The Best 5 Private Equity Books You Should Read (2022)

Financial statements and Excel spreadsheets are valuable tools to gauge the financial metrics of a company or deal. Still, they often only tell half the story as they lack valuable contextual information.

Context can provide the critical details that help you understand the motive, strategy, and real-world insight on why certain decisions are made. To better understand the intricacies of the private equity industry, complementing your research with books and other resources like case studies is a must. There is only so much you can learn from performing technical analysis and financial modeling.

Warren Buffett, one of the greatest investors of all time, recognizes the importance of consuming information. “Read 500 pages like this every day,” he said. “That’s how knowledge works. It builds up like compound interest. All of you can do it, but I guarantee not many of you will do it.”

When it comes to private equity, hedge funds, and venture capital, books are great windows into the minds of some of the greatest dealmakers in history – their journeys, their successes, and their failures.

In this article, we compiled our five favorite private equity books. These books are full of eye-opening stories, clever financial deals, larger-than-life personalities, and creative business concepts. We believe they are essential for every private equity investor to read.

We also recommend you read these books if you are focused on investing in other asset classes, including the stock market. As Benjamin Franklin said, “An investment in knowledge pays the best interest.”

(Note: We link to each book’s page on Amazon, but these are not affiliate links. We don’t earn a commission or any other compensation if you choose to buy one.) Most of these books are also available as Kindle eBooks.

1. The Masters of Private Equity and Venture Capital

Unlike some of the other must-read books on this list, this one is not only based on the author’s experience working at various private equity firms but also on the experiences of various industry pioneers. Author Robert Finkel conducted interviews with multiple private equity and venture capital titans and chronicled their experiences.

This book is full of anecdotes and thought-provoking stories of profound success, heartbreaking failure, and the lessons learned along the way. We highly recommend it to finance professionals working in capital markets, private equity, and investment banking.

(Video) What are the Best Private Equity Books to Read?

The featured stories are high level and provide good context without diving into quantitative analysis or the intricacies of valuations, structuring deals, etc. Instead, Finkel discusses key topics like sourcing new markets, selecting management, and applying private equity principles to non-profit organizations.

One reviewersaid it was, “A good read for someone wanting a qualitative insight into the world of private equity and venture capital. Conversations with reputed investors reveal key considerations of an investment thesis – allowing the reader to compare and contrast different strategies for success.”

The Best 5 Private Equity Books You Should Read (1)

Buy The Masters of Private Equity and Venture Capital on Amazon.

2. Competition Demystified

Competition Demystifiedtakes a unique approach to defining strategy. Authors Bruce Greenwald and Judd Kahn simplify the competitive analysis by focusing on “barriers to entry” as the most critical type of competitive advantage. Regardless of whether you are managing a startup or working in private equity and are focused on executing leveraged buyouts (LBO’s) or conducting due diligence, you will find value in this book.

We like this book because it challenges Michael Porter’s “Five Forces” framework- an essential staple in every business school casebook. While the five forces model has its place in the world of competitive analysis, Greenwald and Kahn think this method is too complicated and leads to unusable corporate strategy.

The authors claim there are three forms of competitive advantage: supply advantage, demand advantage, and economies of scale. The book further explains how to capitalize on each. If a company doesn’t have a clear advantage in any of those categories (identified by persistently high returns or market share), then there’s little reason for a private equity fund to invest.

“Either the existing firms within the market are protected by barriers to entry or they are not,” the authors write. “No other feature of the competitive landscape has as much influence on a company’s success as where it stands in relationship to these barriers.”

The Best 5 Private Equity Books You Should Read (2)

BuyCompetition Demystifiedon Amazon.

(Video) Top 5 Investment Banking Books that you Must Read!

3. Barbarians at the Gate

Barbarians at the Gate is an investigative journalism bestseller authored by Bryan Burrough and John Helyaran that covers the fall of RJR Nabisco. It describes the economic climate in the 1980s when small businesses – and some large ones – were bought out, sometimes for just their assets or the real estate they occupied. Businesses were torn apart and closed once the profit from selling their assets surpassed the purchase cost.

This book is a great resource to learn about RJR Nabisco’s corporate finance strategy, the history of leveraged buyouts, and the role junk bonds played in LBOs, among other relevant topics.

Barbarians at the Gatechronicles dozens of main characters (all interviewed personally by the authors) and hundreds of side characters. It helps you understand how money, legal maneuverings, and personal relationships affect strategy and finance at the highest level. In some cases, hubris, greed, and egos are appalling.

This is one of the best books if you want to have an intimate look at how the sausage is made – an unpacking of corporate interplay, countless business deals, and howpeoplecreate change, even at the expense of profit. If you want to understand the human and psychological sides of private equity, this book is for you.

The Best 5 Private Equity Books You Should Read (3)

BuyBarbarians atthe Gateon Amazon.

4. The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success

Have you ever wondered what makes a CEO successful? What is it about a leader that propels a company to success? Is there a secret roadmap they follow? InThe Outsiders, author Will Thorndike evaluates a leader’s qualities and how they play a role in the overall value of a company’s stock (as opposed to short-term metrics like earnings or sales growth).

The book walks you through the eye-opening lives of eight “outsiders” – CEOs whose firms’ average returns outperformed the S&P 500 by a factor oftwenty. You might not recognize the names of each CEO. Still, you’ll know their companies: Teledyne, Capital Cities Broadcasting, TCI, General Dynamics, General Cinema, Ralston Purina, The Washington Post Company, and none other than Berkshire Hathaway.

These eight outsiders are unique because they prioritized independent thinking, ignoring Wall Street and the media by not falling into the trap of chasing the latest management or investing trends. However, these leaders had specific traits that propelled them (and their companies) to success, like their ability to allocate capital and human resources and their laser focus on cash flow. At times, this book might be a bit counterintuitive, but the results achieved by these eight industry heavyweights speak for themselves.

Furthermore, this book is highly acclaimed by industry experts. Warren Buffet hailed it as “An outstanding book about CEOs who excelled at capital allocation.” It was the first book on his Recommended Reading List in the Berkshire Hathaway Annual Shareholder Letter of 2012. It was also named one of “19 Books Billionaire Charlie Munger Thinks You Should Read” in Business Insider.

(Video) Three Private Equity Books That You Never Thought Would Apply to Private Equity

The Best 5 Private Equity Books You Should Read (4)

BuyThe Outsiders: 8 Unconventional CEOs and Their Radically Rational Blueprint for Successon Amazon.

5. Cable Cowboy

If you enjoyedThe Outsidersbut wished each story went into more detail, thenCable Cowboyis what you’re looking for.

Hailed as a hero by some and accused of villainy by others, this book tells the story of John Malone, a finance guy that at 29 became the CEO of TCI- a small debt-ridden Denver cable company. In the next 25 years, he built a media monopoly that dominated the cable television industry by orchestrating clever but complicated financial deals that at times sidestepped some rules.

Malone was one of the sharpest business minds of his day. His mergers and acquisitions pace was unparalleled. He averaged one deal every two weeks for 15 years and raised his company’s share price from $0.75 in 1974 to $4,184 in 1997. Admittedly, however, he was a controversial figure, often “overpromising” about his company’s capabilities and willing to use litigation to disrupt competitors and take over markets.

The most crucial lesson in this book is aboutvalue creation. Malone didn’t become successful through quick gimmicks or short-term thinking. He made plans for 10 and 20 years. He understood that maximum value comes from making decisions over a long time horizon.

Plus, Malone was known for his creative financial structures that were downright confusing to many of his contemporaries. His use of debt financing and tax deferment were unique at the time. This book will enlighten you on how much advantage an intelligent leader can create if he or she has a keen understanding of finance.

The Best 5 Private Equity Books You Should Read (5)

BuyCable Cowboyon Amazon.

Honorable Mentions

This list is far from inclusive; if you are interested in reading more about PE, investment banking or investing in emerging markets, etc., these are some of the books we recommend.

(Video) Top 5 Books on Private Equity

The Intelligent Investor by Benjamin Graham:A widely acclaimed book on stock market value investing. In it, the author discusses concepts like stock pricing, risk management, etc. Many famous investors have praised this book for helping them learn how to pick stocks successfully.

King of Capital: The Remarkable Rise, Fall and Rise Again of Steve Schwarzman and Blackstone by David Carey: Tells the story of how Private Equity became a mainstay of the financial world, especially how Blackstone became the preeminent firm eclipsing other players like KKR.

A Practical Guide to Investment Banking and Private Equity by Paul Pignataro: Will teach you the analytical tools and techniques used by bulge bracket banks such as JP Morgan and Goldman Sachs to analyze a company’s financial standing.

There are more books on private equity than the space we have available. These are other authors you should research if you would like to dive deeper into the topic.

– Orit Gadiesh: Chairwoman of Bain & Company

– Claudia Zeisberger: Professor at INSEAD and author of several PE books

– Josh Lerner: Harvard professor focused on studying Venture Capital and Private Equity

– Guy Fraser-Sampson: Seasoned private equity investor and advisor

Final Thoughts

While there are countless books on private equity, those five are our favorite. That said, there are plenty of great reads. We encourage you to read voraciously. The more knowledge you consume, the better deals you’ll make and the quicker you’ll recognize the bad ones.

If you are eager to learn more about the private markets, read our articles on the topinvestment bankingandventure capital booksyou should read.

(Video) 5 Must Read Books That Made Me A Millionaire (LIFE-CHANGING)

FAQs

What should I study for private equity? ›

Candidates should have an bachelor's degree in an analytical major like finance, accounting, statistics, mathematics, or economics. Private equity fund management requires technical ability to analyze financial performance and estimate the value of a private company.

What is the most prestigious private equity firm? ›

Private equity firms are typically ranked by their assets under management (AUM) and success in returning gains to investors. The Blackstone Group Inc. had the most AUM out of any private equity firm in 2021.

What are the most important sources of private equity? ›

Most private equity money comes from institutional investors, such as pension funds, sovereign wealth funds, endowments, and insurance companies, although many family offices and high-net-worth individuals also invest directly or through fund-of-funds intermediaries.

Does CFA help in private equity? ›

The CFA shows investors that you can be trusted to manage their money. In private equity, the hardest aspect is not finding the right companies to buy, or employing the most appropriate turnaround strategy, or finding the best exit opportunity.

How much does a VP in private equity make? ›

How much does a Vice President, Private Equity make? The average Vice President, Private Equity in the US makes $366,700. The average bonus for a Vice President, Private Equity is $179,200 which represents 49% of their salary, with 100% of people reporting that they receive a bonus each year.

How hard is it to get into Blackstone? ›

The firm had more than 15,000 applications for 100 analyst positions, co-founder Steve Schwarzman said on Thursday on a conference call with analysts and investors. That's an acceptance rate of less than 0.7 per cent.

Does Blackstone pay well? ›

How much does Blackstone in the United States pay? The average Blackstone salary ranges from approximately $39,100 per year for Receptionist to $213,305 per year for Senior Real Estate Manager.

Which city has the most private equity firms? ›

New York is home to the largest number of private equity firms globally, with 445 active firms currently based there, and $633 billion in private equity funds being raised over the past 10 years.

Is BlackRock a PE firm? ›

Private equity is a core pillar of BlackRock's alternatives platform. BlackRock's Private Equity teams manage USD$41.9 billion in capital commitments across direct, primary, secondary and co-investments.

How do you break into PE? ›

How to get into private equity
  1. Get into private equity right out of college. ...
  2. Get a master's degree. ...
  3. Transition from an engineering career to one in private equity. ...
  4. Transition from a consulting, accounting or investment banking role.

How hard is it to break into private equity? ›

Your odds at landing a Private Equity job at a top 10 firm is 1 in 300. As of October 2019, the US college population size of students pursing business degrees is 3.9 million,3 according to the National Center for Education Statistics.

Is an MBA necessary for private equity? ›

Although most large private equity firms look exclusively for job candidates with an MBA, you can still get into a smaller firm without one. Smaller firms prefer candidates with an MBA, but it's not always a requirement.

What are the 5 sources of equity financing? ›

Sources of equity finance
  • Self-funding. Often called 'bootstrapping', self-funding is often the first step in seeking finance. ...
  • Family or friends. ...
  • Private investors. ...
  • Venture capitalists. ...
  • Stock market.
Mar 1, 2022

What percentage of private equity investments fail? ›

The common rule of thumb is that of 10 start-ups, only three or four fail completely. Another three or four return the original investment, and one or two produce substantial returns. The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail.

How much money do you need to invest in private equity? ›

The minimum investment in private equity funds is relatively high—typically $25 million, although some are as low as $250,000. Investors should plan to hold their private equity investment for at least 10 years.

What are private equity hours like? ›

In private equity, you'll work hard, but the hours are not nearly as bad. Generally, the lifestyle is comparable to banking when there is an active deal, but otherwise much more relaxed. You usually get into the office around 9am and may leave between 7pm-9pm depending on what you're working on.

How much does an MD in private equity make? ›

Private Equity Managing Director Salary + Bonus: Compensation here is highly variable, but a reasonable range is $700K to $2 million, with slightly less than half from the base salary. “Senior Partners” will earn more if the firm makes the distinction.

Is principal higher than VP in private equity? ›

The main differences, if they exist, are: Pay: Principals earn more than VPs in base salary, bonus, and carried interest (the last one is especially significant). Work: VPs are responsible mostly for deal execution (e.g., due diligence, financing, memo writing, managing the Analysts and Associates, etc.).

What colleges does Blackstone recruit from? ›

what schools does blackstone recruit from?
  • Wharton.
  • Harvard.
  • Stanford.
  • Columbia.

How many hours do you work at Blackstone? ›

Employees at two of the biggest names in the industry – Blackstone Group and Apollo Global Management – report working 70-plus hours a week.

Who is bigger Blackstone or BlackRock? ›

BlackRock's brand is ranked #602 in the list of Global Top 1000 Brands, as rated by customers of BlackRock. Their current market cap is $108.30B. The Blackstone Group's brand is ranked #958 in the list of Global Top 1000 Brands, as rated by customers of The Blackstone Group. Their current market cap is $47.16B.

How much does a principal at Blackstone earn? ›

Principal salary at The Blackstone Group ranges between ₹ 250 Lakhs to ₹ 300 Lakhs per year. Salary estimates are based on 4 salaries received from various employees of The Blackstone Group.

Does PE pay more than IB? ›

Analysts at all types of private equity firms earn significantly less than Associates, just as Analysts in IB earn significantly less than Associates. In fact, PE Analysts often earn less than IB Analysts! So, you might initially make less money if you start in private equity.

How much does an AVP at Blackstone make? ›

How much does an Assistant Vice President make at Blackstone in the United States? Average Blackstone Assistant Vice President yearly pay in the United States is approximately $146,266, which is 36% above the national average.

Is private equity prestigious? ›

Private equity is extremely prestigious. Compensation for both careers is very high, but the work/life balance in private equity is better, it is often the preferred exit route for investment bankers who have a few years of experience.

Which state has the most private equity firms? ›

California topped the list of states receiving the most private equity investment, with $87 billion in capital invested. The top 5 states included California ($87 billion), Texas ($60 billion), Florida ($59 billion), New York ($42 billion), and Massachusetts ($37 billion).

Who is the biggest investment firm? ›

  • BlackRock is the largest investment firm in the world. ...
  • With $7.2 trillion in total AUM as of Jan. ...
  • Fidelity Investments earned its name in the brokerage and mutual fund provider spaces. ...
  • State Street manages $3.9 trillion in assets as of June 30, 2021.

Who is Vanguard owned by? ›

Vanguard is owned by the funds managed by the company and is therefore owned by its customers. Vanguard offers two classes of most of its funds: investor shares and admiral shares. Admiral shares have slightly lower expense ratios but require a higher minimum investment, often between $3,000 and $100,000 per fund.

Does Vanguard have a private equity fund? ›

Each of Vanguard's private equity funds is slated to take 14- to 17 years to complete its investment journey. Yes, the plan is to begin generating some returns after four- to six years, but the ultimate performance of Vanguard's 2020 vintage fund won't be known until 2035 or so.

What AUM means? ›

Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company. In the calculation of AUM, some financial institutions include bank deposits, mutual funds, and cash in their calculations.

How tough is it to get into private equity? ›

Your odds at landing a Private Equity job at a top 10 firm is 1 in 300. As of October 2019, the US college population size of students pursing business degrees is 3.9 million,3 according to the National Center for Education Statistics.

Are private equity jobs hard to get? ›

Landing a career in private equity is very difficult because there are few jobs on the market in this profession and so it can be very competitive. Coming into private equity with no experience is impossible, so finding an internship or having previous experience in a related field is highly recommended.

Is private equity a good career? ›

A career in private equity can be highly rewarding, both financially and personally. Private equity managers often take a great deal of satisfaction from successfully guiding their portfolio companies to new high levels of profitability.

How do I get into private equity undergraduate? ›

A finance degree is usually the most valued in the field. If you can't get a job or an internship in private equity during or right after college, consider getting one in a complementary field, like investment banking, venture capital or asset management.

How much do private equity guys make? ›

Private Equity Associate Salary + Bonus: Your salary + bonus will probably be in the $150K to $300K range, depending on the size of the firm and your performance. Some of the large funds may pay more than $300K, but we're using the 25th percentile to 75th percentile range as a reference here.

Is private equity more prestigious than investment banking? ›

Compared to investment banking, exit options are a bit more limited for private equity professionals. Private equity is the tier 1 among finance careers, so there are few exit opportunities more prestigious than private equity.

How can I get into private equity with no experience? ›

If you can't score an internship or a first job in private equity, try a related field like venture capital, investment banking, or asset management. These firms also have little interest in hiring inexperienced business school graduates, no matter how bright. Once again, this is a function of supply and demand.

What are hours like in private equity? ›

In private equity, you'll work hard, but the hours are not nearly as bad. Generally, the lifestyle is comparable to banking when there is an active deal, but otherwise much more relaxed. You usually get into the office around 9am and may leave between 7pm-9pm depending on what you're working on.

How many hours a week do you work in private equity? ›

Private Equity Associate Lifestyle and Hours

At many smaller funds and middle-market funds, you can expect to work 60-70 hours per week, mostly on weekdays, with occasional weekend work when deals heat up.

Do you need an MBA to work in private equity? ›

Although most large private equity firms look exclusively for job candidates with an MBA, you can still get into a smaller firm without one. Smaller firms prefer candidates with an MBA, but it's not always a requirement.

Is private equity a stressful job? ›

Private Equity Jobs, Career Progression & Salaries

It's extremely difficult to get into private equity, and once you're in, the job is stressful and requires long hours and sacrifices, especially when deals are in their final stages.

Do you need to be smart to be in private equity? ›

PE firms tend to be relatively small, tight-knit and full of extremely smart and highly motivated people. As a starting point, the right career background is critical. Overwhelmingly, PE firms hire people with experience working for a top investment bank, or professionals who already work in PE in different firms.

How much do private equity CEOs make? ›

The median base compensation among US CEOs surveyed for this report was $476,000 in 2021, and the median cash bonus received in 2020 was $294,000, for a total median cash compensation of $800,000. (Eleven percent of CEOs said they received no cash bonus in 2020.)

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