Co-Invest -- Long Term Outlook, Comp, Career Progression?
Anyone have a take on this? Current burnt out PE VP here seriously considering going the co-invest route. Hard to get any concrete info but anyone in the space have a sense for lifestyle, comp potential, attractiveness of the asset class and long term outlook? Any thoughts would be appreciated.
Bump - have been in the space for about a year but unsure if it was a smart move.
What do you mean by coinvest?
I don't have tremendous experience. I brought major LP names in as co-investors to a deal for the first time, and I have one classmate I still speak to who's in this role.
Compensation is a step down from flagship direct private equity. I have only one data point, but it's about a 30% haircut to brand-name buyout on base and bonus. I don't know his carry figure.
Lifestyle seems significantly lower stress. I wasn't dealing with OTPP / OMERS or the few other names known to run tougher hours for junior teams by being complete volume players, but I was not seeing emails after 10pm or on weekends. And my classmate has side projects and investments he spends time on, as well as family stuff.
Any comments on the long-term outlook would be complete conjecture. I don't think the function is ever going to go away, so it's not like you have to worry about the seat drying up if that's your question. There are always GPs and fundless sponsors looking to bring equity capital into a deal. There are increasingly successful and active advisory franchises catering to both sides of this market. I think it's a straightforward proposition: you get to do continue practicing a very 'high finance' skill-set and day-to-day experience, but with a notable reduction in intensity and the commensurate step-down in compensation as a result.
I admit this is complete anecdata, but I hope it's helpful.
Any thought on being a career LP? It seems the comp would be a bit lower but also the stress. Any idea what the comp expectation is at senior associate/VP level. Thank you.
A much easier role at senior level, in my opinion. You primarily have to spend your time on portfolio allocation and internal investment committee discussions. Little to no active deal sourcing: existing GP relationships will make up for +80% of co-investment deal flow. You rarely have a board seat. Too small an equity check to have a say in operational decisions. It would simplify life a lot for you, for sure.
I made the move to a co-invest role after being burnt out as an Associate in LMM PE. Can’t speak to the VP and up levels but from my pov, the lifestyle looks great other than the comp discount. Putting together IC decks and financial modeling is all handled by Analysts/Associates. Senior team is mainly handling portfolio allocation, managing processes, sourcing, ad-Hoc fundraising requests, etc. When I made the move from a direct shop, the pay cut wasn’t as much as I anticipated and the workload was significantly less. Typical hours are 8am-7pm, sometimes even earlier, and that’s even better for senior team.
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