Financial statements and Excel spreadsheets are valuable tools for gauging a company’s or deal’s financial metrics. Still, they often only tell half the story because they lack valuable contextual information.
Context can provide the critical details that help you understand the motive, strategy, and real-world insight into 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. You can learn only so much 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, venture capital, and the financial markets in general, books are great windows into the minds of some of the greatest dealmakers and entrepreneurs in history—their journeys, successes, and failures.
In this article, we compiled our top favorite private equity books. These books contain eye-opening stories, clever financial deals, larger-than-life personalities, and creative business concepts. We believe they are the best private equity books every investor should read.
We recommend reading these books if you are focused on private equity investing and 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.
Here are the must-read private equity books:
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 interviewed multiple private equity and venture capital titans and chronicled their experiences.
This book contains anecdotes and thought-provoking stories of profound success, heartbreaking failure, and the lessons learned along the way. We highly recommend it to finance professionals in capital markets, private equity, and investment banking.
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 fundraising, sourcing new markets, selecting management, and applying private equity principles to non-profit organizations.
One reviewer said it was “A good read for someone wanting a qualitative insight into the world of private equity funds, portfolio companies, 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.”
Buy The Masters of Private Equity and Venture Capital on Amazon.
2. Competition Demystified
Competition Demystified takes 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. Whether you are managing a startup or working in private equity, focused on executing leveraged buyouts (LBOs), 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 competitive analysis, Greenwald and Kahn think this method is too complicated and leads to an 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.”
Buy Competition Demystified on Amazon.
3. Barbarians at the Gate
Barbarians at the Gate is an investigative journalism bestseller by Bryan Burrough and John Helyaran. This book covers the fall of RJR Nabisco. It describes the economic climate in the 1980s when small and large businesses 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 New York Times best seller 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 Gate chronicles 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 how people create change, even at the expense of profit. If you want to understand private equity’s human and psychological sides, this book is for you.
Buy Barbarians at the Gate on 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? In The 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 of twenty. 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.
5. Cable Cowboy
If you enjoyed The Outsiders but wished each story went into more detail, then Cable Cowboy is 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 who, 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 sometimes 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 about value 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 time.
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.
Bonus: What it Takes
In "What It Takes: Lessons in the Pursuit of Excellence," Stephen A. Schwarzman, co-founder and CEO of Blackstone, one of the world's largest private equity firms, shares his journey and the lessons he learned along the way. This book provides a rare glimpse into the mind of a financial titan, offering invaluable insights for those interested in private equity, finance, and business leadership.
Schwarzman chronicles the founding and rise of Blackstone, detailing the strategic decisions and challenges that shaped its success. He emphasizes the importance of decisive leadership, risk management, and integrity, illustrating these concepts through personal anecdotes and real-world examples. The book also delves into Schwarzman's philanthropic efforts, highlighting his commitment to giving back and using his success to create positive change.
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.
The Intelligent Investor by Benjamin Graham is a widely acclaimed stock market value investing book. 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: offers an in-depth look into Steve Schwarzman’s ascent with the Blackstone Group, juxtaposing its trajectory with rivals like KKR in the private equity arena. The book delves into Blackstone’s challenges, successes, and adept navigation through the 2008 financial crisis.
Financial Modelling & Valuation: A Practical Guide to Investment Banking and Private Equity by Paul Pignataro: This step by step guide 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.
Mastering Private Equity: Provides a reference for investors, finance professionals, business owners, and students looking to engage with a private equity firm or invest in private equity funds. In plain English, this book distills all the core private equity concepts, including venture capital, growth equity, and leveraged buyouts.
The New Tycoons: Inside the Trillion-Dollar Private Equity Industry That Owns Everything This book takes you behind the scenes of the private equity firms that own many well-known brands in the United States. Discover how a relatively unknown group of clever bankers took over hundreds of firms in just a few years.
The Private Equity Playbook: Management's Guide to Working with Private Equity, by Adam Coffey, offers a comprehensive guide for senior executives on how to collaborate effectively with private equity firms. The book demystifies the private equity process, providing actionable strategies and insights on navigating deals, maximizing value, and building successful partnerships with PE investors.
The Buyout of America: Offers an insightful look into the private equity industry, revealing how leveraged buyouts have reshaped American businesses and the economy. It explains the playbooks PE firms follow and the impacts of deals, making it an essential read for investors, finance professionals, business owners, and students interested in the dynamics of private equity.
There are more books on private equity than the space we have available. You should research these other authors if you want 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 for private equity professionals. 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 top investment banking and venture capital books you should read. We have also compiled a list of the top private equity podcasts.
