PCA & Secondaries - thoughts on industry & exits?
Hi all, I am current in process for one of the big PCA teams (EVR/JEF/LAZ/PJT). I have personally found secondaries to be a fairly interesting space, but I’m a little worried about whether I can see myself stay long term, and how much upward opportunity exists in the market. I do have to preface that currently I am looking more towards LP led rather than GP led.
People more familiar with the space, how do you see the space moving? Do you think that there will be a lot of opportunity to be found here? I know exit ops are fairly slim (to secondaries PE) but was curious to see the outlook in staying in this vertical. Also curious how staying might impact B-school chances.
Based on the most helpful WSO content, the secondaries market is a fast-growing industry with immense upside in the long term. As Limited Partners (LPs) and General Partners (GPs) become more sophisticated with different liquidity solutions, the growth of secondaries is expected to outpace Private Equity (PE) in general. In terms of exit opportunities, it's been observed that many associates coming out of secondaries programs often stay within the industry, as secondaries itself is a significant exit opportunity. However, there are also paths to asset management or allocator roles, and some smaller corporate development roles. As for the impact on B-school chances, it's not explicitly mentioned in the context, but generally, experience in a growing and complex field like secondaries could be seen as valuable by business schools. Lastly, it's worth noting that some secondaries investors move to intermediary roles, where the pay may be better, although it might be challenging to move back to the investment side. Remember, the industry is evolving and there's a lot of potential, but it's also important to consider your personal career goals and interests.
Sources: Secondaries Comp / Culture in 2023
congrats on JEF
I worked in secondaries advisory (PJT) before going buyside. I highly recommend against it: 1) there is very little intellectually stimulating work, mostly emails and process banking stuff related to syndication, 2) while the industry is growing, you're not able to benefit from the tailwinds as a junior - which is why I would going into secondaries private equity or traditional M&A IB and then doing secondaries buyside, 3) no modeling which leads to the limited exits since modeling is key for buyout seats 4) and an environment where analysts really have to drink the Kool-Aid about secondaries being the greatest thing since the LBO.
As it relates to LP-leds, a lot of this is true. GP-leds can get pretty complex and in my opinion can be very intellectually stimulating. There’s definitely a certain level of modeling required in GP-leds but not to the extent that there is in direct PE (which to some is a good thing). In any case, whether you’re on the LP-led or GP-led side, exits are very much within secondaries/FoF and I wouldn’t recommend it as a first role out of undergrad. I wouldn’t go so far as to say you would be pigeon holed but you’d be fighting an uphill battle to start in secondaries. That said, in my biased opinion, if you find the space interesting it’s a great place to build a career in. Market tends to remain steady through economic cycles, a lot of room for growth, generally good WLB and can make a very solid living buyside or sell side.
But how then did you do your pitch deck / CIM at PJT? Don't you have to analyze the companies and pick up the pointers for putting into your slide deck and maybe project financials as well?
I remember reading an AMA on here from a secondaries guy on the buyside. His job didn’t sound as interesting as traditional PE, but he was making some pretty fantastic money. See if you can dig up that old thread
Very good thread… it’s Q&A: Secondaries Principal or something like that. Confirmed for me a lot of the reasons why I wanted to work in secondaries.
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