The Accounting & Finance Functions in Private Equity
5 min read
Most newly qualified hires come straight from an accounting firm, usually one of the Big 4.
Entry-level routes split into fund accounting (the funds themselves) and corporate accounting (the firm’s own books).
Hiring is based on fit as much as technical expertise; finance teams are small and work closely together.
The path to CFO typically runs Financial Controller, Finance Director, then CFO over ten to fifteen years.
Similar to investment roles, the finance functions in private equity are both competitive and rewarding, with the potential to be highly lucrative career choices. The finance functions in these markets provide many career options and routes to the C-Suite as CFO.
Academics and Early Career
With a degree being the absolute minimum requirement, attending a top university will always stand you in good stead. Private equity firms place great emphasis on traditional prestige and tend to prefer reputable universities. The ideal combination is a numeracy-related degree such as mathematics, accounting, business or economics.
When private equity firms are looking to hire someone for a finance function at the newly qualified level, chances are they are taking them straight out of an accounting firm, usually one of the ‘Big 4’. Moving beyond the Big 4, the top twenty accounting firms are probably as far a net as clients are willing to cast.
What industry should I audit?
Firms generally prefer someone with experience of auditing private equity at the fund or corporate level, but would also consider someone with experience of auditing broader financial services businesses, such as asset managers or hedge funds.
Recruitment for private equity accounting roles is very much based on fit and not just on technical accounting expertise.
Your CV and academic record get your foot in the door, but what will get you the job is how well you build rapport. Team fit and culture are crucial, as finance teams are typically smaller (between five and thirty people) and work very closely together.
Fund vs Corporate Accounting
There are really only two routes to follow as an entry level:
- Fund accounting role: preparing or reviewing the accounts for the funds which the private equity firm manages.
- Corporate accounting role: preparing the internal accounts of the private equity firm itself.
The uniquely complex and legally challenging nature of private equity fund accounting requires a specialist skill set. It is what most people from the Big 4 are attracted to, and more importantly, where the demand lies. Those with hands-on accounts preparation experience from smaller firms often see themselves more suited to the corporate accounting roles.
The Path to CFO
The typical career journey starts as a newly qualified accountant, progressing to Financial Controller or Fund Controller, then Finance Director, Head of Finance, and ultimately CFO. The general timeline is usually between ten to fifteen years. The CFO role demands leadership skills, a strategic mindset, strong financial planning, and excellent communication skills, often acting as the unofficial number two in the business.
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