A private equity company takes an interest in a company that isn’t listed publicly and seeks to turn the company around or expand it. Private equity firms raise money through an investment fund with a specific structure, distribution system and then invest it into their target companies. Limited Partners are the investors in the fund, and the private equity firm is the General Partner accountable for buying or selling the fund and overseeing the targets.

PE firms are often critiqued for being uncompromising and pursuing profits at all cost, but they possess extensive management experience that allows them to enhance the value of portfolio companies by enhancing operations and supporting functions. They can, for example help guide a new executive team by guiding them through the best practices in financial and corporate strategy and assist in implementing streamlined accounting, IT, and procurement systems to reduce costs. They can also increase revenue and find operational efficiencies which will help them improve the value of their assets.

Private equity funds require millions of dollars to invest, and it could take them years to sell a company with a profit. This is why the sector is liquid.

Working for a private equity firm typically requires previous experience in finance or banking. Associate entry-level associates are responsible for due diligence and finance, while senior and junior associates are accountable for the relationship between the firm’s clients and the company. Compensation for these roles has been on an upward trend in recent years.

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