Corporate / Business Development Exits
I'm around 1 year into a PE stint, and am getting a sense that from a work-life balance perspective this is not the job for me long term. I don't anticipate wanting to jump to another PE firm afterwards. Beyond more PE, it seems like a somewhat typical exit afterwards is corporate / business development and strategy roles (and to a lesser extent, project management). For context, I came from consulting.
Has anyone here moved to those roles that can speak to them? I'm trying to get a sense for a) how common these exits are / how accessible these roles might be, b) how does compensation compare, and how is this segmented between base / equity, and c) how day-to-day life compares and if improved WLB is realistic. Any other relevant information would be appreciated.
I would like somewhat comparable pay, but recognize that the improved WLB comes at a cost in pay and would accept that. I'd love a 9-5/9-6 with some greater flexibility overall.
And also, any other exits that are equally good from a WLB perspective would be good to know if the strategy / Corp dev stuff is not the only other common exit.
Vanilla corp dev is a pretty common exit and something that I personally explored. Having a consulting background definitely opens more doors to hybrid strategy/M&A roles as well. You shouldn’t have any issues getting looks although recruiting is more unstructured.
WLB and comp will really vary. If you’re doing M&A for a PE-backed buy and build thesis, 9-5 might be a stretch. In general your hours should be better than PE but a consistent 40-hour work week is tough with any M&A component. Comp makeup will depend on the org’s maturity. For manager-level roles at mid/late stage startups in NYC, I was getting quoted in the $150-$200 range with varying options packages.
Thanks for the response -- super helpful. It sounds like you didn't end up going the Corp Dev route. Why not, and what did you end up going with instead?
It sounds like the options packages are incremental to the $150-200k; would this be in line with what Bass12 quoted (e.g., $1-1.5m over the 3-5 year hold period?) or were you seeing different figures?
I ended up joining a co-investor which offered significantly better hours. The deciding factor was really cash comp and culture. It’s really tough to put a confident value on the options for startups and I would’ve had to have been joining a future unicorn to justify the cash comp ding. I think the outcome below is one end of the spectrum, but there’s a whole other end where your options are underwater. Need to do as much diligence as possible.
I did 2 years of IB and 2 years of PE and am now wrapping up my first year of work for a PortCo of one of the megafunds. I will probably make around ~$230-$250k cash comp this year ($175k base / rest in bonus based on achieving acquired EBITDA M&A target) with cash comp hopefully ramping over next few years with promotions etc., and currently have 1,000,000 incentive units (options) that strike at $1.50 per share (which was the share price at the time they were granted). The company is an industry that was hit particularly hard by COVID, and I think/hope the share price was decently depressed when the options were granted (although like any PE PortCo, the sponsor pulls out all of the stops and PF adjustments when valuing the biz, trust me)
The rough math on the equity piece would be that the options will be worth: (Exit MOIC - Strike Price) * 1M, so at a 3.0x MOIC on the deal, the options would be worth ~$1.5M. We're on track to exit (potentially IPO) in the ~2023 timeframe, and I think there's a good chance we hit north of 3.0x (3.0x case includes a conservative view of exit multiple IMO and we have been way outperforming on acquired EBITDA vs. the underwriting model).
In terms of work life balance, it is definitely better than PE, but not a walk in the park. We do 25-30 acquisitions a year, and I have had plenty of late nights (more than anticipated going in). However, I really like the people that I work with and that makes a huge difference. I have a super flexible vacation schedule and can basically travel freely (within reason) as long as my work is getting done.
If we exit at a 3.0x MOIC in 2023, that would imply ~$750k of average total comp every year (split ~$250k cash / $500k from equity proceeds of $1.5M divided by 3). Takeaway is that cash comp is very mediocre, but the equity component can make roles like this very interesting IMO (so important to place your bets on a good horse in this sense)
Congrats, that sounds like a great role. Much higher equity comp than what I had heard was available after a 2+2.
Roughly how big is the CD team and where do you sit in that hierarchy? Are you the most junior person or do you have significant support below you?
I am second highest ranking (have 1 team lead that I report to) on the corp dev team and have 3 team members below me supporting.
Are you a manager or director?
Very helpful -- thank you for the detail. A few questions, if you don't mind me asking:
Was this one of your previous firms portco's / i.e., did you get plugged in there, or was this found through a headhunter?
I think the vacation schedule flexibility is fantastic -- definitely what I'm looking for. I'm also curious what your title is and what might be typical coming out of a 2 year PE stint. I see "Corp Dev Associate" roles a lot but it seems like Manager level roles are more typical after the typical associate track.
Did Business Dev / Corp Strategy roles ever come up as an option as you were looking? I have to assume comp and WLB here would be optimized particularly at startup-y and tech roles.
No, it was not one of my prior firm's portfolio companies. My prior firm did have a portfolio company in the same industry as my current company, but I did not work directly on that deal, so I was only loosely knowledgeable about the industry going in to the current job.
I got the job through a headhunter, and it probably helped that our group head is friends with some folks that I worked with at my old PE firm. I came on as a Senior Manager (akin to a "Senior Associate" at our company, and will be promoted to Director hopefully by year-end)
Equity comp can obviously vary HUGELY depending on 1) the portfolio company, and 2) the sponsor. At my company, the equity account on the biz is currently in the multi-billion dollar range, so me earning $1-$2 million at close would be a rounding error on the final funds flow and returns calcs for the sponsor.
There would likely be completely different math on a company with a $100M equity check / $25M of EBITDA. However, I'd argue that the risk/return profile is completely different there too. I think it is more plausible to hit outsized returns (4.0x+) on a company of that size vs. a more mature company like mine, so there may be a scenario where a lower $ equity grant gets you to the same place in terms of total equity comp. There's a huge spectrum of risk/reward out there, so you just have to pick your spot
Super insightful comment, thanks for sharing! Since we are in Q4 2023, I'm curious if you could share the outcome. Eg. are you still at the firm/ on-track to exit this year. Wondering how it's all shaking out.
I left under similar experience (a few years IB too is all).I went to strategy and love it.
They also pay 150 bases pretty easily with bonus and stock structure. The hours are not nearly as bad.I highly recommend brotha
Edit: I am at a post LBO PE portco working on side projects and on M&A strategy. My base is 175 and I should hit over 210 if we include all incentives
Where are you located? What do Managers make?
Thanks, man -- good to hear it's going well! How did you find this role / do you have headhunters that you used?
50-60 hours a week is definitely more reasonable. Are crunch times comparable to banking / PE deal times?
How many years of experience total is that for ~$200k?
Oh and hours are 50-60
Following
Does anyone know of any best recruiters to use for these roles? I'm assuming a lot of these positions are filled through headhunters.
Following.. can anyone speak to Comp and work life balance for PE business development roles?
I moved from PE to corp dev at a global energy company and can give you a rough breakdown of what I know about compensation and WLB.
1. The pay is significantly lower. Analyst/senior analyst salary would be about 85k-105k and maybe a 10% bonus (but I know a lot of companies that give even lower for this level). Associate pay is between 130k-160k and about 15-20% bonus depending on the company. Managers can be between 175k-250k (really wide range of what I've seen at this level) and 15-30% bonus. Then at the VP/Head of Corp Dev/SVP level comp can shoot up to 400k+ depending on public/private company (stock options) and incentives for bonuses. In private equity you can hit the manager comp in year 1 as an associate. In perspective of everyday America, it's a very healthy income but for people that are in PE it is definitely a step down for comp.
2. The WLB is night and day different from my experience and from what I have heard from colleagues. It is very common to come in at 9 and leave at 4 in our office. Obviously when there are live deals that need to get pushed across the finish line, there are some later nights. But, in general there are more weeks that our team is working less than 50 hours than weeks we work 60-70. I don't remember a weekend I lost to work (the occasional quick Teams message or email that needs to be sent out though) and vacations are protected except for the occasional email if something goes completely off the rails.
I can honestly say that I'm glad I made the leap into Corp Dev to have time for friends and family again. Does it suck I won't clear $1m in a year because of carry or get massive 6-figure bonuses? Sure. But the money to me wasn't worth missing out on life and straining relationships. The only thing I will caution you on besides the compensation is that once you make that switch to Corp Dev it is very difficult to jump back to PE. Certainly not impossible, but I would only make the lateral once you are certain that you are unhappy in PE and Corp Dev is what you actually want to go into rather than just a different PE firm.
Hi there, this is great.
I'm someone that got an offer for 'commercial development' type role at a large energy generator/retailer. So I suspect role would look a lot into project finance in developing greenfield renewable projects. This is different to the traditional corp dev that one would think/know of.
Q1) What is your day to day modelling like? Is it debt heavy and project-financed?
Q2) I think in a field like infra/energy, it can be possible to go back to a PE-firm, won't be a MF but will be a developer or smaller energy-only type shop. What assets do you guys tend to play in?
Q3) Any areas you needed to upskill or resources?
My role is rather traditional for corp dev where I am evaluating operating companies rather than greenfield developments. My experience and answers to your questions probably won't apply to commercial development (similar to business development not being the same as corp dev) but to your questions:
1. I don't do modeling day to day anymore. I haven't in a long time since I have analysts and associates that do the base modeling. My only functions when it comes to the modeling is to make sure it is flowing correctly and that the assumptions are reasonable. My day to day would be socializing assumptions with the various other VP and SVP's in their respective fields so we can finalize models and feel comfortable with the assumptions plugged in. Since we are one of the largest energy companies in the world we don't do individualized debt for each acquisition, rather we have a line of credit and use a discount rate that our treasury and finance team updates us on according to whatever financing they secure for the overall company.
2. You can certainly go back to PE from corp dev, it just won't be Blackstone or KKR more than likely. Since my team doesn't develop land and exclusively evaluates operating companies there is much more flexibility/optionality to jump back to traditional PE. We tend to invest in alternative energy, fin tech, manufacturing, up/downstream energy companies, etc.. There's a lot of roll-ups that we do for vertical and horizontal integration so we are looking at a lot.
3. Not really based on my background. Just learning a new operating model is always difficult and takes a few months to really understand the ins and outs. At the end of the day financial modeling is (revenue - expenses) and making educated guesses about predicting the future. You'll naturally learn through evaluating dozens of deals what a normal assumption is and what might look out of place so as long as you can build out a model (or just use an existing template at your company) then the rest will come over time.
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