How to know if PE is right for you
Hello, I'm considering PE as a future career path and had a question. I enjoy analyzing businesses and the value creation associated with PE investments; however, I was wondering how to know if it is really right for someone other than recruiting for it after an analyst stint and working in it. With the public markets one can trade on a paper account or with their own capital as it's fairly accessible. With PE though it is quite difficult to get all the information about a business to analyze and track it over time as it is private. Did most of you just follow your interest and start working in PE to find out you were actually good at it?
The work you do as a PE investment analyst is fairly similar to what you do at IB / M&A. The big difference is that in PE you tend to be way more critical (read: pessimistic/realistic) than in IB / M&A because you are actually going to invest money in a business, rather than just close the deal and having nothing to do with it anymore.
Yes, businesses are private but just as in any deal a PE gets access to a ton of information. Being good at PE is hard to judge. As a junior you are not good in PE, not at all. You can be good at making a model, good at looking things up in market reports or good at extracting the right information from DD reports. But the people with >5 years experience drive the deal and they make sure that the juniors perform the right analyses and that the deal is closed under the right conditions.
A key differentiator between PE and M&A is the fact that the PE has to hold on to an investment for a couple years, the work you perform on a deal is quite similar across the two. From my experience, though, there is a lot more paperwork involved at PE in terms of transaction documentation etc. Depending on the fund you are at, it can also be a bit more slow-paced, but I imagine that at MFs the culture and speed is similar to IBs.
How can someone go about developing the characteristics you indicated people with >5y experience have earlier on in their career?
A lot of times there are trade offs between performing your daily work and managing these bigger issues mentioned with zero room to budge on hours in the day, and exhibiting the qualities of experience will surely advance VP candidacy.
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