© Copyright Job Search Digest An Overview of Private Equity Careers

The Private Equity Industry © Copyright Job Search Digest Private equity (PE) firms invest in non-publicly traded companies –Top firms provide tremendous PE job opportunities PE investments can take various forms: –Leveraged Buyout (LBO) –Mezzanine Financing –Venture Capital (VC)

Leveraged Buyout (LBO) © Copyright Job Search Digest Taking control of established firm via leveraged financing techniques Research shows that companies with PE owners tend to outperform public industry indices –Revenues & margins improve; jobs are created Some top PE firms: Kohlberg Kravis Roberts & Co, Carlyle Group, Goldman Sachs, TPG & Apollo Management

Mezzanine Financing © Copyright Job Search Digest Availability of capital –Challenge in PE Mezzanine investors –Focus on debt side –Provides more seniority than equity shares Less risk & lower ROI than equity- based investments

Venture Capital (VC) © Copyright Job Search Digest Focuses on growth of a company –Launch new products or services Funds raised by VC firms tend to be smaller than LBO Early stage financing –Known as “seed round” Later stage –Focus less on launch & more on market expansion

VC Industry © Copyright Job Search Digest Less positive reputation –Company founders not supported –Deal terms often viewed as “vulture-like” Founders often see their stake in company reduced significantly even when growth plans are achieved

Investor Returns © Copyright Job Search Digest PE firms provide returns by successfully exiting the investments Achieved in one of 2 ways –Company goes public (IPO) –Company is sold for a price higher than purchased

The PE Model is Changing © Copyright Job Search Digest Traditional model is breaking Use of financial engineering (e.g. high leverage, arbitraging higher exit multiples) Focus will be on: Locating good companies that are undervalued Driving profitable growth to generate good returns

International PE Jobs © Copyright Job Search Digest Will play an important role in the next decade –Especially in Asia & India PE investments will likely increase in rapidly growing (China & India) and resource-rich countries (e.g. Russia, Brazil, Indonesia & Australia)

PE Job Skills Needed © Copyright Job Search Digest Firms backed by PE tend to value operational vs. accounting skills –Focus on cash flow driven by operational excellence & sales growth Best suited for long term PE careers –Business professionals with: Operational experience Leadership ability Communication skills Financial modeling skills Ability to inspire teams under pressure to perform

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