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Wondering about this. Is it just the prestige/pay? Seems like your experience would be quite limited at megafunds (type of work similar to banking, just modelling focused). Why don't more people pursue MM -- especially if it is less competitive?

Moderator note: This has turned into one of the most candid conversations about what working in PE is actually like that we've had on the site in a long time.

Comments (169)

  • Cpatters's picture

    My opinino is because there is the desire to be the best of the best in anything you do and it seems banking and finance seems to attract hard working motivated individuals who want to be number one in everything. Of course I may be wrong, but its what my take on the matter is. MM are still extremely competitive as well , but most consider BB the most prestigious job you could get.

  • TheKing's picture

    Not sure what you think you'll be doing in MM that is so different. Seriously, how do you think it's different? I have a feeling you have a very skewed view as to what MM PE Associates do. I am a MM PE Associate and would like to hear what your thoughts are.

  • lurker22's picture

    Correct me if I'm wrong but don't associates MM shops have a broader role in the investment process (i.e. not just modeling and writing memos but also working closer w/ portfolio companies and given greater responsibility to evaluate investments)? This seems to be something that is important to me -- even if the MM firm is not as well-known.

    Also does the experience at growth equity shops (General Atlantic) differ much in terms of learning? I'd like to go somewhere it's not just like spending another 2 years in banking.

  • In reply to lurker22
    TheKing's picture

    lurker22 wrote:
    Correct me if I'm wrong but don't associates MM shops have a broader role in the investment process (i.e. not just modeling and writing memos but also working closer w/ portfolio companies and given greater responsibility to evaluate investments)? This seems to be something that is important to me -- even if the MM firm is not as well-known.

    Also does the experience at growth equity shops (General Atlantic) differ much in terms of learning? I'd like to go somewhere it's not just like spending another 2 years in banking.

    "working closely with portfolio companies and given greater responsibility to evaluate investments." What do you think this means? What do you honestly think you will be doing in PE?

    Not trying to be a dick, just so sick of reading about people who want to do MM PE for "operational improvements" and "doing more than modeling and memos." These vague catchphrases that analysts jerk off too (I did once, as well) need to be thrown in the garbage. PE is a deal business, you work on transactions. That means modeling, research, presentations and memos. It means reading a bunch of shit for due diligence and a lot of the same kind of shit you did as an analyst in banking. Yes, your firm owns companies, and you monitor them, but you are not making decisions about how to improve them, if anything, you're analyzing add-ons that come along.

    Contrary to what many seem to believe, when you join PE you are not going to become some important hot shot, taking an elevator to the top of a really tall building, sitting behind a desk, making decisions all day. No, you're going to be doing a shit-ton of modeling, memo writing, and due diligence crap that will often bore you to death. Furthermore, there is a shit ton of internal crap to do, just as at a bank. No, you don't get pitches staffed on Friday at 4pm, but it doensn't mean that the work is fundamentally different. At all.

  • In reply to TheKing
    bankbank's picture

    TheKing wrote:
    No, you don't get pitches staffed on Friday at 4pm, but it doensn't mean that the work is fundamentally different. At all.

    and...you might get staffed on some nonsense potential investment on Friday at 4pm (or 5 or 6 pm) that requires an indication of interest by end of day Monday. then your life isn't much better than the analyst starting on a pitch on a Friday evening...

    PE is banking 2.0. slightly better hours. way bigger paychecks. same mind-numbing work.

  • TheKing's picture

    bankbank, let's not mislead here. The paycheck is definitely not guaranteed to be much bigger, nor does it make up for the fact that it's banking 2.0 with a better sounding job description.

  • bankbank's picture

    I was in no way saying that the paycheck makes up for the fact that my PE job is turning my once sharp mind into mush and that I still spend my days wishing I were working somewhere else and posting on WSO to distract myself from the stuff I'm supposed to be doing.

    Regarding the pay, I am talking about moving from being an analyst at a BB to being an associate at a big PE fund. I am still the one getting shat on at the bottom of the totem pole, but my pay more than doubled when I switched. Had I stayed in banking for another year and then gotten the associate promote, I wouldn't be making nearly as much money. MM PE might pay a little less, but from the offers I saw it still paid way more than I would have received as an analyst/associate in banking. The difference in pay might not be as great once you start moving up in PE and more of your pay is dependent on your fund's performance, but I don't know.

  • bankbank's picture

    to answer OP, I think prestige is the biggest motivator.

    a lot of us in finance are type A. we want to be the best and work for the best and we want to do the big deals that make the front page of the journal (just like you told your interviewer for your summer analyst job...hah). we want to go to harvard and then we want to work for goldman and then we want to work for KKR. we hear people talk about these places being the best and that's what we go for. that's why there are 10 new "what's the best bank/group?" posts on this forum every day.

    i had the choice between MM and MF. the guys at the MM were cool as shit and i'm sure it would have been a blast (well...a relative blast) to work with those guys. the pay was the same at the MM. in the end, and against advice from my parents about doing what would make me happier, I went with the bigger fund. I wasn't sure if I wanted to do PE forever and I figured it would look better on my resume if/when I looked to exit. All the senior guys had gone to HBS (as is the case at every MF) so I figured that would be good if I wanted to do Bschool. correct choice or not, i basically decided based on the fact that the MF was bigger and would look better on my resume.

  • TexasIB's picture

    TheKing and bankbank are 100% correct. You're still the lowest on the totem poll, and you'll be doing more than your fair share of mind-numbing, menial work most of the time. I'd say 75% of the time I'm doing similar tasks than what I did in banking. Not the exact same thing, but similar in terms of modeling, number crunching, "analysis", etc. The social aspect of work is far different as well, and don't underestimate that. The comradarie of banking is non-existant in PE. Most of my friends in PE believe all these things are true at their firms as well, so I don't feel I'm that much of an outlier.

    That being said, the hours are better than in banking, which is fantastic. I also travel to meetings much more than in banking. I talk to the CEO and CFO of portfolio companies often, though the novelty of that wears off pretty quickly.

    Remember in college when you all you wanted to do is banking, because even though you heard from your older friends in banking how much it sucked, you thought it actually sounded cool and exciting? Then you got there and your friends were right, it sucked. Then, when you're in banking, all you wanted to do is jump to PE because it sounded so cool to be on the buyside, even though older friends in PE said it was just like Banking 2.0? Same thing.

  • apprentice7697's picture

    TexasIB: Remember in college when you all you wanted to do is banking, because even though you heard from your older friends in banking how much it sucked, you thought it actually sounded cool and exciting? Then you got there and your friends were right, it sucked. Then, when you're in banking, all you wanted to do is jump to PE because it sounded so cool to be on the buyside, even though older friends in PE said it was just like Banking 2.0? Same thing.

    Wow. That's a reality-check moment. What the hell are we all doing?

  • apprentice7697's picture

    I don't agree with that. It depends on the fund's focus. I work for a lower middle market fund, targeting companies with 50-150m revenue. More than a few of our port co's are family-run businesses with unprofessional mgmnt teams (I don't mean that disrespectfully) who make decisions on gut, never data. Most of our energy companies have CEOs with no more than a high-school education. I'm often assigned to think-through some quality metrics, develop some dashboards, bring data to bear on their decision-making. Forget whether I personally add value. The role of the associate in this case can add tangible value to a mgmnt team even if it HAS been in the industry that long. They bring experience. We peddle a really good tool kit.

    Put it this way, the CEO of an oil and gas waste management company used to drive the service trucks himself. He doesn't know the first thing about managing his balance sheet. He's never (really) had to care before. Even if it is a $70m company. I'm no genius, but that's something I can bring to the table. I think it adds value.

  • TexasIB's picture

    That's a good question apprentice. Am finishing up year 4 in the banking ->PE track, and that question enters my mind way more now than it did in years 1-3. Of course it takes experience to learn this, as believe me I was the quintessential "M&A! PE!" guy for the longest time. If you aren't passionate about finance and the whole deal process, the day to day of this job can get beyond grueling. You might think are you now, but after a few years, took a look in the mirror. This has happened to more people that I know than I can count.

    Do I regret doing this track at the beginning of my career? Of course not. I've learned a decent amount, and I've been compensated well. I've met a whole bunch of interesting people and made good contacts for the future. I've been able to live in New York during my 20's and have enough extra cash to really have a blast. But never forget that all comes with a price.

  • In reply to apprentice7697
    Kenny_Powers_CFA's picture

    apprentice7697 wrote:
    More than a few of our port co's are family-run businesses with unprofessional mgmnt teams (I don't mean that disrespectfully)

    Agree-we're not usually involved with the operations of companies whose debt we hold but sometimes a mezz debt or a loan to a small company ends up with us getting our hands dirty, and for a lot of small firms, even good companies with good businesses, the level of professionalism and organization is so lacking that even minor changes that are obvious to a moron excel jockey like myself can make a big difference.

    We also perceive difference depending on the sponsor involved; I'd divide them into three categories:

    1) Firms that put a lot of boots on the ground and make operational changes. These sponsors are often industry-focused; they also have a tendency to have a lot of operational partners, make bolt-on acquisitions or come in via restructuring.

    2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

    3) Firms that are mostly financial engineers.

    Curious if people on the sponsor side agree?

    There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

  • jimbrowngoU's picture

    So the question is... how much better is the lifestyle in MM PE than in banking? I don't hate EVERYTHING I do in banking, though it is riddled with so much worthless, menial bullshit that I can't stand, and I like to think that in MM PE, senior-level guys won't ask me to change the colors on charts from dark blue to medium-dark blue, or make the font size just a tad bigger -- wait, maybe make it a tad smaller -- well, you get the point. My biggest issue with banking is being an absolute bitch to your clients and the hours (both sheer volume and unpredictability). I like to think my transition to MM PE will bring me to 50-60 hours per week, with much more predictability, i.e. I won't be cancelling vacation plans for the second time in six months, or I won't have to worry about spending my life in the office on weekends. Am I on-target here or waaaaay off base?

  • In reply to jimbrowngoU
    bankbank's picture

    jimbrowngoU wrote:
    So the question is... how much better is the lifestyle in MM PE than in banking? I don't hate EVERYTHING I do in banking, though it is riddled with so much worthless, menial bullshit that I can't stand, and I like to think that in MM PE, senior-level guys won't ask me to change the colors on charts from dark blue to medium-dark blue, or make the font size just a tad bigger -- wait, maybe make it a tad smaller -- well, you get the point. My biggest issue with banking is being an absolute bitch to your clients and the hours (both sheer volume and unpredictability). I like to think my transition to MM PE will bring me to 50-60 hours per week, with much more predictability, i.e. I won't be cancelling vacation plans for the second time in six months, or I won't have to worry about spending my life in the office on weekends. Am I on-target here or waaaaay off base?

    others chime in, but i think you're in the wrong industry if you want to work regular 50-60 hour weeks. there is just too much money at stake and too much competition for people to be working 50 hours a week. i'm at a bigger PE firm, so maybe my experience is a bit skewed, but our partners still work that many hours in a lot of cases. you make money by doing deals and getting AUM. you don't make money by relaxing at the end of the day and coaching your kid's soccer team. not that making money is the be all and end all in life, but in this industry, it kind of is.

    to make money in finance you either take risk or you work your ass off. unless you're the GP at a PE firm and you have tens of millions or hundreds of millions invested in the fund, you aren't taking that much risk.

  • jimbrowngoU's picture

    Fair enough, and I appreciate the perspective. What size fund are you at? I'm more talking about the lower MM, where they're investing out of a $500 million fund and focus on writing much smaller checks. I would assume there is definitely some disconnect between the Advents and Riverside Partners of the world. And if you're at a fund bigger than Advent... Well, I again assume the experience is going to be a bit skewed. But you're insight is definitely appreciated.

    Any other thoughts?

  • TheKing's picture

    I am at a lower middle market fund (think $500M and below) and we are all about the "improving operations" type of thing. But, again, let me be clear, this rarely affects the work that you do as an associate. Have I been on calls with partners and our companies talking about operations? Yes. Do I monitor operations and go to board meetings? Yes. Do I really do analysis that affects decision making at the companies in any real way? Absolutely not. In all seriousness, the majority of the shit you do at a fund that is all about operational improvements is looking at add-ons.

    When we want our companies to implement new go-to-market strategies or some such shit, we hire consultants to work with them and develop plans. Yes, we review these plans and work to understand them with the companies, but again, it's not really my role nor should it be as I'm a 25 year old who has spent his professional life working on excel models, PPT presentations, and long-winded Word documents.

    Again, not to beat a dead horse, but this is a deal business. Do not get pulled in by lofty sounding crap and realize that it is still a process-oriented job in which you are building models, updating models, writing memos, and doing due diligence. It's not glamorous and will not turn you into a master of the universe.

  • In reply to jimbrowngoU
    apprentice7697's picture

    jimbrowngoU wrote:
    I like to think that in MM PE, senior-level guys won't ask me to change the colors on charts from dark blue to medium-dark blue, or make the font size just a tad bigger -- wait, maybe make it a tad smaller -- well, you get the point. My biggest issue with banking is being an absolute bitch to your clients and the hours (both sheer volume and unpredictability). I like to think my transition to MM PE will bring me to 50-60 hours per week, with much more predictability.

    I couldn't disagree more. At my fund, ($4B MM), I am still an investment banking bitch. My client is the MD or principal on the deal. And before he brings the powerpoint deck (to invest or not invest) to investment committee meetings, he will absolutely have you up until 4 in the morning fiddling with fonts, colors, formats, sizing, etc. And yes, the hours will be equally unpredictable. Like the partner screaming, "I don't CARE if it's your goddam honeymoon! We're getting a look at a company that's NOT going through an auction process! But the M&A broker wants our indication of interest by tomorrow or he'll take the deal to another firm! Become an expert in the market for machinery that makes dental crowns, NOW!"

    Actually, though: I find I don't have the weekend facetime problem as much, though. So at least that's good.

  • HFFBALLfan123's picture

    The King is 100% correct from my personal experience. Also, apprentice hit the nail on the head; I had was on vacation after being very slow at work and sat in the hotel room updating my model for 3 days; I would fix a little spelling mistake, email it to the MD then wait. Then get yelled at for an incorrect cap table, fix it, mail it back and wait. You arent going all the time at 100% but if something needs to be done and you are not available then you are screwed...

  • In reply to Kenny_Powers_CFA
    Otter.'s picture

    This discussion is really great guys - thanks to everyone sharing their perspective. Definitely interested in hearing more about peoples' perspectives on MM vs. MF etc. I had a specific question, for anyone really to answer, but it was brought up by Kenny Powers:

    Kenny_Powers_CFA wrote:

    2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

    What's the work of these consultants like from a PE perspective? I hear consultants gripe a lot that they have to analyze very mundane operational problems for clients that don't want to hear that they're doing things wrong, and then the clients don't actually implement any of the consultant's suggestions. Is this very different if you're working with a sponsor's portfolio company?

    I guess what I'm asking is - would working on a portfolio company for a sponsor that sees value in operational changes in a company be a lot more interesting and meaningful work experience because the company actually needs to change, rather than just doing an internal study for a F500 company when that company doesn't really care what the consultant has to say? Also, do the consultants work closely with the PE guys, or is it more like - here's the problem, come back to us when you've fixed it?

    Hi, Eric Stratton, rush chairman, damn glad to meet you.

  • In reply to Otter.
    TheKing's picture

    Otter. wrote:
    This discussion is really great guys - thanks to everyone sharing their perspective. Definitely interested in hearing more about peoples' perspectives on MM vs. MF etc. I had a specific question, for anyone really to answer, but it was brought up by Kenny Powers:

    Kenny_Powers_CFA wrote:

    2) Firms that want to make operational changes but don't do it themselves. These sponsors tend to hire management/operational consultants to work on the changes they want made.

    What's the work of these consultants like from a PE perspective? I hear consultants gripe a lot that they have to analyze very mundane operational problems for clients that don't want to hear that they're doing things wrong, and then the clients don't actually implement any of the consultant's suggestions. Is this very different if you're working with a sponsor's portfolio company?

    I guess what I'm asking is - would working on a portfolio company for a sponsor that sees value in operational changes in a company be a lot more interesting and meaningful work experience because the company actually needs to change, rather than just doing an internal study for a F500 company when that company doesn't really care what the consultant has to say? Also, do the consultants work closely with the PE guys, or is it more like - here's the problem, come back to us when you've fixed it?

    In my experience, the consultants work more directly with the portfolio companies and produce reports that are then reviewed with the company and the PE firm. I'm not really sure what you are looking for here, to be honest. It isn't like that's some awesome and exciting work.

    Again, people need to put this "operational improvements" shit to bed - it isn't some super exciting shit, it's a consultant's report that says "you need X salespeople with a focus on Y to attack market Z because of such and such reasons." Not gonna get your dick hard (no homo.) Let me be clear. If you want experience running a business, then join a business, not a financial services / consulting company. Or start a business. Obviously, the latter is tough, but people need to understand that there isn't some glamorous shit going on when you work in PE. It doesn't matter if it's MM or Mega Fund, you're going to be doing relatively the same shit just on different scales and the due diligence reports you get from consultants and shit will just be done by different firms that specialize in different deal sizes. And maybe your hours would be better at one place vs. another. As in, KKR will work you to death whereas some no-name MM fund will likely be a shit-ton better (though you can still expect to work a lot and stress about it.)

  • TheKing's picture

    Let me basically summarize all I've been saying with one sentence:

    Private Equity is way more awesome on paper than it is in practice.

    Until people realize the reality of it, they will continue to jack off to it and think it's the road to money and happiness in their professional lives.

  • In reply to HFFBALLfan123
    Marcus_Halberstram's picture

    HFFBALLfan123 wrote:
    The King is 100% correct from my personal experience. Also, apprentice hit the nail on the head; I had was on vacation after being very slow at work and sat in the hotel room updating my model for 3 days; I would fix a little spelling mistake, email it to the MD then wait. Then get yelled at for an incorrect cap table, fix it, mail it back and wait. You arent going all the time at 100% but if something needs to be done and you are not available then you are screwed...

    You sound like a real fucktard... spelling mistakes and fucking up cap tables... I'd get you transferred to another group.

  • CaptK's picture

    I came by this thread wanting to add my two cents, but then I realized that every bit of knowledge I wanted to add has already been dropped by TheKing, bankbank, Kenny Powers, and apprentice7697. I've scattered about 10 SBs throughout the thread agreeing with you guys.

    TheKing summed it up best: Private Equity is way more awesome on paper than it is in practice.

    I think a lot of people want to go into PE because they want to have an impact on a business right now and fast track paying their dues as much as possible (I absolutely include myself in this statement). I didn't want to climb the ladder at IBM for 30 years before anyone listened to what I have to say - private equity seemed like it would put me there in 4 years, so I was all about it. And here I am, still making excel models.

    Of course it turns out that us type A folks don't really want to do private equity - what we all really want to do is be entrepreneurs. Unfortunately most of us don't figure it out until we've arrived in PE and seen it for ourselves. Just look at the number of PE associates that eventually bail and start their own businesses - those are the guys that climbed the ladder as quickly as possible, then realized that if you really want to call the shots as quickly as possible, you've got to be CEO. Not to mention that PE gives you a lot of great insight that makes starting a company a hell of a lot easier. You also figure out really quick in PE (and even banking) that while you're doing pretty well, the guy that's really getting paid is the entrepreneur that owns 40% of the $400MM deal you're working on.

    Despite the excellent content in this thread, I know it's going to do absolutely zero to expunge the delusions any of the college seniors or bankers out there aspiring to private equity. To borrow a quote from Morpheus - "Unfortunately, no one can be told what the Matrix is. You have to see it for yourself."

    - Capt K -
    "Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

  • junkbondswap's picture

    Great discussion. While I agree that PE in general is over-hyped I do think the experience is highly contingent upon your actual shop as the diversity that exists between PE shops is significant whereas the banking spectrum is more normalized.

    For example, I have experienced all of the things that people generally believe make PE exciting - great comp w/ carry, meetings with famous/powerful people, jet-setting, black-tie charity events, $B+ front page deals, exposure to operations and financial engineering, etc but beyond all this bullshit it is still all about updating models, drafting memos/presentations, culling info from data rooms and other mindless administrative BS.

    Bottom line: It is still better than banking and I would rather be at the mercy of my principals and LPs than the mercy of a relentless client

  • In reply to Inept Speculator
    CaptK's picture

    Inept Speculator wrote:
    Don´t really recall the saying but goes something like ¨if you want to see capable people waste their time, add prestige blah blah¨...

    Gee, I wonder where you keep hearing that...

    - Capt K -
    "Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham

  • In reply to bankbank
    Beef's picture

    bankbank wrote:

    to make money in finance you either take risk or you work your ass off.

    This is key. SB for you, sir.

    Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

  • junky_munky's picture

    I don't work in a PE firm but am on the buyside as well - I work in the utilities industry, and essentially for the holding company which holds a number of power generation assets.
    I work in a regulated industry where most of the revenues and costs are contracted and thus predictable. The issues I get involved in are financial engineering related (refinancing, interest rate hedging etc). Also, for a couple of acquisitions we made, I am currently supporting the asset management team in identifying the areas where cost cutting can be done. this is primarily being done through benchmarking studies and liaising with technical advisers. So while I am not doing any actual "improvements" or "getting my hands dirty", I am assisting in the process.
    While the investee company's management generally has tonnes of experience, do not underestimate the power of a fresh perspective. Also, sometimes they get so involved in the day to day activities that it takes an external guy to run these out of the ordinary improvement activities.
    While I am not in the financial industry any more, let me add my 2 cents to the MM versus MF debate. Working with a small team, you will definitely handle more responsibility. However, now that I am looking to move on, I realise that the brand name of the previous company matters a lot while making the job switch. So while I know I will get a good gig eventually, it might take more time than initially expected

  • Kenny_Powers_CFA's picture

    Vaguefunda, that is a good example of what I'm talking about in terms of funds that have a deep industry focus and can make big changes operationally. There are a number of utilities-focused funds that have their own asset-management groups (in the plant operation sense, not the investing sense). ArcLight Capital is one good example of a very successful, industry-focused PE sponsor that has a great consulting/operational group.

    There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

  • Kenny_Powers_CFA's picture

    Question for the employees of equity sponsors (CaptK, The King, et al):
    Do any of you work for and/or have an opinion of the difference between working for a pure-play LBO/Financial Sponsor versus working for a "family office"-style conglomerate/sponsor like, say, Rank Group or Huntsman Gay, where the owner/founder is an industrialist/businessman rather than a life-long buyout artist?

    There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

  • jimbrowngoU's picture

    Wow, active day. Really good posts here, thanks guys.

    I agree with Marcus' 2+2+2 assessment. While I agree with CaptK, I think the experience one gains is invaluable in being able to properly run a business. While I'd love to run a business right now, I have no issues admitting I wouldn't have a clue -- I won't be an expert at the end of my two years in PE, but I'm having a tough time believing I won't be significantly better off.

    After reading this, I've also realized what a shot-in-the-dark it is when placing at PE firms. Most of you guys seem to like it slightly better than banking, and while it hasn't exactly been stated explicitly, it seems as though most of you still put in 60-70 hours per week with similar levels of unpredictability to banking. Then, I go and chat with other MM PE associates, and they rave about how great it is, how they typically work somewhere between 45-60 hours per week, how they never work on weekends, etc. (CompBanker, this is to you). While they don't deny there is still some mundane and menial work involved, it's significantly less and lifestyle is just much better. Basically my point is that your experience is heavily dependent on the culture of the PE shop you place at.

    Where do all of you work (city) and what size fund? If you all work in NY, I guess I understand -- most of my MM PE contacts are in Boston, and my guess is a big reason for the difference of lifestyle has to do with the senior-level guys.

    I appreciate the inside info though guys. I try to escape the disillusion of PE as much as possible, but it can be tough sometimes.

  • HFFBALLfan123's picture

    Marcus, did i say i made the spelling mistake? I think not, correcting the mistakes of someone else and the cap table errors were a factor of not having the orignial loan docs. So i didn't know that interest was capitalized every quarter on the debt, nor did i know the conversion rate on the debt because the original loan doc was being amended to include a conversion rate (which had not yet been agreed upon). And this was key to the model so don't be so quick to judge.

  • UFOinsider's picture

    It sounds like the most qualified people take themselves out of the competition pretty early on. Am I correct to guess this? I'm planning on MBA -> IBD associate -> try and take over the company

    Get busy living

  • Jorgé's picture

    Fantastic thread guys.

    People like Coldplay and voted for the Nazis, you can't trust people Jeremy

  • Faustus's picture

    I'll chime in with my experience:

    I worked for 8 months as an analyst/intern at a MM PE shop. I did ride up to nearly the top of a nice building (ha, quoting someone who posted before me), the firm structure is very top heavy, there are a lot GPs relative to underlings. Three very successful GPs and a few VPs.

    The quotes about it being a lot more fun on paper is very true, most of my time, when we were not working on a deal, was spent marking up CAs/NDAs, distilling CIMs into one/two pagers and doing research on whatever industry the VPs were interested in. Also, I would do research for portfolio companies, a few times I helped them out – the port comps – with excel stuff. We would also run a bare bones LBO analysis based on the information provided in the CIMs and how much debt (senior, junior, mez), just to get an rough idea of IRR/ Xs money.

    Serious modeling work was only done once we submitted an LOI; I did tons on mundane deal room shit after this, extensive analysis on the company, sales trends, etc. It was exciting for me, and felt great to close.

    As one poster mentioned, the direct sourced deal is the holy grail – in the lower middle market it is easier to side step auctions.

    As for the VPs roles, they did everything from operational stuff with portfolio companies, to deals – running the deal: managing consultants, accountants ect.), depending on what needed to be done. They do get carry from what I understand.

    fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

  • alexpasch's picture

    I left my job at a MM PE fund to start my own small HF. My reasons were manifold but it basically resulted from realizing a few key things:

    1. I don't care what PE fund you work at, unless you are a Partner (which takes about 20 years, btw), you are not calling the shots at all, your superiors are. Your value add and compensation will always be limited by the level of control you have as far guiding the business forward. Everyone below this level just follows through on getting deals done. If you spend your entire day building an excel model, just how much value did you REALLY contribute? That's why the entrepreneurs of companies make so much more, they build companies, not excel models. One is worth more than the other...

    2. The hours are slightly better than banking, but the work is just as boring. Also, the work is often harder. Try doing a waterfall on a company that is on its Series F round and each round has different terms, liquidation preferences, dilution adjustments, etc. And it has to be perfect, btw. I worked tons of hours on stuff like that, but it's not really value add, at the end of the day it won't affect your IRR. Writing memos and portfolio company performance write-ups, same thing; worthless in the big scheme of things.

    3. If you own your own business, there is no cap to your compensation. If you are in PE, there is a cap to how much you can make, even if it's a very good living, there is a cap (huge turnoff for me). I'm not afraid of risk and most of you shouldn't be either; if you think you really are top notch, you shouldn't be killing yourself to go work in PE, you should be taking advantage of the fact that you're young and have virtually zero opportunity cost to breaking out on your own and doing something that could potentially be much more valuable. Worst case scenario, it doesn't work out and at least you have something unique on your resume that makes you an attractive candidate to prospective employers.

    Consultant to a Fortune 50 Company

  • ke18sb's picture

    Really great stuff guys. I wish there was more conversations like this and less of the other crap that goes on here.

    Personally, having worked in lower MM PE (loosely), I prefer it to the MF. Granted I haven't worked at a MF but I like working with smaller/growing companies. Doing some blockbuster deal doesn't really get my rocks off. As others have eluded, a lot of the lower MM companies are family business or shoe strap operations that have grown organically and they don't really have the perspective that bankers/consultants have and weren't trained for financial and operational optimization. I feel like if I was ever to become an entrepreneur these deals would be more relevant than working on mega deals.

    To really be a PE or banker long term you really gotta be a deal junkie. If you aren't a deal junkie, PE and banking are all the same and you will eventually bore of them. However, they are great places to launch a career and gain insight into running a company and its financial and operational strategy. Even if your work is predominantly excel/research/memos, you still get access to the internal meetings and that is where you can really learn something.

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