Hey Guys,
I have not found any posts regarding breaking into PE by working for a portfolio company and becoming an operational partner, hence I decided to open up this thread. I just graduated without a job lined up and have started networking with PE firms focused on the lower middle market and wanted some insight on this idea.
I have a few phone calls setup with some directors at smaller shops that I got referred to by my bosses of my last internship (PE at a shop with 500AUM). I wanted to know if anyone considered offering to work for a portfolio company in hopes of working your way up and getting hired into the PE firm once the company exits 2-3years down the road? I feel like the operational experience and industry knowledge would be much valuable to get on partner track.
Also, I feel like this type of experience would give me the opportunity to open up a fundless sponsor somwhere down the road.
Let me know what you guys think!
Thx
First off, there are certainly junior level roles available at most portfolio companies (especially for someone who can model / use excel & powerpoint). The problem is that is not going to be a good launching point to an operating partner role.
Most of these roles are filled by grey hair former executives who cut their teeth at large organizations. You would be better off looking at a rotational program at somewhere like GE or Danaher and then trying to make a move in 10-15 years.
On a final note, there are some junior type operating partner roles at PE funds but they are more like a back office financial analyst. With the main responsibilities being monitoring and valuation work.
Agreed, I don't think that's a great angle of attack, for any party (you, PE shop, portfolio company). The company needs people to help work, and at many of these junior finance workers are exactly what firebi234 said, BO, FP&A / Accounting with Budget work in-between your closing periods. To set up for a hop over the PE shop when an exit comes along, you would have to, on top of the standard networking and being visible to the firm, but you'd have to show that you are competent to do the PE work once you move over. Once the portfolio company sees you trying to do this (instead of the job you were hired to do), you're in a deeper hole than you started in.
How would you view (what kind of potential exit opps) a Corp finance analyst for a PE portfolio company with a job description of half reporting to the PE firm (monthly valuation, fp&a) and half any ad-hoc projects (capital raising, M&A, IPO, etc.)? Seems to me like a hybrid of typical corp finance analyst and corporate development positions
To add a little to the OP question, what about working for a corporate development team for a PE portfolio company? How is that viewed upon by the PE firm?
Well, I don't think the PE portfolio company part really adds much if anything. The real value is the corp dev work and what exactly your responsibilities are and the skills you have acquired. The typical path you see if former PE guys going to corp dev. and not vice versa. But, not sure that it is an impossible move. I have seen people get traction in PE post Bschool (with prior corp dev experience and a summer internship in PE).
For more junior roles, most PE firms tend to favor investment banking analysts (which are sourced by the big head hunting firms). Now, if you can get traction and convince the headhunters that you could be a good fit, I don't think PE funds would throw up on that kind of resume. Key would be to convince them that you can do the junior level work at the fund (mainly modeling, comp work, etc).
While I am not saying it's 100% impossible, I have never seen or heard of someone moving from from an portfolio company to a PE investment team. I work at a fund that is very operationally involved in sort of the lower / mid range of MM PE (our portfolio companies tend to have lean management) and I rarely get exposure to people below the director level. 80% of my interactions (and I am in touch almost daily) is with C-suite execs. I don't see how as a junior person you'd be able to get enough exposure to the PE professionals for them to have any idea of your qualities / potential.
PE is a shrinking industry as you move up the ranks and it's become so competitive that pretty much the only entry points are following a 2-year IBD / MBB stint or straight our of undergrad (almost all post-MBA hires have previous experience so it's not truly an entry point anymore). It's not that PE professionals don't respect or value anyone who has done differently (although there's certainly a part of that), but it's just that there's so many quality candidates with relevant experience that's it's pretty impossible to break in if you fall outside of the traditional path.
100%
Also, as someone else mentioned, operating partners are usually grey-haired, ex-CEOs. There's no such thing as 'partner track' for an operating partner at a lower-MM firm.
But what about inhouse consulting teams at large PE shops?
Thanks for everyone's insight, the role I was being pitched would work directly with the PE Firm MD - so I'm not sure how that dynamic may affect things but I also understand this structure is more of the exception more than the rule
For those interested, here's a report on in-house operating teams at PE firms. I don't remember much as it was quite a while ago that I read it. From what I can remember it makes the point that operating professionals are often much older and more experienced; and PE firms are also struggling a little with how to integrate such professionals into their business model in terms of things like compensation, role/responsibilities, etc.
http://centres.insead.edu/global-private-equity-initiative/research-pub…
Hey, this article is really insightful. Thanks for this!
Operating partners flow from PE firm to Portfolio, not the other way except in rare situations.
Your realistic expectation should be to gain experience in a tough performance focused operating environment. That is what a portfolio company is. That is your argument for your next step up and your reason why you are better that the guy that worked at a bureaucratic, stable growth / shrinking public co.
Never heard of portfolio company employees making transition to PE. As one of the posters mentioned, unless you are part of the executive team, you will probably never interact with the investment team.
What kind of hours are you putting in at your shop if you don't mind me asking? ie: time you get in/out during week vs weekend
thx
Working for Portfolio Company (Originally Posted: 10/14/2016)
I have an interview for a company that is backed by a major energy PE fund (NGP, Encap, First Reserve) - curious if anyone has any experience working in a corporate fiance role for this type of company and how the fact that it's PE back changes things.
For example - I am worried I may not get as much 'finance' experience as I would imagine the associate at the PE fund might do a lot of the modeling and step in when any M&A comes about?
Also - do you generally get much exposure to the PE fund in this type of role?
Any thoughts / experience with this would be appreciated.
Are you working in a general finance role or an M&A role for the portfolio company? If the latter, I assume you'd get some modeling experience from doing add-on acquisitions, but it wouldn't be as robust as what the PE guys are doing for big deals.
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