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Myths about Having a Private Equity Career

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There are a few of myths have sprung up about having a career in private equity industry. So, let’s see the most common misconceptions about this industry.

• One of the most common misperceptions about the private equity industry is that they are made up of only the elitist and brilliant graduates who are having an experience in investment banking. This is untrue! Although there are people in the world of private equity who have attended Harvard, Kellogg, there are a lot of individuals too from small business schools. The point is private equity industry isn’t hiring the young talent out of the Ivy League or the top-tier schools only. This means even if you didn’t make it to the top-tier institutions, you can still make it to the private equity industry. You still have a very good chance to land a coveted position! Most of the individuals back out because of this.

• It is being perceived that working in the private equity sector means you don’t pay taxes or only pay a lower rate. One thing to remember is the part that the investors are taxed is known as Carried Interest, and it is 20 percent which only happens if the firms can earn from the funds. The value of the funds need to increase in that case. The investors manage an investment fund and thus they receive a part of the fund’s profit which is known as the carried interest. According to the law, if the profits are considered as capital gains, then the carried interest is also taxed at the same rates of the capital gains. Now, this would be treated as ordinary income, like other forms of income. The fund managers get a fixed management fee for handling the fund. A lot of people argued that the carried interest is not really an investment but it’s just a normal fee for a service that is being levied.

• There’s a famous myth about private equity investors, and that is they like to fire the people. The point is private equity firms are looking for candidates who can showcase the ability to cope with strict deadlines, work grueling long hours, and be ruthless when needed. They must be able to respond to the shifting priorities and the new dimensions of the strategic needs of the company. One must truly understand the agenda of this industry. It should be a no-brainer that working in private equity is not a cakewalk.

Today’s firms face enormous pressures in this global economy. It is important to understand that to deal with the multifaceted role, one must thoroughly prepare to develop the skillset for handling the financials and building the company’s strategy. It’s not for everyone to make such transition. A great deal of pace, urgency, and prioritization is present in the current roles. Each company has their own strategies, vision, and horizons. They do care about their employees because their efforts are the reason for their business’s growth.

Latest Activity: May 14, 2018 at 5:02 AM

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