours are typically long.

Further, a person with excellent spoken and written communication is preferred. Needless to say, self-motivation and being a self-starter is important too.

You should be able to build positive and productive relationships, have professionalism, practical judgment, and integrity and be result oriented.

Lastly, knowledge of Excel, MS Word and PowerPoint are an added advantage, hinting at your competency levels.

If you are experienced, a year or two in structured transactions, banking, consulting, trading or analytical experience for a specific industry are valued by the recruiters.

You can get more information on private equity industry and being a private equity analyst on websites such as VC Circle and Private Equity.

Private Equity Analyst Jobs and Salary

A job in the private equity sector is rewarding.

Make an early start and go for internships while you’re still studying.

It will gain you an advantage over other applicants when you finally venture towards fulltime employment as a private equity analyst.

Don’t avoid campus placements. Top and mid-level equity firms prefer to hire candidates from campus placements. As such, keep a watch on campus recruitment announcements.

If you are going for direct recruitment, give extra focus on crafting the perfect resume.

Don’t ever create generic resumes as they mostly go into trash bins!

Mention relevant skills and experience.

For instance, a financial consultant will mention information about financial projects or a business development person will talk about business acquisitions or a banker would talk about restructuring deals and so on. I hope you’re getting the drift.

The financial remuneration depends on your skills, education and experience (if any). Of course, the geographical location matters too.

According to PayScale.com, a private equity analyst with 1 or 2 years of experience in Mumbai, India, earns anywhere between INR 3 Lakh and 14 Lakh a year.

However, an applicant based in New York, USA, getting selected for the same profile will earn around 40,000 USD to 100,000 USD a year and in London, the pay scale is around 23,000 GBP to 58, 000 GBP.

Apart from salary, there are added benefits like performance bonuses and other emoluments.

Endnote

Are you interested in making a career in private equity? What is stopping you? I hope you are now clear about private equity analyst career.

To help you put this advice into practice, you need to work on your skills.

Take the first step now!

If you take the time to implement these suggestions, you’ll be sitting pretty the next time you get an interview call for a private equity analyst job. 

How to Become a Private Equity Analyst 1
How to Become a Private Equity Analyst 2
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21 thoughts on “How to Become a Private Equity Analyst”

  1. Hello, I am currently studying bcom economics and econometrics and I see that In order for me to become a private equity analyst, I would need an accounting degree. Can I still become a private equity analyst with an Economics degree

  2. Hoi I have completed y chemical engineering and have 3 years of experience in chemical factory and I have a great interest to become a private equity strategist but I have o background of finance and commerce will you tell me the process ,how to become a private equity strategist

    • Dear Rose,

      Private equity valuation is basically roles evaluating private companies and making investment recommendations. So I generally recommend BIWS Premium course since it covers the key accounting and valuation knowledge you’ll need in these roles.

      We cover private company data gathering, financial statement projections, valuation, and related analyses, such as how M&A deals differ, in this module of the Financial Modeling Fundamentals course.

      Please note that majority Private Equity Companies prefer MBA, CFA, and CAIA.

    • Dear Rose,

      Private equity valuation is basically roles evaluating private companies and making investment recommendations. So I generally recommend BIWS Premium course since it covers the key accounting and valuation knowledge you’ll need in these roles.

      We cover private company data gathering, financial statement projections, valuation, and related analyses, such as how M&A deals differ, in this module of the Financial Modeling Fundamentals course.

      Please note that majority Private Equity Companies prefer MBA, CFA, and CAIA.

  3. Respected Avdhut Sir,

    M Commerce Graduate, PGDBA & 1 year of Diploma in Marketing Mgmt but all studies completed before 2011-2012 & also has 8 yrs of real estate working experience as a Team Leader & Working profile as a Surveyor & Others additional duties & responsibilities.

    I am damn thirst for persuing career in real estate analyst which is another peek step in real estate sector.

    Kindly suggest & high light me and show me the proper path for my career.

  4. I had clear my CA (ICAI) in nov 2016 and scored exemption in Accounts and Finance at both IPCC and Final Level and want to further research in Equity Analyst for future career.
    Please guide me on that part.

  5. I am a medical graduate with interest in finance. I hold an executive MBA. I am also an associate of the Institute of Chartered Accountant of Nigeria (ICAN) and as well an ACCA affiliate. I am currently studying for level one CFA exams. I however have limited finance experience. I have interest in venture capital and private equity. How can you help me develop my finance career? I live in Nigeria.

  6. I have completed my C.A internship and equity research is my passion.

    Could you guide my for equity research career and would like to have telephonic conversation if possible.

  7. Dear sir,
    I’m graduated since 2012 and now engaged in ca internship, but I’m madly interested in private equity analyst job & equity researcher job as well… Please guide me what should I do next now???

  8. Hi sir
    I am an engineering student but now I am interested to become a stock analyst, Is it possible ?
    Kindly guide me.

  9. Dear Sir,

    Please counseling me, I am Commerce Graduate 1991 and 22 years experince in account , finance and audting,
    presently working in gulf as an accountant, I would like to be Manager level.

    I will appreciate your early response.

    Wajahat

    • Hi Wajahat,

      Thanks for getting in touch.

      Please email me your ideal job link (on job site) and your resume, so that I’ll have an idea about you.

      Regards,
      Avadhut

  10. How the strategies work for equity analyst?

  11. Thanks for the job responsibilities explained here for equity analyst in this post. Its really great post!!

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