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Overview
I’ll tell you right now, private equity is a pretty hard and busy job. Any deal-oriented job is going to involve intense, short sprints and private equity is no exception.
It’s not quite at the level of investment banking hours, but you’ll still be working a lot. And the average intensity of each hour is going to be higher because your job is to put money at risk. Private equity tends to mean less hours for more money.
In private equity, you’ll also be responsible for a lot of different tasks. The deal teams are lean and your decisions will have a high degree of permanence, which is why I’d say the stress level is overall higher in private equity than in banking. Very importantly, there’s also no one around to check your work. There’s a much higher burden of getting things wrong in private equity.
I would say the average amount of hours worked in private equity as an associate is ~60-65 hours. This is about 10-15 hours better than investment banking, which is a material difference.
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Tasks in Private Equity
Let’s start by talking about the key categories of work you’re expected to do in private equity:
Working on transactions
In private equity, your job is to purchase companies, operate them, and sell them for a profit. The key engine at work here is to work on possible transactions and go through deal processes (which will be managed by investment bankers). The vast majority of your time – probably at least 2/3 of your time, assuming normal market conditions – will be spent looking at new investment opportunities, meeting with management teams, and doing diligence on companies.
You’ll need to go through the investment committee multiple times before the firm is prepared to deploy any money, so there’s a lot of work to be done. You’ll work with a variety of advisors, build financial models, and prepare materials as part of your diligence.
Managing portfolio companies
Once you purchase a company, a lot of your work will be around supporting the portfolio company. You need to make sure the company is operating healthily and as an Associate, you’ll help support a lot of the FP&A work in the company. You’ll go to quarterly board meetings, periodically meet with management, and help run any financing processes.
If your portfolio company isn’t doing very well, if the company is understaffed, or if you’re going through a sale process, you will probably become more heavily involved with the day-to-day operations.
Everything else (valuation, sourcing, conferences, fundraising)
Perhaps 5-10% of your time will be spent doing miscellaneous tasks:
Valuation: Typically a quarterly process where you set a mark for your portfolio companies. You’ll have to go over the company’s financials and health to assign a private market valuation. I found this to be kind of a headache since it’s not additive to returns and tends to involve a lot of back-solving to get to a specific answer.
Sourcing: Anything that involves canvassing or landscaping potential industries. If you’re in growth equity, this is going to be a big part of your job, in which you’ll spend a lot of time cold e-mailing and cold calling management teams.
Conferences: Somewhat related to sourcing, but you may be expected to occasionally go to industry conferences to meet with management teams or stay up to date on trends.
Fundraising: At smaller firms, you may be expected to fulfill more of a business development role associated with fundraising. Fundraising is a huge part of the Partner job in private equity and they’ll often need help preparing discussion materials company-level data.
Hours Distribution in Private Equity
So there’s definitely a lot of work to go around in private equity.
Again, you’re going to be working on average ~65 hours. And mega funds tend to be slightly grindier. However, I think it’s best to think of the typical hours you work in private equity as a distribution.
Normal work: 60 to 70 hours
Maybe 50% of the time, you’ll be in this bracket of working 60 to 70 hours per week. You might be in a few live processes and have to work to midnight once per week, but generally you’ll have your late evenings free. You’ll have work to do for multiple concurrent projects. I found that on any given day I generally had deliverables for 2-3 different teams.
You’ll probably have some weekend work (perhaps 3-4 hours of updating a deliverable on one of the days). But generally, there’s a much greater respect for people’s weekends in private equity. People in private equity are older, more professional and tend to have young families, so most people care about having good weekends.
Deal mode: 80+ hours
When you’re in the heat of a live deal, you’ll most likely be working 80+ hours per week.
By live deal, I generally mean that you have exclusivity with a specific company. That means there are no other private equity firms doing work and you have the undivided attention of the management team.
There is so much work to do on a deal that it’s hard to get around. You’ll have multiple calls per day with advisors like lawyers, accountants, and consultants. You’ll be getting boatloads of new data from a data room every single day. You’ll have new presentations and diligence e-mails to synthesize all the time. And because this is the world of business, all of your deliverables are going to have a handful of iterations to go through.
Even if you’re not on a live deal, you might get to this 80+ hour range if you have multiple processes heating up. 80 hours means that you’re working past midnight a couple times a week and you’ll have at least a couple of hours of work each weekend day.
Chill time: 40-50 hours
The good thing about private equity is that you can conceivably work between 40 and 50 hours. If your portfolio companies are humming along normally and you’re not in a live process, there won’t be an awful lot to do. A lot of your capacity will depend on the capacity of the more senior people. If the partners are all occupied working on other deals or fundraising, they won’t be able to meet with new companies and fill the funnel with new deal opportunities.
One additional quirk is that if you’re only an Associate for 2-3 years, it’s possible you’ll have a relatively chill end to your stint. It’ll be difficult for new teams to staff you on live projects because a lot of work requires continuity. I was consistently leaving at 5pm my final few months on the job.
Hours Improve Over Time
It’s important to realize that your hours definitely get better in private equity over time. You might even have a normal life by the time you’re 40!
As the Associate, you’ll be doing a lot of work that takes a requisite amount of time. Building a model and putting together a PowerPoint presentation always takes a discrete amount of time to do properly. But as you rise in the ranks, you’ll spend more of your time leading calls, coordinating diligence, and giving mark-ups vs. actually computing the work.
I think that for every promotion, you can probably shave off 5-10 hours of the time spent in the office. Mid-level people, which would be in their 30s, can get by working around 50 hours per week in the office. They’ll also be highly motivated to go home since many of them have young children at home.
The role of the Partner is extremely different, in which your main job is to meet new people and create new deal opportunities. They can spend 40 hours in the office (or far less), dedicating the majority of their time to travel and meeting new companies.
The amount you travel increases significantly over time. You might only travel once per month as an Associate, but Partners easily travel multiple times a week.
Summary
The hours in private equity are far better than in investment banking. It’s a significant enough improvement that most people will make that switch.
The stress can be high in private equity, but if you can compartmentalize it reasonably well, then it might be the right career for you.