Private equity and investment firms?
Private equity owners make money by buying companies they believe have value and can be improved. They improve the company, which generates more profits. They also make money when they eventually sell the improved company for more than they bought it for.
Private equity owners make money by buying companies they believe have value and can be improved. They improve the company, which generates more profits. They also make money when they eventually sell the improved company for more than they bought it for.
Investment banks tend to act as middle-man, marketing shares of publicly traded companies to other investors in a sell-side function. Private equity firms, on the other hand, invest their own money in a buy-side fashion in privately held companies.
The four largest publicly traded private equity firms are Apollo Global Management (APO), The Blackstone Group (BX), The Carlyle Group (CG), and KKR & Co. (KKR).
A private equity firm is an investment management company that provides financial backing and makes investments in the private equity of startup or operating companies through a variety of loosely affiliated investment strategies including leveraged buyout, venture capital, and growth capital.
Private equity is a core pillar of BlackRock's alternatives platform. BlackRock's Private Equity teams manage USD$35 billion in capital commitments across direct, primary, secondary and co-investments.
Private equity firms make money through carried interest, management fees, and dividend recaps. Carried interest: This is the profit paid to a fund's general partners (GPs).
Vanguard's entrance into the private equity market follows that playbook. Private equity at Vanguard seeks to solve the challenges asset owners face, by using our scale and more than 40 years of experience sourcing investment talent as a leader in manager search and oversight capabilities.
The minimum investment in private equity funds is relatively high—typically $25 million, although some are as low as $250,000. Investors should plan to hold their private equity investment for at least 10 years.
Examples of solid answers to the “why private equity” question: You want to work with companies over the long-term instead of just on a single deal. You want to get exposed to the operations of companies and understand all aspects rather than just the financial ones (note: “exposed to,” not “control” or “improve”).
How much does a VP in private equity make?
| Annual Salary | Monthly Pay | |
|---|---|---|
| Top Earners | $244,500 | $20,375 |
| 75th Percentile | $190,000 | $15,833 |
| Average | $157,532 | $13,127 |
| 25th Percentile | $115,000 | $9,583 |
KKR & Co.
1 spot on the PEI 300 list in 2022. It did so by overtaking the prior champion, Blackstone. KKR also claimed another honor: being the only private equity firm to top the $100 billion capital raised mark. In fact, it brought in a stunning $126.5 billion over the previous five years.
Private equity firms usually look for entry-level associates with at least two years of experience within the banking industry. Investment bankers usually follow the PE firm career path as their next job and typically have a bachelor's degree in finance, accounting, economics, and other related fields.
| Position Title | Typical Age Range | Base Salary + Bonus (USD) |
|---|---|---|
| Associate | 24-28 | $150-$300K |
| Senior Associate | 26-32 | $250-$400K |
| Vice President (VP) | 30-35 | $350-$500K |
| Director or Principal | 33-39 | $500-$800K |
Private equity, in a nutshell, is the investment of equity capital in private companies. In a typical private equity deal, an investor buys a stake in a private company with the hope of ultimately realising an increase in the value of that stake.
When a private equity firm recapitalizes a company, they often use debt financing to finance part of the acquisition price – we have written about this here. In addition, private equity firms often ask owners of the companies they buy to “roll over” or reinvest part of their equity into the new company going forward.
BlackRock's brand is ranked #602 in the list of Global Top 1000 Brands, as rated by customers of BlackRock. Their current market cap is $108.30B. The Vanguard Group's brand is ranked #250 in the list of Global Top 1000 Brands, as rated by customers of The Vanguard Group.
As private equity investors since 1980, the J.P. Morgan Private Equity Group (PEG) is one of the longest-standing PE firms in the industry.
Goldman Sachs Asset Management Private Equity (previously Goldman Sachs Capital Partners) is the private equity arm of Goldman Sachs, focused on leveraged buyout and growth capital investments globally. The group, which is based in New York City, was founded in 1986.
It is no secret that private equity firms have a bad rap. They are often seen as ruthless cost-cutters who gut companies and lay off workers in order to make a quick profit.
Can anyone start a PE firm?
The bottom line is that it's probably a minimum of 10 years of full-time work experience before you can even consider starting your own PE firm.
By contrast, private equity firms make money by exiting their investments. They try to sell the companies at a much higher price than what they paid for them. The profits are then divided up based on a distribution waterfall.
Fidelity offers a range of capabilities in the alternatives space including private equity, private credit, real assets, liquid alternatives, and digital assets, and is a leading provider of custodial services of more than 5,000 alternative products to its institutional, intermediary, and retail clients.
As expected, BlackRock's top equity holdings include America's most established tech companies: Apple, Microsoft, Amazon, and Google. BlackRock also has large positions in Nvidia and Broadcom, which happen to be America's two largest semiconductor companies.
Merrill Lynch Private Equity Fund is a buyout fund managed by BofA Securities. The fund is located in New York, New York and will invests in the United States and South America.
