Gone overboard on a portco secondment
Hi all,
• Some background - I recently got an offer from a PE MF to start in Q2’24. To keep me busy till then, they offered a 6-month consulting role at a portco (a financial services company) and the brief was to observe and understand the workings (just a learning opportunity)
• I started about a month ago and since then, the portco management has thrown a huge chunk of their core workings on my plate - I am the one running point on their annual operating plan creation and new initiatives to understand and optimise their opex
• So far I have a decent level of freedom in the initiatives - recreating a fair bit of their core projections workings at the moment
• The problem I’m facing is that I haven’t really worked in this industry so far (and definitely not on an operational level) and it’s a turnaround portco so the internal processes are a mess
• Would really appreciate your guidance on how to convey realistic expectations to the management (and the PE fund) on the role I can really play here. I was previously an IB analyst but don’t have a ton of modeling and FP&A experience
Hey there,
Sounds like you've been thrown into the deep end, huh? But don't worry, it's not as bad as it seems. Here's what I suggest:
Communicate Clearly: The first step is to have an open conversation with both the portco management and the PE fund. Let them know about your background and your limitations. It's better to set realistic expectations now than to disappoint later.
Leverage Your IB Experience: Even though you don't have a lot of modeling and FP&A experience, your IB background can be quite useful. You've probably developed a good understanding of financial statements, valuation, and deal structures. Use this knowledge to your advantage.
Learn on the Job: This is a great opportunity to learn about the operational side of a business. Try to understand the company's processes, identify inefficiencies, and think about possible improvements.
Ask for Help: Don't hesitate to ask for help when you need it. Reach out to your contacts at the PE fund or within the industry for advice and guidance.
Stay Positive: Remember, this is a learning opportunity. Even if things don't go perfectly, you'll gain valuable experience that will serve you well in your future PE role.
Remember, every challenge is an opportunity in disguise. Embrace it and do your best!
Sources: Let's be honest about PE, Let's be honest about PE, Random Things I Wished I Knew About PE, Life in Development - Expectations vs Reality, Advice for New Analysts Seeking PE Exits
Embrace it. You’ll learn a hell of a lot more in that role in 6 months than you will at the fund level in 6 years
Wow. There’s an only upside to this.
Not only are you getting true operational experience that is going to differentiate you, but you already have a gig in 5 months with the MF.
If you don’t have any experience in the industry, then how did you even land a MF PE offer? The portfolio work will not be as complicated as your day to day work on the investment team - so if anything, this will help flatten the learning curve when you hit the desk.
Honestly, you’re in a terrific position and perfectly understandable you have some misgivings, but there’s light at the end of the tunnel.
The problem I’m facing is that since I’m new to this industry, most of my inputs are either very theoretical or are obvious first/second level solutions to problems the management has already tried to solve
Apart from this, since the FP&A team is tiny (2 managers for 600 employees), they have no true bandwidth to walk me through this
An actual example on the theoretical aspect - they didn’t factor in attrition in their employee base which led to a huge difference in plan vs actuals. I built a new logic which factored in attrition at each level and threw out the actual hiring requirement. Upon presenting it to the teams, they shot it down as impractical (4 iterations of it)
It is clear that this could be an incredible opportunity but I have to be realistic on what I can really do. It’s very difficult to fight back with people who have 20 years of experience in this industry and are really comfortable in their jobs to want any change
Also, I’m personally finding it hard to keep a 10k view while obsessing on the granular details (which is very important for PE but a bit hard on someone very new)
I have an opposing view. You need to tread extremely carefully. You have a real chance of overstepping. You’re completely blind to the politics internally at the portco, within your fund and between them. Can you imagine how the Budget & Business Plan session is going to go when the partner doesn’t like the plan (as always) and management decides you’re a nice distraction for him and says you made the plan / told them to do it in this way?
I think the instructions were abundantly clear. You’re there to observe. I would schedule time with the deal team, explain what management would like you to do, and ask your fund team how they want to handle it
At this point there’s no man overboard and decent odds you can keep doing what you’re doing, but you need to be very careful and play the politics / governance right before you find yourself in potentially very tricky situations without realising.
Agreed - more downside than upside here if you go the route of trying to be active and make change. Best case scenario? You get a vocal recommendation or something about how you improved the FP&A and reporting, great. Worst case scenario? What the poster above me said...or worse
Try your best, ask smart and thoughtful questions, set realistic expectations with your PE fund and the mgmt. team on what you think you can do. You will be in over your skis, but I have been in a similar seat; I embraced it and I have learned a ton. It’s not easy but you gotta at least give it a try. Just over communicate on everything. Remember at the core PE is truly a people business and so is basically every business. You got this and good luck!
I had a similar-ish situation when I was made the Chief of staff at a PortCo. I took it by the horns and went super deep into trying to make the business better, which won the trust of the CEO who reported it up to my Partners and got me on the track to get top ratings. The CEO ended up writing one of my letter of recommendation for b school, which I think helped me stand out against a crowd of others applying. Play the politics right, ask dumb questions, etc. but realize that you’re sitting on pocket Aces.
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