Private Equity Life: Expectations vs Reality

Life at a Private Equity (PE) Fund (expectations vs reality)

Typical weekday rhythm

• 7:00 AM wake-up; in-office by ~8:00 AM (about a 30-minute commute)
• Monday Morning Meeting (~1.5 hours) to align on:
  • current workstreams
  • priorities
  • timelines
  • new deals
• Lunch ~12:30
• Deep work block afterward for:
  • diligence
  • strategy
  • meetings

Role focus: research + thesis building

Common activities include:

• Benchmarking (e.g., financial services):
  • compare Axis Bank vs 2 other banks
• Industry analysis (historical and forward-looking), such as:
  • credit growth rate (growth over last 10 years / 5 years)
  • future prospects
  • deposit growth rate
  • identifying indicators for upside and risks
• Expert calls to validate assumptions, followed by internal analysis
• Financial modeling (often with a dedicated team owner):
  • project profits forward from ~5-year historicals
  • derive valuation today from expected future performance

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PE deal valuation mindset (framework + process)

Target-return framework (mindset)

1. Set a required return (e.g., 20% over ~5 years).
2. Estimate the exit valuation after 5 years:
   • Exit value ≈ (profit after 5 years) × (valuation multiple, e.g., P/E)
3. Discount the exit valuation back to today using the required return.
   • Example: if exit valuation is ₹2,000 crore, discount at 20% over 5 years → implied current valuation (example given: ₹1,000 crore).
4. Decision logic:
   • “I can pay ₹1,000 crore today to make 20% return in five years.”

Key inputs mentioned for valuation

• Growth rate
• Margins
• Valuation multiple (e.g., P/E)
• Time horizon: typically ~5 years (modeled hold period)

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Deal workflow: IC approvals + bidding + diligence

• The deal team builds the case, then submits it to the:
  • Investment Committee (IC) at global HQ (outside India; examples given: US or Singapore)
  • A deck/IC submission is prepared for remote/offshore approval
• Bidding process (multi-bid environment):
  • another investor may bid (example mentioned: ₹1,200 in May)
  • company selects which bidders enter the second round
• Second round:
  • detailed due diligence
• Final decision:
  • submit a final bid or walk away
  • “no bid after diligence” can happen

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Post-acquisition: portfolio-company monitoring (operational control loop)

• After acquisition, the target becomes a portfolio company
• Continuous tracking vs model targets:
  • Example target: revenue grows 15% annually
  • If actual is 12%, the PE team escalates and asks management:
    • “why the variance?”
• Mark-to-market / value tracking:
  • internal “marks” track value changes over time
  • example logic:
    • invested ₹1000 crore
    • after 1 year, mark-up to ₹1300 crore (or ₹1500 crore, depending on performance)

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Expectations about work hours, compensation, and sustainability

Work hours

• Baseline implied minimum: ~12–14 hours/day
• With IC deadlines: sometimes 18–20 hours/day
• Example cadence:
  • in office until 4:00 PM
  • then back at ~8:30 PM

Weekends

• Yes—weekend work is common during active deals
• Saturday/Sunday can become full-day work if needed

Compensation perspective

• “Long hours” are understood upfront
• Pay is framed as higher relative to other roles
• Suggested comparison points:
  • hourly valuation of time (may not look “worth it”)
  • vs alternative job total pay (may feel “worth it”)
• Over time, efficiency gains can reduce perceived time cost

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Health/fitness and personal life management (realities + tactics)

Gym + diet

• During urgent periods, workouts may fail (“forget everything” during critical meetings)
• When possible:
  • gym can be scheduled around home days or weekends
• Diet discipline is encouraged due to long sitting hours:
  • avoid junk

Team culture (micro-example)

• Office described as highly health-conscious
• Examples: sugar-free options, salads, sprouts/quinoa salads

Work-life structure tactic

• Life “revolves” around Friday nights and weekends
• Example execution tactics:
  • if work is slow initially, use time-blocking:
    • record one end-to-end video on Friday night in ~1 hour
  • capture ideas during commutes (notes while traveling)
  • plan content around weekends and flexible home–work timing

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Actionable takeaways / recommendations implied

For PE aspirants

• Don’t evaluate the role on money alone—explicitly weigh:
  • health impact
  • family time
  • personal time
  • opportunity cost (e.g., building a venture/side project)
• Expect:
  • heavy diligence + modeling cycles
  • frequent weekend work during deal crunches

For deal teams (operational discipline)

• Maintain a clear valuation model loop:
  • required return → exit assumptions (growth/margins/multiple) → discounting → bid/no-bid
• Use variance tracking post-close (e.g., 15% planned vs 12% actual) to drive management discussions and corrective actions

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Presenters / sources

• Nandini (CA; former employee at a private equity fund; presenter of the video content)