PORTCO IS PARADISE
It’s 2pm on a Saturday and you’re out with your wife for a late lunch. You’re 4 sangrias in and masterfully executing the “2 for me, 1 for you” strategy that you know will lead to a mutually buzzed pre-dinner smash.
Called to the Board Room
Out of the blue you get a text from your CEO, “sponsors want sitdown w/ us next week, concerned abt progress, need 2 put together some pages, can u help?”
You can’t help but draw parallels to when Sonora Cartel lieutenant Manuel Diaz was recalled to Mexico in the movie Sicario. You’ve long thought of yourself as the CIA nerd with glasses who blasts everyone during the border scene, but you’re gracious to be cast as any character (except the girl) in the best movie of all time.
You can appreciate why the meeting has been called, it has been a poor year for the business and no doubt the sponsors are starting to get impatient. Despite the investment coming in March, you’ve only managed to complete 29 acquisitions, and the firm has only triple septubled in size. You pride yourself on defending the shield but even you can agree that is pretty pathetic for 8 months passing.
Building the Deck
You dart back to your apartment and start shelling out the presentation. You’ll be taking a first crack today before hopping on with the rest of the management team to hammer it out tomorrow. You quickly start thinking about your audience and what they might want to see.
Based on what you’ve been hearing from the sponsors:
- Integration is the single most important critical piece of the puzzle (full stop) and also a complete waste of time and resources (fuller stop).
- They prefer sharp, pithy slides that are “too high level” as well as granular detail that is “too in the weeds”.
- The equity incentive plan must be rolled out ASAP. Dilution is not an option, and it has to be SIMPLE. You struggle to understand the latter in relation to the proposed vesting schedule that is time-based on a multiple of lunar fortnights (“MOLF”), but you chalk that up to not recruiting on-cycle all those years ago.
“Somewhere between a 30 and 30,000 ft view?”, you ponder, concerned about how you might position your thought process to management. “It’s a 1,270 ft view, which ties to the height of the skyscraper our sponsor’s NYC office is in”, you’ll later say proudly to the unimpressed group.
Review with Management
With the draft deck in good shape, you eagerly await the Zoom link to come through. You’ve done hundreds of board presentations in the past, so you know exactly what to expect. “Put on another pot of coffee, we’re gonna be here for a while”, you think to yourself. You are surprised when the invite comes through, “30 minutes? WTF, that is not even enough time to thoroughly explain my spider charts”, you say to your uninterested wife.
Alas, you jump on and are greeted by the senior leadership. “Good afternoon!” you say to the Co-CEOs, the 6 presidents, the 3 CFOs, the 5 COOs, and each of their respective Chiefs of Staff (integration has been difficult).
You flash the deck on the screen and are shocked when the scope of review consists entirely of reviewing the 1-page executive summary and assigning speaking roles. “Everything else should be fine, we’ll read through before the meeting but assume no changes. We can voice over everything”, the 32 participants say in a-capella-esque unison.
You’re a little disappointed that you didn’t get direct feedback on your proposal to spice up the acquisition process by using physical cash handed over in Mr. Beast-style-glass-containers, but at least they didn’t make you remove all the Latin phrases you learned in banking (Pari passu et al).
“Working with secure and skilled operators is paradise”, you think to yourself as you exhale and go back to enjoying your weekend.
Presenting to the Board
You look around the room taking stock of those in attendance:
- The “Grey God”, the founder of the fund, a billionaire several times over, the least involved with the most to say. “I wonder if he can go the whole meeting without tweeting – oh a rhyme haha”, you think to yourself.
- To his right, “Bald Brian”, the partner leading the investment and the most arrogant person you’ve ever come across in your life.
- To his right, his most trusted lieutenant, “Camel Ken”, a Principal who you’re still trying to figure out. “This guy is so pale I can see his brain through his skull”, you observe.
Behind them, against the wall, and sitting in chairs pulled in from another conference room is the associate peanut gallery. You haven’t bothered to learn the names of what is a familiar cohort: A tall white kid (nepo), an Asian gal (smart), and blonde gal (hot and also probably nepo but you give a pass). “Maybe after b-school you’ll get a seat at the big dawg table”, you disdainfully think.
You spend the next 2 hours largely zoned out trying to make subtle eye contact with the hot associate but for some reason you only seem to be making progress with the tall one. You’re deep in a fantasy about meeting Bald Brian in the A-gap and truck sticking his goofy ass when you hear Camel Ken shouting “MOIC MOIC MOIC MOIC MOIC”, prompting you to whisper “HUUMMMMPPPP DAAAAAAY” under your breath. “Something to add Mr. Non-Target?”, asks Brian. “Don’t want to belabor the point, just agree we need to be lockstep in determining the art of the possible”, you say.
“’Belabor the point’ AND ‘Lockstep’ AND ‘art of the possible’ in 1-sentence, I’m getting units this year for sure”, you think.
PORTCO IS PARADISE
This is amazing, how do you know my life to the T? Don't forget the fratty PE MD/Director. A fun, bro-type guy who is way less familiar with the numbers/legal docs/processes, and is only brought in to drink with the CEO(s) & talk about college football - so that the CEO(s) don't lose their mind.
Based on the WSO content, here's a detailed breakdown of the scenario described in "PE PortCo is Paradise":
Called to the Board Room
Building the Deck
Review with Management
Presenting to the Board
Attendees:
Meeting Experience:
Summary
This detailed breakdown captures the essence of the scenario described in the WSO content, highlighting the key events, interactions, and outcomes.
Sources: Investment Banking is Paradise, Private Equity is Paradise, Private Equity is Paradise, Zurich is Paradise, FT Partners is Paradise
This was cleverly written -- kudos to the author, made me laugh.
This might be the best one I’ve ever read of these. Fucking hilarious hahaha.
How come when we ask our portcos for stuff over the weekend they just ignore us till Monday lol
The 2 to 1 brunch/lunch drink ratio to afternoon delight is an all time play, bro is handing out game for free
10/10 hope this gets the appreciation it deserves
Hilarious stuff. Am i crazy for trying to move from a 20-30h a week listed FP&A role to a PE Portco one? are they always brutal constant slogs and constant mind numbing decks? here its just doing a few weekly reports (30mins each) and a few monthly reports (maybe 2-3 day work) and a few quarterly ones (again maybe 3-4 days work at most).
I think it largely depends on the PE firm. Have seen someone in my network hate his first portco experience but has been enjoying his second more (or at least it seems, second experience was with a much smaller fund).
would it be the usual suspect PE firms (MFs eg Apollo or that one with the nightmare Healthcare team) that result in massive redundant work? or could one be at a firm owned by a nightmare PE firm for investment associates but otherwise be chill for PortCo? Suspect that in part it would depend on if the PE firm has a portfolio improvement team too and what industry it is in?
just I feel that long term being an interim PE portco FD / Head of FP&A is a great role to sort of semi-retire to (or do e.g. 6 months on / 6 months off) but for that I need actual PE experience/exit cycle etc....
The experience I'm thinking of, yeah - it was a name-brand fund and my contact didn't like their time there despite it being a great resume boost.
Its funny that you mention all that because I'm in talks with a potential PortCo for a manager role where the PE Ops team works directly with the senior management of the company a lot. I'd imagine if I somehow land a role there, WLB will be bad but still a great experience for future roles.
Yeah exit cycles with some equity later in your career can be sweet. I know quite a few SVP / C-Suites that have gotten sweet Portco exits. Some of them have semi-retired at young ages (early 40s).
Depends on both the PEG as well as the fund in which the PortCo is housed. Any of these "value add" or distressed investors will be a nightmare to work for. Expect your boss the CFO to be fired when the business takes a nosedive or becomes obvious it was not a good investment. You will then spend dozens of hours explaining everything and running all sorts of analyses. Having worked at two separate PE PortCos, my advice would be to pursue this path as it is fairly rewarding, but do a really good job interviewing the PortCo just as much as their interview you.
thanks for the insight.
any particular advice / suggestions for not so obvious questions to ask?
e.g. i assume would be good to understand how involved PE is / how frequent ad-hoc analysis requests from them are / how much they direct decision making and spring it upon the company etc but what are some other questions to ask?
Many thanks!
You have some good ideas for questions. PEGs are generally aware of how other PEGs manage their PortCos, so the PEGs that are more hands-off like to advertise that as its something that potential hires want. Ask the PEG what their PortCo M&A approval process is and when the PEG gets involved. If the answer mentions anything like weekly status meetings, deep dives into pipeline, etc., that is a red flag. Ideally, your CEO should be having a weekly 1:1 meeting with the PEG's MD or partner to run through everything from PortCo ops to HR to M&A and be able to get a quick verbal approval for anything pre-LOI that way. Other questions might include how involved you would be from a modeling standpoint, what post-acquisition integration is like, who the main touchpoints during an M&A process are, etc. Ideally, you want to be working together with the PE associate on the model and be able to lead integration and any third party vendor (i.e., auditors and environmental consultants) during the M&A process. You could also ask the PEG how they staff M&A deals. Ideally, the PEG would tell you that their associate runs everything day-to-day with moderate input from the VP and minimal (if any) input from the MD or partner. The PEG should also tell you how involved you will be at this point. A good response would be the PEG highlighting how the PEG will be a resource if you need them, but that you would be the quarterbacking most of the process.
Chairs from another conference room for associates is very on point
Respectfully have to disagree. Sicario not even a top 3 Villeneuve film. Arrival, Enemy, and Prisoners all better.
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