Matisse FOY

Key participants in the Private Equity ecosystem

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Key participants in the Private Equity ecosystem

Matisse FOY

In this article, Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023) explains who the key participants in Private Equity (PE) are, and what are their role in the PE ecosystem.

Private Equity is an increasingly important model of financing for companies at different scales. Whether you’re simply interested in the subject or want to find a professional experience, here is a list of the main participants in the PE ecosystem and their function.

Key participants in the Private Equity ecosystem
Key participants in the Private Equity ecosystem
Source: production by the author

A glossary of the participants

Private Equity funds

PE funds are the central actors in the private equity ecosystem, pooling capital from various sources (mainly from Limited Partners and Investment Banks) and invest this money in private companies, meaning companies whose shares cannot be freely bought and sold on the stock market.

The employees of PE funds are responsible for sourcing, evaluating, and managing investments in “Portfolio Companies”.

Their objective is to enhance the performance of those Portfolio Companies. By doing so, they aim to sell these firms later and generate profit. This profit is primarily derived from the investment capital provided by their investors, from which they take a percentage as their fee.

General Partners (GPs)

These are the managers of the PE fund who make the investment decisions. They have a fiduciary duty to act in the best interest of the LPs.

GPs are typically compensated through a management fee, which is a fixed annual fee for the fund’s operation, and a performance fee (also known as “carry”), which is a percentage of the profits of the fund.

Limited Partners (LP)

Limited Partners are the investors in a PE fund. They include institutional investors like pension funds, university endowments (like Harvard University endowment), insurance companies (e.g., AXA, Allianz), and sovereign wealth funds, as well as high net worth individuals.

Limited Partners provide the capital that the PE funds invest and expect a return on their investment.

Portfolio Companies

Portfolio Companies are the companies in which PE funds invest. They are often in need of capital for growth, restructuring, or as part of a strategy to transition the company from public to private.

The goal of PE funds is to take a share in these companies, improve their performance and sell them for a profit.

Investment Banks

Investment Banks often play a crucial role in the PE ecosystem, especially with regards to the acquisition and sale of portfolio companies by PE funds. They can help PE funds identify potential investment opportunities, facilitate transactions, and provide financing by leveraging Limited Partners’ equity. Moreover, they can help portfolio companies go public when they are sold.

Law Firms and Consultants

These professional service providers support PE funds throughout the investment process:

  • Law firms help with legal aspects of transactions, including drafting and reviewing contracts, to ensure compliance with relevant laws and regulations, and advising on the structure of deals to minimize legal risks and tax liabilities.
  • Consultants, on the other hand, assist with due diligence and the development of strategies for improving the performance of portfolio companies. They might also be delegated the sourcing and contact with portfolio companies by PE funds.

Regulators

Regulators oversee and govern the operations of PE funds. They aim to protect the interests of investors and the integrity of the financial markets, in order for the local environment to be as attractive to invest in as possible.

Why should I be interested in this post?

Private Equity is a wide ecosystem. Knowing about its different participants is very important when deciding to work in one of them, in order to understand their importance (who knows, maybe you will be asked questions about these actors will be asked to you in your next interview).

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Useful resources

The Financial Times Private Equity

Wall Street Journal Private Equity

Coursera’s MOOC Private Equity and Venture Capital

About the author

The article was written in May 2023 by Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023).

My professional experience as an Assistant to the CFO at Association Science Ouverte

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My professional experience as an Assistant to the CFO at Association Science Ouverte

Matisse FOY

In this article, Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023) shares his professional experience as an Assistant to the CFO at Association Science Ouverte.

About the structure

The missions of the Science Ouverte Association are “to open young people to science and science to young people, to fight against a feeling of powerlessness and confinement often too present”. It aims to create a visible and effective structure in Seine-Saint-Denis, capable of arousing scientific vocations and helping young people who are committed to this path.

It offers various activities, especially to high school students: tutoring, science and technology courses, various workshops on 3D graphics, programming, etc.

Logo of Science Ouverte Association
Logo of Association Science Ouverte
Source: Association Science Ouverte

I was a part of the Finance Department, a critical unit within the organization that was responsible for managing the association’s financial resources. As a district association, our department was made of only two people: the CFO and me.

The Finance Department oversees a wide range of functions, including budgeting, accounting, and financial reporting. It also plays a strategic role in decision-making processes by providing financial analysis to guide the association’s decisions.

Furthermore, the Department works with external stakeholders, such as auditors, as well as private and public funders.

My internship

My missions

Throughout my internship, I was tasked with various missions to operate and enhance the accounting and financial tools of the Association. Those missions had both short-term, operational objectives, and long-term objectives. Here is what they mainly consisted in:

  • Preparation of files for the audit of the accounts
  • Improving timesheet maintenance (e.g., adding indicators and summary tables for them to be as ergonomic and easy to use as possible)
  • Verification and updating of financial statements, individual funds and association budgets.

Required skills and knowledge

To work in a corporate finance position and be efficient at your job, you will need to acquire many skills:

  • Knowledge of financial concepts: During my internship, I was accompanied by the CFO in my learning of specific financial notions related to an association. My previous knowledge of finance and accounting helped understand and assimilate those notions faster.
  • Basic knowledge of a spreadsheet like Excel: In most structures, Excel will play a key role in your everyday job. Don’t forget to learn basic Excel skills and shortcuts to save time and make your tasks easier.
  • An understanding of the organization’s industry: Each structure has its financial specificities in terms of business model, objectives and regulatory environment. Learning about them as soon as possible will help shape your decision to be most effective.

What I learned

This experience brought me key valuable lessons about professional environment and work ethic. Here are three of them:

  • Attention to details: my time in the Finance department taught me how every piece of documentation, and every penny is important. The margin for error is low, and it allowed me to become meticulous is my work.
  • Effective communication: clear, concise, and timely communication was vital when communicating with my colleagues and superior to accomplished task I was assigned to. When confronted with a new problem, I did not hesitate to contact relevant persons if I couldn’t find the solution myself.
  • Proactivity: I tried to show initiative, anticipate needs, and propose solutions to existing problems that weren’t directly asked by my manager. This helps to create a positive impression and demonstrate your commitment.

Financial concepts related my internship

Financial forecasting

Financial forecasting refers to the process of estimating the future financial performance of an organization. These forecasts played a crucial role in strategic planning, helping the organization know what they could be able to invest in or not in the months and years to come.

Budgeting

Budgeting allows to estimate revenues and expenditures over a future period. During my internship, I saw how a well-structured budget serves as a roadmap, guiding the association’s financial decisions, and keeping the organization on track financially.

Financial Reporting

Financial reporting involves the process of producing statements that disclose an organization’s financial status to funders and the government. As part of my role, I helped in the preparation of the 2021 and had to work on financial reports. These reports were critical in understanding the financial health of the association, making informed decisions, and ensuring regulatory compliance.

Why should I be interested in this post?

An experience in the financial department of an association helps apply your theoretical knowledge about finance while taking a step back about its role: concretize the most impactful project by allocating resources, reporting, and optimizing them, to get the most of every euro you inject in the structure’s activities.

As I was working next to the association’s activity rooms, it was really gratifying to see that my work has a concrete influence on the young people the association is helping.

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   ▶ All posts about Professional experiences

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

   ▶ Martin VAN DER BORGHT My experience as an intern in the Corporate Finance department at Maison Chanel

Useful resources

Association Science Ouverte

About the author

The article was written in May 2023 by Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023).

 

My professional experience as a Strategy and Innovation Consultant at Planet Impact Advisory

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My professional experience as a Strategy and Innovation Consultant at Planet Impact Advisory

Matisse FOY

In this article, Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023) shares his professional experience as a Strategy and Innovation Consultant at the firm Planet Impact Advisory.

About the company

Planet Impact Advisory is a consulting firm located in Paris and providing strategy consulting services for corporates and venture funds.

The firm uses methodologies mixing strategy consulting, design thinking, and a strong entrepreneurial approach to solve challenges and build impactful projects.

Its missions range from accompanying a mid-size company in the establishment of an investment strategy in the health sector, to the construction of a European program and two innovative platforms to solve the talent crunch in the health sector.

Logo of Planet Impact.
Logo of Planet Impact
Source: Planet Impact.

My internship experience

My missions

My assignments within the firm were extremely diverse. I was assigned in the mobility, human resources (HR) and even healthcare sectors. These missions mainly consisted in:

  • Sourcing, production of one-pagers, presentation, and matchmaking with startups for a Swiss-German CVC (Corporate Venture Capital Fund)
  • Construction of the strategic documentation and support for a fundraising for a startup in the HR Tech / Future of Work.
  • Conceptualization and competitive analysis of two innovative platforms for an organization in the health sector
  • Participation in the construction of a database of 2,500 startups in the mobility sector.

Required skills and knowledge

Many soft skills are required to perform in the consulting world:

  • Strong analytical skills: much the work involves interpreting complex data through dense literature and translating it into actionable strategies.
  • Communication: whether when facing your superiors or clients, you need to be able to communicate idea in a concise and effective way.
  • Business fundamentals: you don’t need to be an expert with 10 years of experience in each and every business sector you will be working in, but you should at least know about the core aspects of marketing, finance, and project management.

What I learned

This experience brought me key valuable lessons about professional environment and work ethic. Here are three of them:

  • Be honest about what you can do and not to do in a timely manner. Being a people pleaser is not a good thing if you get buried under the workload that you will have accepted.
  • Learn to accept criticisms: there is always room for improvement, especially when starting an experience: don’t take criticism from your superiors personally, and show that you apply it.
  • Keep an eye for the details: the work you’re sending to the clients must be of excellent quality. One of the witnesses of this quality is the documentation that will be sent to them: check and double-check your work to avoid grammar or spelling errors.

Financial concepts related my internship

Return on Investment (ROI)

The ROI helps determine the profitability of an investment or compare the efficiency of different investments by measuring the gain or loss made on an investment relative to the amount of money invested. In consulting, you need to help clients make informed decisions about where they should be investing their money to get the most out of it.

Financial leverage

Financial leverage refers to the borrowed money used to finance the purchase of assets. In consulting, understanding a client’s industry and risk aversion with regards to how much financial leverage it is willing to take is crucial before taking any financial decision.

Profit margin

Profit margin is a profitability ratio calculated as net income divided by revenue, or net profits by sales. It measures how much percentage of sales a company keeps in earnings. Using profit margin analysis helps understand a company’s pricing strategy and cost structure, providing insights into the company’s operational efficiency.

Why should I be interested in this post?

Sometimes, thinking narrowly about your dream career can cut you off from excellent professional opportunities.

During my search for an internship, I was primarily interested in finance, but my position at the firm was not exclusively dedicated to this area. However, this opportunity broadened my horizons and allowed me to approach financial topics in a different context than finance-oriented position. This experience was thus unique compared to most people who wish to pursue a career in finance.

So, the next time you are looking for a professional experience, don’t hesitate to think broader about what you want to learn.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

   ▶ Anant JAIN My Internship Experience at Deloitte

Useful resources

Planet Impact

About the author

The article was written in May 2023 by Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023).