Being employed in the private equity industry is largely tied to asset management, but it is not limited to that role. There also are back-end positions, or jobs that require accounting and bookkeeping and administrative skills to perform. Financial analysts, researchers and investment consultants also support private equity firms and investors with decisions. So although portfolio management titles are the most prominent, these are not the only jobs in the private equity industry.
Portfolio management at a private equity firm is front and center and is performed by the general partner, the most prominent position offered in the private equity industry. This professional is responsible for overseeing assets and large pools of money on behalf of investors and is responsible for the debts or liabilities associated with the firm. Investors could include large institutions such as financial institutions, pension funds and endowments, and they might also include wealthy individuals. The general partners earn management and performance fees based on the size of the fund and the returns earned over time.
A general partner probably has completed business school and earned a master's of business administration or another business degree. Finance is not the only background that is relevant to private equity, however. Private equity firms often specialize in a particular industry, such as retail, so executives from that industry can often transition into the portfolio management team at a private equity firm. This is because after the firm buys a company, the executives have to manage it, and if a former executive from the industry is on the investment team, this increases the amount of relevant knowledge being applied to run that portfolio company.
It is the function of private equity to acquire companies and assets with money pooled in a portfolio made up of investors' capital. Investment professionals must perform extensive research on potential investments before moving forward with an acquisition, so a solid research team is often an extension of the private equity firm. Internal research in addition to research performed by financial analysts who might be part of another financial institution are all considered integral parts of the private equity buyout process.
Back office tasks also are essential to run a private equity firm. These professionals could be hired in house, or the job could be outsourced. The services typically include financial reporting for the portfolio companies, tax compliance and risk management.
Private equity (PE) consultants offer advice to investors about where to allocate capital or invest. There are consultants who specialize in the private equity industry. The role of this financial adviser is to recognize where opportunities in the private equity industry reside and also to warn clients about risky investments. Although the consultant might not be employed by the private equity firm, this adviser still will have deep relationships within the industry to understand the investment opportunities for clients, who are investors.