placement agent - information

Hi,

I have now the opportunity to join a placement agent as an associate, I don't know much about the industry other than the usual things (act as a middleman and look for investors to put money in the fund, typically more a sales/marketing type of skillset). Would be really keen to know more about the industry specifics and was wondering about the career itself :

1/ what is the career progression and how your role differ from being an analyst/associate to VP/MD ?
2/ what is the typical comp structure for an associate
3/ hours and lifestyle
4/ exit opportunities

Would really appreciate if any of you has some info, even through PM.

Thanks,

 
Best Response

I interned at a placement agent last summer. Is it within a bank or independent boutique?

The way my firm worked was that there were two sides: origination/project management and distribution.

First side had a lot of ex-bankers. They met with potential GPs to take on as clients and once they won the mandate would just do due diligence, put together marketing materials, etc.

Distribution had a lot of ex-sales guys. They basically manage relationships with the LPs like pension funds, endowment funds, etc.

I was on the first side and thought it was interesting because you get to hear top PE fund managers pitch their fund to you and you assess their strategies and whatnot. Bad thing is you don't work with companies and don't gain a lot of industry expertise. No modeling either but the hours are good. Personally I thought the origination/project management side was a lot like banking. Working on pitchbooks and getting them revised, working on private placement memoranda, etc. Except no financial analysis.

I'm not sure about comp. I imagine base salary similar to banking but smaller bonus probs.

Hours and lifestyle is great but it depends on who you work for and how much dealflow you have. Some boutiques run their shops like investment banks and make you work 80 hours a week. Mine was pretty normal but we only had one deal going since my office was in an emerging market

Exit opportunities would be either to stay in the business or move to investor relations at a PE fund, RE fund, infrastructure, hedge fund maybe. Or any kind of fund marketing role. Jumping to an investment consulting firm like Cambridge Associates, fund of funds, pension fund, endowment fund, etc. is also doable because basically you're doing a similar thing in looking at fund managers. But those are LPs and pay a lot less.

Hope this helps

 

1SB for you ! Very useful answer. Position would actually be within a boutique and my understanding is that my work will be more focused on LPs from a specific region therefore I assume this will be more about the "distribution" aspect of the job...will definitely check that during interview process. Thanks for the information, great stuff !

highhater:
I interned at a placement agent last summer. Is it within a bank or independent boutique?

The way my firm worked was that there were two sides: origination/project management and distribution.

First side had a lot of ex-bankers. They met with potential GPs to take on as clients and once they won the mandate would just do due diligence, put together marketing materials, etc.

Distribution had a lot of ex-sales guys. They basically manage relationships with the LPs like pension funds, endowment funds, etc.

I was on the first side and thought it was interesting because you get to hear top PE fund managers pitch their fund to you and you assess their strategies and whatnot. Bad thing is you don't work with companies and don't gain a lot of industry expertise. No modeling either but the hours are good. Personally I thought the origination/project management side was a lot like banking. Working on pitchbooks and getting them revised, working on private placement memoranda, etc. Except no financial analysis.

I'm not sure about comp. I imagine base salary similar to banking but smaller bonus probs.

Hours and lifestyle is great but it depends on who you work for and how much dealflow you have. Some boutiques run their shops like investment banks and make you work 80 hours a week. Mine was pretty normal but we only had one deal going since my office was in an emerging market

Exit opportunities would be either to stay in the business or move to investor relations at a PE fund, RE fund, infrastructure, hedge fund maybe. Or any kind of fund marketing role. Jumping to an investment consulting firm like Cambridge Associates, fund of funds, pension fund, endowment fund, etc. is also doable because basically you're doing a similar thing in looking at fund managers. But those are LPs and pay a lot less.

Hope this helps

 
CaymanIncorporations:
Can you send me the names of some placement agents? Thank you.
I will send you 1 name for every $10 million in subscriptions to my fund that you supply. You supply the LPs first, fair enough? Also, make sure those clients never want to speak with me...I can't stand that, you have to handle that.
 

Are you looking more so to receive questions regarding on how to be a PE placement agent? or questions regarding about what you do and how you would be able to place a person looking to get into PE in a job?

make it hard to spot the general by working like a soldier
 

Skinnayyy, sorry if I wasn't clear - by placement agent I mean fundraising agents. All I meant is that when I was hunting for the job, there wasn't much on here that helped. I thought therefore that if people wanted to know more about it or more about the interview process then I'm here to help.

 

Cool thread - I will totally bump this up, since I'm in the industry and deal with agents all the time.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

Hi Skinnayyy, it is nice of you to open the thread. Could you describe what is a typical day for an associate working in placement agent firm like? Is it feasible to move from placement agent to PE? Thanks.

 

How much of the placement agent's work do you think is truly value-add versus just providing extra capacity to the PE firm? For example, do your firm's partners actually have pre-existing proprietary relationships with potential limited partners or are you doing CapIQ searches and cold calling to establish new relationships once you have a client?

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 
CompBanker:

How much of the placement agent's work do you think is truly value-add versus just providing extra capacity to the PE firm? For example, do your firm's partners actually have pre-existing proprietary relationships with potential limited partners or are you doing CapIQ searches and cold calling to establish new relationships once you have a client?

I can't comment on the placement agent side, only the fund side as I've been involved in multiple raises personally, but it's a bit of both. I'm in lower MM to MM and we run lean. I'm sure MF's and other large funds have entire departments dedicated to raising but in my world when you're already managing the previous vintage itself, the people who work for you (never discount the time that takes) and overseeing existing portfolio companies and exits it's extremely difficult to dedicate high level people to raise the next fund on a full time basis. And raising a fund is more than a full time job.

The good placement agents will have relationships with LP's and they're not cold calling randoms off of CapIQ and should bring in new LP's. You can usually carve out existing investors to a discount but it's worth them managing the process to pay something for them even if it's peanuts.

I would be interested in hearing more details from those in the placement business though. I don't know what the feeling is inside the biz. I somewhat believe there's a parallel between funds using a placement agent and (established) companies using an IB to raise money. I'm sure an F500 could raise their own capital but that's not what they do so they hire an IB.

 

What positions are you recruiting for? Associates, deal makers, operators, portfolio company execs, ?

Global buyer of highly distressed industrial companies. Pays Finder Fees Criteria = $50 - $500M revenues. Highly distressed industrial. Limited Reps and Warranties. Can close in 1-2 weeks.
 

I have a few acquaintances on the placement agent side so I'll try to comment a little on the above two posts:

Some of them really are pretty good when it comes to existing LP relationships and I don't think any of the big shops coldcall (someone please correct if I'm wrong on the coldcalling). I think it's more about having that high-level oversight of who's looking for that strategy, who still has existing allocation in their alternatives portfolio etc. E.g. if their client is a 300mm buyout fund, they'll know which LPs want more small buyout allocation and where they are with their 2014 PE target so you don't waste time meeting with LPs that have a low chance of committing (a lot of LPs will take all meetings just for market intel purposes).

Also pretty sure they help design the pitchbook since 1) they've sat through a million and know what's good/what's bad and 2) they think like an LP and know what LPs want to see.

And then, of course, the value-add of them handling all of the LP requests.

 

As someone who is friends with plenty of agents and deals with them all the time, I can't say that I have too much to add to this thread that has not already been said yet. One thing I will add is that good agents also know how to spin the story, and really rehearse certain GPs to make the pitch slick and deal with tough questions. That's some potential limitless value add. This can be customized to the LP as well.

For example, I'm typically very casual in my approach. So I don't care if people cuss, cut to the chase and tell me how it is (or pretend to). You don't need to be swish and suave with me. I am sure that agents have prepared their clients as to how I act, ask questions, what I like to ask, how I think and how they can talk to me (Agents are always canvassing with me and I with them). I am sure they will do the same in the meeting after mine where they might have to act and pitch differently. When you are having 5-10 meetings a day and running from airport to airport, this is truly valuable stuff.

I think lots of people also underestimate the running of the process and how tough it can be. Diligence and data requests, DDQs, RFPs, running the data room etc. Time and money consuming stuff.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

Hi tgclewis,

I am currently an investment banking analyst in London with prior marketing/IR experience, and a few recruiters have suggested interviewing at Placement Agents. Please could you give me an indication of what the hours are like at Analyst/Associate level?

Thanks.

 

Hi all,

Sorry to have taken so long to get back on this thread.

I would mostly agree with everything said so far on this thread but will summarise a few of my thoughts:

  • I do think a good placement agent adds value - this is especially true in the MM/lower MM where typically fundraising has not been a priority in the past. As such the GP will have some existing relationships, but in order to grow their fund size will need to know a lot of the things already mentioned (who's buying the strategy, how much they could feasibly grow fund size by etc.)

  • Secondly, not all capital is equal. There is a huge difference between raising the same amount of money from two different investors. A placement agent can provide advice on quality of capital - how loyal the investor is, how much they'll hassle the GP, whether they would be likely to increase their commitment in a subsequent fund, what their return targets are like etc. This is something that is impossible to know without meaningful relationships.

  • Spin, as has been mentioned, is also a good use of an agent. Before going into a meeting with an investor, knowing that the investor is certain to ask a question about deployment, or a particular sector or deal, are valuable pieces of information

  • Boring as it is, the admin side of answering DD questions and responding to investors is something that smaller shops just can't handle so is a definite value-add in terms of simply outsourcing man hours

Hope this addresses some of the questions.

Hours - can vary hugely, but don't expect IB hours. I would go for 11-12 hour days.

Interviewing - people don't expect you to know about the PE fundraising world, as it is almost impossible to know about without working in it. More focus will be given to sales skills, whether you can build relationships easily, and your genuine interest for the sector. Structure will consist of an initial interview, then an assessment centre. There can then be several follow up interviews with other team members - it is important that they assess your personality.

Hope that helps, I will check back more often!

T

 

Re-igniting my account for this -- in a similar situation as @Jammal, having moved from IB to fundraising recently. Happy to answer questions or gossip with the 5-6 other users on WSO in similar roles.

EDIT: Sorry about the no-longer-relevant username, but I just can't let go of the 15 banana points I've accrued pre-real-life.

2020 Update: recounting my experiences in PE and sharing thoughts on recent deals at https://leverup.substack.com
 
BoutiqueBaboon:

Re-igniting my account for this -- in a similar situation as @Jammal, having moved from IB to fundraising recently. Happy to answer questions or gossip with the 5-6 other users on WSO in similar roles.

EDIT: Sorry about the no-longer-relevant username, but I just can't let go of the 15 banana points I've accrued pre-real-life.

Any tips on exits and positioning for someone in a similar position? I'm at a boutique doing private placements and have worked on a couple of fundraises. Curious as to if I can make a move to a bigger placement agent (Lazard, Centerview, Evercore, Moelis, UBS etc. all seem to have these type of shops) or if there are any other legit possibilities?

 

@dan_theman Compensation: I personally earn more than I did in banking. I was a second year when I left to join a placement agent (I used to work for an Elite M&A boutique and we earned a little more than IBD market rate). We're a very small team, margins are high etc. I was hired to be in distribution (in the future) but start off as a hybrid between distribution and project management, which is exactly what I wanted.

@TheNotoriousFIG Exits: Wouldn't see why not if you're working for a reputable placement agent boutique. I'd say most people tend to do the opposite move though (go from a larger bank to a smaller boutique). The ones I know who've done that did it mostly for life-style reasons.

 

There are definitely placement agents who will work with start-up PE firms. They might crush you on fees and tie your hands (ie. x% of this fund but I need to be able to raise the next two funds at x cost as well) etc etc.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

Do a little searching around here as there have been some recent threads on this with a lot of detail, but from a high level a placement agent's job is to help a GP raise capital. They can help set up meetings with prospective LPs, help draft PPMs, improve your marketing deck and pitch, etc. A lot of banks do this through their private funds group (UBS, Lazard, BX Parkhill/PJT, and a few others) and then there are some boutiques as well (Probitas, Sixpoint, Mercury, Atlantic-Pacific).

Not much insight on comp.

 

Day-to-day responsibilities for analysts and associates involve deal co-ordination, logistics and project management. As you progress the role moves towards origination, deal structuring and advisory. Typically 11-12 hour days.

An analyst hire with 2-3 years of expereince in a revelant industry (IR, IB, Corp Fin etc.) starts in the $95k - $115k range. Total comp in the $150k - $180k range. At a higher level, typically VP, you may be allowed to co-invest in the GPs you are raising capital for depending on your firm.

 

Private placement groups normally focus on companies seeking equity private placements (essentially growth equity, VC, startup capital, project finance). That is more more or less traditional investment banking. Placement agents work on raising capital for private equity funds. In some firms these groups are related.

Placement agents have a narrower set of exit opportunities as you don't learn company/financial statement analysis.

Placement agents seem to be able to transfer to fund of funds or IR groups relatively easily, but IB or direct PE might be a stretch.

 

thanks for the insights. I dont really care about getting into PE, mainly because I am perfectly fine living an above average life and not working crazy hours. Generally, most weeks are about 50 hours, and occasionally 60. By chance, are there any people on here that work at placement agents? I am just wondering what your salaries/bonuses are like.

 

I wouldn't think of B-school yet - your background probably won't afford you top 5 admission (although with a killer GMAT, recommendations, etc.) you never know. If you are interested in RE PE - I would start researching / networking in this capacity. These firms are usually very selective in terms of prior experience (ie you need to have done RE valuation, etc.) From the forums - it seems InternationalPymp would be the right person to address - as he works in PE RE (just a thought)

If you continue in your position, you might get stuck in this capacity (since you don't have transferrable skills to buyside due to your position mainly being marketing and you will be competing with kids that have worked on actual transactions and have line items on their resumes).

It sounds like there are a couple interesting exit ops - PE FoF or fundraising could be quite interesting and get you great experience for B school...if these are possible - why not pursue? Maybe sticking it out for your last year and using the senior folks to break into one of these is not such a bad move. Then you will plausibly attain a skillset that will make you a candidate in what you really want to do.

"Jesus, he's like a gremlin; comes with instructions and shit"
 

Thanks man!

I definitely agree about bschool. I just threw it out there as a possibility.

I guess what I really want to know is how I will stack up against someone else looking for a 2nd yr analyst role in a more traditional banking role where I can get the deal experience? Will I be expected to be able to crank out merger models on day one considering I would be in a 2nd yr analyst role? Will others going for the same position have the technical skills from the onset?

I am just really thinking out loud. I do plan on checking out a few PE FoFs in addition to a traditional banking role. I just want to manage my expecations and set up a game plan before I go out into the market.

And hey, if there is anyone out there looking for 2nd year analyst feel free to PM me.

 

The issue you will face is when banks hire 2nd years, they are usually lateral hires - so they have either already completed training at a bank or have tangible banking experience (specifically modeling). You will be expected to enter the position and hit the ground running, rather than entering a training program with your fellow analysts. It is still possible to break in, but this is where networking is going to pay off and your story, etc.

"Jesus, he's like a gremlin; comes with instructions and shit"
 
hiit:
They assist in raising funds for private equity shops by helping in the marketing process and using their networks/contacts of institutional investors. An analyst will likely be doing PPMs and pitches for the funds you are marketing. No, you won't be expected to "bring in" revenue.
exactly, sounds about right. I met with few just recently, they attend the meeting with us and the fund manager not say a word, but then follow up later with an email or a call.
 

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