To all associates coming up on the 2 year mark, how bad is it to have no deals done?
Know this is probably affects those coming up on the 2 year mark more than other classes given the slow deal flow the past couple years.
At a $4-6B fund. No deals including exits across a ~10 person associate class have been done the past 2 years. How does this affect those staying for Sr. Associate or lateralling (to VC / growth / corp dev, etc.)? I've found it a little disappointing to speak to just small portco M&A and a tougher sell on overall deal experience. After all, platforms and deals are the lifeblood of PE.
Based on the discussions on Wall Street Oasis, not closing any deals within the first two years as an associate in private equity can indeed be challenging, especially when considering future career moves or promotions within the industry. Here are some key points to consider:
Impact on Career Progression: Not having closed deals might make it more difficult to move into senior roles within private equity, as deal-making experience is often a critical factor in such promotions. This could also affect your ability to lateral to other firms or move into different areas like venture capital or corporate development, where hands-on deal experience is highly valued.
Skill Development: While not closing deals is a setback, it's important to focus on the skills you have developed during the process. For instance, if you've been involved in due diligence, deal sourcing, or managing portfolio companies, these are valuable experiences that can be highlighted in interviews or discussions about your career path.
Networking and Mentorship: Utilize your network and seek mentorship within your current firm or through external contacts. Sometimes, discussing your situation with a mentor can open up new opportunities or provide guidance on how to navigate your current role more effectively.
Exploring Lateral Moves: If you're considering a lateral move to another firm or a different area like corporate development, focus on how your existing skills can be transferred and how you can add value based on your current experiences, even if they don't include closed deals.
Long-Term Perspective: Evaluate the long-term potential of staying at your current fund versus moving. If the broader fund performance and the potential for future deals look promising, it might be worth staying and working towards closing deals in the future.
In summary, while not having closed deals can be a hurdle, it's crucial to leverage your existing experiences and network to navigate your career path effectively.
Sources: No VP Promote from Sr. Associate - Seeking Advice, Do your associates just not care?, PE Associate Not Closing a Deal, Leave PE for Corp Dev VP role?, Do your associates just not care?
Bump
It’s tough if you haven’t closed a deal or have been deep in diligence because you wouldn’t have exposure to the skills needed for the next rung up. Eg - leading diligence, financial DD, document drafting/negotiations etc
Bigger issue is entire industry is overhired on the junior level - probably expect significant tightening of funnel from associate to VP level.
It’s very tough at the moment given wider candidate pool
You’re seeing a lot more people take Sr. ASO and VP promotes vs testing the lateral market. Firms also just being generally more selective of associates because they can be with larger candidate pool and finding candidates that have a desire to stay long term and rise the ranks. I valued the ability to rise the ranks vs going to business school in my process but still encourage people to take a long term view and realize that this environment won’t last forever. At some point, rates will start to go down, deals will come to market and hiring will pick back up. But, we almost certainly won’t go back to the frenetic environment that was 2021. I believe that’s a good thing. Too many funds raised that simply didn’t have a reason to exist. I see people often lamenting about how PE is done for and it’s no longer an attractive asset class. To me, that’s a foolish take and this is a simple rightsizing that needed to happen. Sorry for the ramble, but all this to say, ASO hiring and lateraling will remain competitive but I wouldn’t necessarily associate your talent with the number of deals completed. Hasn’t been a concern with any recruiters I’ve spoken to, as long as you haven’t been sitting on your hands for two years.
Given you joined right when everything slowed down a lot you are in the majority for sure and people shouldn’t hold that against you (for example if someone did a deal the first month they joined the firm, did they really learn anything and do a lot of the work they are claiming or did they just do simple modeling / coordinating calendars and drafting some agendas…).
that being said over two years you should have developed skills assuming you weren’t sitting on your hands and can spin that as deal experience that unfortunately you just didn’t get to close on a deal. Especially if it’s a decent sized fund you have a whole class of associates and it’s somewhat of a luck crapshoot of who gets to close a deal and you cannot control that.
the one thing that you probably didn’t get a lot of experience on then is document negotiations, which is really important, but generally at an associate level you won’t be the one doing that, but would still get exposed and should understand it the basic points. That is something you can work on studying in your free time. You can find online main points or if you get quarterly distros from large law firms they have updates on what they are seeing across the market. Or if you have a partner or sr associates at a law firm you work with a lot they have training materials they give new associates and you can ask for that to get up to speed (although more detailed than what you need at associate level generally).
Back in 2009 / 2010 time frame there were PLENTY of people who didn’t get a platform done during their 2-year associate stint and that was simply the norm. It didn’t seem to hold people back when the market started picking up again in 2011. The bigger risk was that many people were unable to secure PE jobs out of IB because the hiring market was so bad. My two year analyst stint ended in summer 2009 and it was a brutal year for PE recruiting. While we used to have near 100% placement into PE in prior years, my class was well below 50%.
how did people compensate for that tough market? currently recruiting for a sr asso / vp title after ~6+ years of experience across banking and pe, but given the tough deal / macro environment haven't been able to land a role so far. not sure whether to just take a corp dev / strategy role and try again for buyside role in a year once market recovers
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