Private Equity vs Public Equity Career: An Overview

Businesses raise capital and attract investors. Equity facilitates a company to provide business share for the investors for which they earn returns as the business grows.

Most of the companies use equity to obtain capital and grow their business. However, the structure of equity offerings varies between private and public companies leading to different returns and voting priorities.

Public equity is a viable option for several investors as it is known for highly liquid making whereas private equity investing is for sophisticated investors with minimum requirements and clauses.

Let us understand the major difference between a career in private and public equity here.

Private Equity

Private equity (PE) firms invest or buy private companies indulged in increasing their business value. PE firms provide capital to the companies and support them to grow, restructure, research and develop new products or services. In brief, they add value to the company they bought or invested. During their tenure of holding period, they enable the company to gain long term benefits, and then they sell it for profit. During this course, they earn money on a commission basis.

A career in private equity (PE) is one of the sought-after careers by finance graduates. It is the destination job for aspiring finance graduates. Most of the finance graduates tend to take private equity jobs because of the following strong reasons.

Reasons to consider a Private Equity career

As a fact, it is known as the destination career. Some of the reasons to take a private equity career are as mentioned below.

• Enormous and valuable knowledge gain
• Fruitful working hours though the work hours are more
• Interactive job as it is not a job working with systems
• Build a relationship with C-suite professionals
• Active participation in board sessions and meetings
• Improve clients’ business provides job satisfaction
• Exposure to a different type of industries

Above all this, private equity professionals earn high compensation.

Moving forward, let us know what public equity is all about.

Public Equity

Public equity is an asset class. Here either the individuals or the organizations buy ownership in shares of stock of the company through the public market. For E.g. New York Stock Exchange, London Stock Exchange, etc. They are safer than private equity.

Investors prefer to invest in the public equity market for the following reasons.

Reasons investors prefer public equity market

The primary benefit is they get the opportunity to grow money and reap investment gains. As the stock market rises in value, even when the prices of individual stocks rise or fall. The average return is ~10 percent. Moreover, certain stocks provide income in the dividend form. The company pays money even if the stock loses its value in the market. As public equities are liquid assets, trading on the stock markets is easier as the investor can buy or sell stock within seconds.

Many graduates prefer to land their careers in public equity because of the exposure they gain. In Public equity, they can:

• Build new corporate relationships to create deal flow
• Manage relationships with regulators and relevant government departments
• Develop investment capabilities
• Build cross-sector investment expertise across the capital structure

The public equity is important for very large companies with large capital requirements.

As a final note, private or public equity, it is the zeal and dedication to learn trading skills that enable the professionals to win in their career goals.