What does a private equity associate actually do?
Private equity (PE) associates are the first proper rung on the industry’s ladder. Most PE associates arrive after two or three years of an analyst program in an investment bank, or maybe sooner. What does their new job involve?
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Private equity associates spend their time on two key things. They are responsible for both looking for new businesses for the fund to invest in, and for keeping an eye on how businesses the fund has already invested in are getting on. Adis, a principal at Blackstone, told us she spent her days as an associate taking expert calls with professionals in the industries she covers, drafting models and assembling investment materials just like a junior M&A banker would, and leading a team of analysts producing their own work.
When we spoke to David, an associate in KKR's technology, media and telecoms (TMT) team in New York, his day began with analytical work – thesis building and diligence, often alongside colleagues on the European team. In the afternoon he ran a diligence session, putting questions to the team working on an acquisition and playing back what the data showed in KKR's models. Associates, he said, get a lot of responsibility to guide the direction of those sessions.
This is the first key distinction between the role of a private equity associate and that of an M&A junior. An M&A analyst produces analysis to support a client's decision – an associate produces analysis to help inform the investment decisions of the private equity firm he or she works for.
When you work in private equity, your responsibility escalates fast. When David returns to analytical work later in the day, he doesn't just build operating models, he also chooses how to appraise the businesses he's investigating. He decides which analyses of the diligence data will answer the key questions, and he frames how his work is presented to the deal team and the investment committee that make the final investment decision.
AI is changing this process. More of the groundwork is automated. For example, Blackstone's chief technology officer John Stecher said in May that reviewing the thousands of documents attached to a deal used to be a weekend-long activity and can now be done in minutes, and that the firm's private equity teams are using targeted tools to move faster from raw deal documents to financial models.
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