Moving Upstream in PE
Moving upstream in PE is notoriously challenging and I would greatly appreciate some advice from the community.
I am currently working in a very small PE boutique with only three investment professionals. I have an MBA from a non-target state school MBA program. No investment banking background. All-in-all this is a good job: decent pay and generous carry. However, we are only doing about 1-2 deals per year, which is all we can manage with our limited bandwidth.
With this background, I definitely see a need for resume strengthening. One idea I've had is to do CPA => Big 4 => MM PE back office, with front office being the final goal
Does that make sense? Too convoluted? What has worked for other Monkeys? Thanks in advance.
If you are already in PE in some capacity, going out of your way to get your CPA and work in Big 4 accounting would be a huge step in the wrong direction. From what I've seen, the only people in finance who have a CPA are those who started in Big 4 accounting before transitioning into banking. If your final goal is PE, it makes no sense to leave simply to try and come back.
Dude you'll have way more luck eating up more responsibility where you are now and using that to push in. Experience in PE is far more valuable...
Also if you have generous carry why leave? You could end up making far more? Especially if the fund is doing well and growing?
That's a valid point. Our shop is relatively new so I won't actually receive carry for a few years until we begin to make exits. That's a bit beside the point though. My main concern is that I will never be able to move upstream down the road, and I'm interested to work on larger deals.
No, it doesn't make sense.
I know of people who moved from UMM pre-MBA to MF post-MBA.
If you don't like the amount of deals you're doing - go source some deals and captain those. If the carry is generous, you can really max out your upside.
The path you're suggesting doesn't make sense. If you're already in an investment role, and you already have an MBA from a non-target school, I think you've done exceedingly well for yourself. If your fund does good deals and has good returns, you will naturally raise more money for your next fund and each subsequent fund thereafter. That's your most natural path to doing bigger deals. Crush it on these smaller deals, show LPs that you can generate returns, then use your success to raise capital for funds with slightly larger EBITDA targets. It's called 'strategy creep', and people do it all the time. Sometimes they shift their target EBITDA or revenue targets, sometimes they shift to adjacent sectors (allegedly adjacent--sometimes just totally different sectors).
As long as you can generate returns, you will be able to raise money. Every shift away from the core strategy which generated those returns will be tough, but as long as it's relatively close and your LPs trust you, you can probably move the goalposts incrementally in each successive fund raise. In this way, you retain your carry in a fund as it grows, and you really own the track record and get to build something. I guess it's riskier in the sense that it requires you to actually perform and generate returns, but has far more upside potential if you do. And to be clear, it's only 'riskier' if there were a path for you to move to a much larger fund and work your way up, but as I suspect that path doesn't exist, you should probably stick to your knitting for a few years.
You would probably want to off yourself if you left your current role to do Big 4 audit.
Thanks for posting. I had a few questions about your current role and your desire to find something else, if that’s cool.
How small of deals are you doing, and what’s the driver behind you wanting to do larger deals?
What’s the problem with doing 1-2 deals per year? Is it just wanting to see more and a wider variety of deals?
What are your long-term goals and why doesn’t staying in your current role coincide with those goals?
I am genuinely curious to understand, as my goal, in the short term, is to work for a LMM fund doing only a handful but solid deals each year, so it’s always interesting to hear the perspectives of folks in those roles today wanting out.
"One idea I've had is to do CPA => Big 4 => MM PE back office, with front office being the final goal"
Don't do this.
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