Fri. Jun 2nd, 2023

Investment Banking Private Equity Vs Private Equity

Both investment banking and private equity are prestigious careers in finance, offering high remuneration packages and significant opportunities for advancement.

The main difference between these two fields is that whereas in investment banking you sell business services to companies, in private equity you buy assets and make money through their value growth or the profit gained from selling them at a later date.


Investment banking private equity is a career pathway that involves arranging financing and facilitating complex financial transactions for corporate clients. The industry is highly regulated, and bankers must pass licensing exams.

The qualifications needed to become an investment banker are a bachelor’s degree in finance or business, experience working in the finance industry, and strong mathematical and analytical skills. They also need strong communication, presentation, and relationship-building abilities.

A master’s degree in finance, or MBA, is often necessary to become a senior associate at a large firm. These professionals typically earn a base salary of around $150,000, and may be eligible for performance-related bonuses after a few years.

Associates who are recruited from investment banks usually come with a strong background in financial modeling and valuations, which is a required skill for private equity work. Some private equity firms may hire junior analysts directly out of college, but most hire them after they have worked as an analyst or associate at an investment bank for a few years.

During this time, they are expected to complete coursework in investment analysis, corporate finance, and portfolio management. They are also expected to perform research, prepare investment memoranda and pitch books, and perform due diligence on potential investments.

They also need to handle client interface tasks, such as preparing and conducting meetings with prospective clients and negotiating deals. In addition, they must conduct research and analyze a company’s financial status to make recommendations for mergers and acquisitions.

A career in investment banking is a great way to gain extensive knowledge of the financial world, as well as develop strong relationship-building and negotiation skills. It also offers a variety of career opportunities and remuneration, and is a popular choice among students who want to start their careers in finance.

If you’re interested in a career in investment banking, you can apply for an internship at a private equity firm to gain exposure to the industry. This will allow you to decide whether the industry is right for you and if it is a good fit with your lifestyle expectations.

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Working conditions

Investment banking private equity is a career in which you invest money on behalf of investors to buy business interests. This involves a variety of functions including company research, valuation and modeling, preparing presentations and pitchbooks, deal negotiation and developing relationships to win new clients.

You can work in this field either on the sell-side or the buy-side, which means that you are buying a business interest or controlling share in another company for a client, or you are selling a company’s shares to a client for a profit. The job requires a great deal of knowledge about financial markets and business strategy, which is why it is so important to have a strong background in these areas.

Typically, you will spend the first few years of your career working as an analyst in an investment bank. This is a good time to start learning about the industry, as well as getting experience in the skills you will need for promotion.

As you progress, you will have the opportunity to do more hands-on project management like dealing with clients, preparing offers and running financial projections. This can be very stressful as high expectations for targets are often set and you will need to be able to handle the pressure of this demanding role.

Although there are a lot of similarities, the main difference between investment banking and private equity is that in private equity, your main tasks include screening for potential investments, executing deals to make these investments, managing portfolio companies, fundraising and designing exit strategies. There are less random tasks and more emphasis on fundamental analysis of a company.

It is also important to have excellent people skills in this field as you will be dealing with a variety of different clients on a daily basis. This is a highly competitive environment, and superior social skills are essential for ensuring you maintain relationships with clients and remain on their good side.

In general, investment banking offers a higher salary than private equity, although the range can vary depending on the type of bank you work for. For example, bulge bracket banks tend to pay in stocks and defer a portion of the bonus to next year, whereas middle-market and boutique banks generally pay in cash.

Career prospects

Investment banking and private equity are two of the most prestigious and competitive finance careers, offering significant opportunities for advancement and high compensation. However, there are many differences between the two. For example, a career in investment banking is more hands-on and involves a greater understanding of how businesses operate and make money.

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Investment banks provide a variety of financial services to corporations, including raising capital and facilitating mergers and acquisitions (M&A). Similarly, private equity firms are on the lookout for companies that they can invest in and improve over time to make profits for their investors.

The first step in becoming an investment banker is completing a financial-related internship during undergraduate study and interning at a large investment bank after graduation. This is a good way to gain experience in the industry and to demonstrate your financial acumen.

Upon qualification, you can expect to spend a few years working as an analyst before being promoted to associate. You will need a bachelor’s degree, along with the relevant financial certifications and qualifications such as the Chartered Financial Analyst (CFA) designation or the Chartered Alternative Investment Analyst (CAIA).

There is a lot of competition for these roles, so you must have strong academic credentials, and be willing to travel to interview for your new role. It is also important to have strong interpersonal and communication skills and a passion for financial modeling.

While the job outlook for an investment banking analyst is excellent, it does require long hours and travel. This is especially true at large firms such as Goldman Sachs or Morgan Stanley, which can be very busy.

Alternatively, you can join a smaller bank, which can provide a more stable environment for your professional development. The size of the company will affect your career prospects, and you should choose one that is renowned for its work in the sector you are interested in.

For some, a career in private equity will be more appealing than investment banking due to its more exclusive nature. This is especially true for those who enjoy working with and learning from the best people in the business. The lifestyle of a private equity associate will be more flexible, as you can be in different offices and locations around the world. Nevertheless, you will need to be able to adapt quickly and effectively to a new set of challenges.


Remuneration is an important factor for candidates deciding on a career path, as the financial compensation in private equity is often higher than in investment banking. The compensation package typically includes base salary, bonus, co-investment and carried interests.

The main remuneration component in private equity is a base salary that covers the management fee, deal fee and other costs. This is accompanied by a bonus that comes from the return on the investments. This is usually a percentage of the fund’s total returns. The bonus may also come in the form of carried interests, which are payments that are made from the profits of the fund after its IPO or sale.

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Associates at a private equity firm will take on more responsibility that directly affects the performance of a fund. They will interact with more senior managers and work in smaller teams, as opposed to an analyst/associate at bulge bracket banks (think Goldman Sachs, JP Morgan and Morgan Stanley).

Associate salaries can range from GBP 30,000-50,000 per year depending on the firm’s size. These salaries are usually paid to analysts and associates with at least one year of experience in investment banking.

However, some firms pay their employees a much higher salary and these include prestigious boutiques such as Centerview Partners which are well regarded for paying their analysts salaries competitive with buy-side opportunities.

For those interested in starting out their careers at a private equity firm, it is best to get an internship in an investment bank before moving straight into the role. This will give you a better understanding of what it is like to work in this field and help you decide whether the industry is right for you.

As a result, more private equity firms are now recruiting straight out of university and offering internships and full-time roles. This is a growing trend that is becoming increasingly common in other industries, so it’s no surprise that the private equity sector has jumped on this bandwagon.

Another difference is that private equity recruitment processes tend to be a lot more “check-the-box” and less demanding than investment banking or consulting interviews. For example, you’ll be asked “Why do you want to join PE?” in a private equity interview rather than “What’s your biggest weakness” or “What are your strengths in finance” in a banking interview.

Jeffrey Augers
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By Jeffrey Augers

Jeffrey Augers is a highly skilled and experienced financial analyst with over 12 years of experience in the finance industry. He has a proven track record of delivering exceptional financial insights and recommendations to clients, empowering them to make informed decisions and achieve their financial goals. Jeffrey holds a Bachelor's degree in Finance from the University of Michigan, and an MBA from the Wharton School of Business.