What Do You Actually do in Private Equity? (Explaining Specific Tasks)
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- Опубліковано 13 чер 2024
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From a high level, private equity is simply just buying and selling companies. But most people don't understand the actual tasks you do on the job like building LBO models, preparing investment memos, and going through data rooms. In this video, we'll discuss the major functions in private equity and the most common tasks in those functions.
0:00 - Intro
0:35 - 1. Sourcing Investments
2:12 - 2. Performing Due Diligence
4:03 - 3. Negotiating Deals / Investing in Businesses
4:45 - 4. Managing Investments & Portfolio Companies
Peak Frameworks is a business career prep service started by Matt Ting and Patrick Fong, who have each spent several years working in investment banking and private equity in New York and Silicon Valley. Matt and Patrick met at Evercore, a top tier investment bank, and over the years have tutored and coached dozens of candidates to land their dream business job.
Matt Ting: / matthewting
Patrick Fong (HBS 2021): / patrick-fong-0b773041
#PrivateEquity #InvestmentBanking #Careers
Hey Matt great video on deep diving into the roles and tasks of a Private Equity firm. Could you do a video on the Funds Flow model that you talked about at 4:40? If I would have to guess that shows how the money raises by LPs and any debt is used to buy whatever stock or other things of the target company. But would love to see more about that and an example. Thanks!
Hey Matt, love the videos! Could you do a video about PE investor relations and fundraising? Curious about the process, pay, and what they do day to day. Thank you!
Very interesting, thanks for sharing.
Pls, do more videos on the Pvt equity market.
Love from a new subscriber.
great video as always from the goat 🐐. i got an ib program interview wednesday wish me luck
You got this, good luck!!!
I work in real estate PE. I definitely understand why it is the lower paid industry. It is pretty much the same thing but like 10 times easier to understand. Or maybe it is just one of those things that makes sense to me. It feels like it has been figured out already. it is easy to value an apartment building. Trying to put a value on a new tech company with an unproven product that isn't profitable at the moment and predict what you can sell it for in the future and what it will cost to get there??? HOW...
Ha same. I also work at a REPE and it’s so much easier than expected
Do you guys enjoy RE PE? Long term goals? Are you ex IB?
Hey Matt - Just wanna say you're the goat. I used all your tips for cold emailing and currently have a 45% response rate over 150+ cold emails in the last few months.
Legend, good work Joe
Do you have any thoughts on the "Project Finance" product groups at BBs and if it's a good role? Does it have a pathway to the buyside? Seems pretty niche and can't find much online. It seems to be a hybrid of cap markets/levfin and infra coverage which is confusing me.
So would coming from tech sales at a top 10 global tech company and a T7 mba be a good transition?
Can you talk about Private credit too?
I don't know anything about private credit, will have to do some digging! So might take a while
I work within the Private Credit group at a large asset manager - our Private Credit team has about ~$20B in assets under management, split across a “Sponsor / PE Finance” group and an “Opportunistic Credit” group.
The Sponsor finance group focuses on supporting private equity leveraged buyouts by providing the debt to fund the buyouts. The group also helps existing portfolio companies of private equity firms by providing them loans / financing to help execute M&A or other growth strategies.
The opportunistic credit group typically focuses on non-PE backed companies, as those companies are usually not managed as well, and we find better opportunities to invest in. However, since the companies are not as well-managed, we usually find that there’s a lot more work associated, so it’s more similar to private equity since you have to manage the companies and work closely with them. You may even end up foreclosing on a couple of them and end up owning them / turning them around for a profit - depends on your investment strategy.
Day to day work is typically reviewing CIMs provided to you by private equity firms or investment banks and assessing how much debt you’d like to provide a specific company or opportunity (this means you’re spending a lot of time building LBO models). You also spend a lot of time managing existing loans / debt / equity investments in your portfolio to ensure things are going well.
Associates spend about 50% reviewing new investments and working on executing them, and 50% of their time managing their existing portfolio companies and ensuring things are operating smoothly with existing investments. Overall, would say most firms are 55-60 hours per week, with some fluctuation in either direction depending on deal flow or if it’s quarter end.
Pay is similar to private equity at the Associate and VP level (since the work is very similar at a lot of firms), but the upside is capped vs. private equity so the comp for an MD is typically lower than PE counterparts.
@@USASPORTSCARDS phenomenal reply, thank you!
@@JKROM5673 of course - happy to answer any questions you might have.
This is so interesting - what kind of returns do both groups underwrite? Might have to email you in the new year to get some more info from you for a potential video!
Could you do 1 for vc?
Hello Matt! I love your videos! I am a finance professional and I trying to transition into PE. Are there a lot of people in PE leaving for entrepreneurship?
Not a ton... most people stay in PE. I can only think of a few others who left to do entrepreneurship. If you include search funds, it might be like 10% of people who were PE associates?
Hey Matt, who do u think has a better chance for HF recruiting: a banking analyst or a trader? These days S&T is increasingly automated and swings more towards market making so i think HF recruiting favours bankers more now? Plus, traders cant do HF analyst due diligence and modelling work like a banker, plus specialized strategies like merger arb would defo favour bankers
Banking analyst easily if we're talking about any fundamental, long-only, long-short or activist fund. Trader maybe for quant funds but I'm not as familiar with those. I don't know much about trading, so won't comment any further
Would u ever be down to make a video on growth equity, Matt?
Coming out soon :)
Do private equity firm invest in stock market
Hey Matt, what school/program in Canada would you recommend for someone who’s trying to break into product management?
Queens commerce?
Waterloo comp sci?
Waterloo comp sci or Waterloo math + BBA. And please chill with the questions man
@@PeakFrameworks Are you referring to Laurier + Waterloo dual degree?
Man, why are you hounding someone in finance for something totally not finance? @Nicholas
@@PeakFrameworks I gotchu, dawg
@@Canadianchungus didn't know asking questions would cause so much harm, perhaps I could've asked someone else. Thanks for your input, William.