Crossroads: Did I Screw Up by Leaving PE?
I’m at a career crossroads and would appreciate perspectives from people who’ve made or observed similar moves.
For background, I spent three years in PE with good deal experience and then moved into a CoS role at a PortCo in a sector I find interesting. I’m coming up on about a year in the role (MBA is off the table).
There are aspects of the operator side I genuinely enjoy: wearing multiple hats, focusing on leadership rather than just investment logic, helping build something instead of underwriting, and a sense that what we are doing creates something for society. I’ve learned a lot about how businesses actually run and what it really takes to reposition / change a company. I also have had time to rebuild my hobbies and decompress a bit.
That said, I’m increasingly unsure whether this was the right long-term move. I took roughly a 50% cut in cash compensation. I do have meaningful equity that could be worth ~$600–700k at exit in the next 1-2 years, but that outcome is super uncertain. The longer-term path is also unclear. CoS role is inherently temporary, I don’t yet have a clear view on what my internal exit would be, and progression toward a C-suite seat is unpredictable, not guaranteed, and can take a lot of time.
Before taking this role, I passed on a PE VP seat because I wasn’t convinced PE was right for me long term. I still have reservations about the industry (lifestyle / culture, structural headwinds, skill transferability), but PE offers clearer progression, higher cash compensation, and a level of security that I’m definitely missing (marriage and starting a family are increasingly on my mind). I also believe that if I returned to PE, my operating experience would be highly valuable.
So basically I feel stuck between two imperfect options:
(1) Stay on the operator path with good WLB integration but a shit load of uncertainty around financial outcome and progression
(2) Return to PE path with stronger cash compensation and predictability. I also know this door won't remain open forever so there is a bit of clock ticking.
For those with more experience watching careers evolve, I’d appreciate your perspective on what you think the right path forward might be
Somewhat similar situation here - 4 years IB, 1 year PE, then CoS at a late-stage startup, then tried starting my own business. Also thinking about marriage and children.
For starters I'd figure out what kind of PE role you'd want if you did go back (title, fund size, geo, upward mobility, LBO or something growthier etc.) and market-check your possibility of getting back in. The lateral market is pretty tough right now and the outlook for PE is seeming less and less rosy. It sounds like you're considering PE for the comp and stability, so would make sure those are still on the table before weighing other options.
In my experience, most CoS "graduate" into ops or finance. Depends on the background and skillset - ex-IB buddy went directly CoS -> COO at a small startup, ex-HF former colleague was insanely good at analytics and created a revops team from scratch then led it, have seen many post-IB exits go into finance / strategy roles. Most likely you'll be a Director or VP and work towards CFO or COO. Is this something you could see yourself doing? It sounds like you enjoy the work itself more than you did in PE.
Your growth would come from increasingly better opportunities with better economics. Like as a CFO, a strong track record (improving financial discipline, growth, access to capital / relationships, M&A, exits, etc.), will get you looks from larger, better-paying companies and PE portcos with stronger outcome-based comp. But to echo your point, these outcomes are variable and you could stagnate at similarly-sized companies with similar economics even if you personally do a good job. I've seen several people grow or recruit into C-level roles after spending 3-4 years as VP, but they were career corporate employees not CoS graduates.
My opinion (and take this with a grain of salt) is that PE is ultimately the better path unless you are much more passionate about corporate work and 100% okay with the pay C-level offers. Comparing the C-levels when I was CoS to partners at my fund, both had roughly similar workloads with similar amounts of stress, similar always-on expectations, and similar overall WLB. But the outcomes for C-level were typically worse and with far more concentrated risk - performance of one company vs. fund-level carry or co-invest. Climbing the ladder is arguably harder in PE since there are fewer spots and more competition, but the path is more straightforward.
Based on the most helpful WSO content, your situation reflects a common dilemma faced by professionals transitioning between PE and operator roles. Here are some key insights to help you evaluate your options:
1. Operator Path: Pros and Cons
2. Returning to PE: Pros and Cons
3. Key Considerations for Your Decision
4. Actionable Advice
Ultimately, there’s no perfect answer, but aligning your decision with your long-term goals and personal priorities will help you move forward with confidence.
Sources: Private Equity Operations / Portfolio Career Path, Would you leave in this situation?, Private Equity or Pizza Equity?, Private Equity or Pizza Equity?
bump
I’m a 2nd YR ASO with $190k total comp in HCOL (4.5 YoE) and I’m thinking of making the opposite jump for the opposite reason.
Great school + top EB / BB, just got into the role late from banking and wanted to make the switch into investing hence taking role with lower comp.
Now that I’ve been investing for 2 years, if I leave High Finance, I don’t need to sit around years longer because I have enough branding (only gets incrementally better, opportunity cost increases). So instead of getting promo to Sr Aso now (I thought I’d get promo in 2 years doing a good job) im feeling it may take a 3rd year even though I’m doing a great job because I have no leverage and I’ll have to just sit in a bad position long.
Hard to lateral though I would for higher comp. A good CoS role can turn into a lot of downstream opps from the operator perspective if the company outcomes are good at least
Honestly, the lower comp in your current role is kind of an asset. The hardest part of this transition has been the psychological aspects of taking a big paycut and losing some of the stability that comes with it. If you don't have that piece to deal with because you're undercomped / not many responsibilities / expectations of those around you, you may have an easier time with the adjustment than I am.
Also, if you've been on linear, structured track / path since you were a sophomore in college to get an internship in banking (imagine close to ~8 years for you) or potentially even earlier if you had to grind through highschool to get into your undergrad, it is a big adjustment to step out of that game. For me it has taken a lot of mental preparation and self management to get comfortable with the change (and I am still struggling with it tbh). To your point, there are a lot of interesting downstreams opportunities that could emerge, but they are definitely not laid out like a simple Assoc -> VP -> Principal -> Partner -> MP ladder climb you can get in your head.
Navigating this world (likely) requires a very different mindset than the one that got you to where you are today
And the exact reasons why I’ve been prepping / have mentally already made the decision I think
I have no view on CoS roles but PE fucking blows
Which industry/region are you in? What is the comp like - cash and equity? How large a portco? Everyone on this board is complaining about carry not paying out - isn’t it nice to have more visibility on and control over your portco equity?
Honest opinion - a good CoS interviews very well with many exit options while PE VPs are a dime a dozen.
There are great PE VPs but the title alone doesn’t signify value or competence because it’s been flooded with those who self select for clear progression and minimal risk. Those with hunger and drive and deep desire to outperform have been drowned out by the noise. Can’t fault anyone for it though because MFs don’t need to outperform, and accumulating AUM just means making PE a replicable low return sausage factory.
In other words, if you show up as a CoS at an interesting business that has challenges and opportunities, and can clearly demonstrate an understanding of the problem you were tapped to resolve, how you improved outcomes and where you could have done more with better resources, or where the C suite was wrong and ineffective, that’s really impressive. People want a CoS because they need a second pair of eyes on management, and you also want to slot in someone that has the potential to develop. It is a great role because you can channel the CEO and access and learn throughout the organization in theory, and you’re basically closer to the top in career terms and have more control over it. You can ensure your next job is as CEO/CFO as long as you are flexible on the company and size for example. As a PE VP you can aspire to Partner but there’s just a lot of competition
The average VP interview - one has to expect much less and therefore it’s just less engaging and exciting for me. It just isn’t really special to hear about the eighth auction run by some bank with standard DD materials and standard process and standard grinding to deadlines and where you won by justifying overpaying with some generic value creation plan (or lost because you are “disciplined”)
Besides, there’s much more upside and it comes much more quickly if you find the right setup. For example - leverage your insight into an interesting industry to form a platform or roll-up. Raise your own money for the first two tiny acquisitions - all of a sudden you are selling equity at a platform P/E multiple to buy pieces at a deep discount. Maybe that’s 50% ownership retained, not a fraction of 20% carry.
Really appreciate this response. I’m in a middle America (Austin / Dallas / Chicago) market now and the speed and mindset are a little different. Company size is in the $40-55M EBITDA range. Cash comp is a little over 200 and the equity could land somewhere in the 600-700K range but timing and quantum are super unclear (could be 6-7 months or 2-3 years). That’s part of the tension for me since the annualized comp swings a lot.
What’s also been tough is that I don’t get the sense most people in PE think about this the way you do. In my experience any deviation from the clean PE path gets viewed as failure or as someone who couldn’t hack it. You don’t get credit for the very real (and honestly pretty differentiated) experience of working in the trenches where economic value is actually created. Instead i get the sense this path gets viewed with skepticism. It drives me crazy because (1) this is the most differentiated experience I’ve had in my career and (2) most PE firms love to talk about how “operational” they are but get squirrelly when an IP steps off the traditional ladder to build those capabilities in a real way.
Ultimately, the skillset / insights im gaining from this experience are only (externally) valuable to the extent I can monetize them. That monetization pathway just may not be the traditional PE channel. To your point, I do see the opportunity to turn this into something bigger and more entrepreneurial down the line which honestly feels more interesting. It’s just the first time in my career that I feel like I have to close a door that I spent ten plus years grinding toward and move towards something a hell of a lot more uncertain without all of the external validation I grew accustomed to. That part is hard.
Posted about CoS above. Partner has a great take and sounds like someone I'd like to work with. But totally agree that most people don't view it this way. My CoS experience in sales, ops, and product was arguably more helpful for understanding a business than a few more years of modeling and writing IC memos. But because it's not PE, recruiters and PE professionals instinctively view it as churning out / failing / no longer being good enough.
In my experience so far, recruiting back in through headhunters is pretty much closed. Like I've straight up had headhunters decline a catch-up call because they have nothing for me. My network has certainly been more sympathetic and open, but finding someone who's hiring has been a shot in the dark.
Definitely recommend some self-reflection before considering entrepreneurship. Not saying you shouldn't do it and a lot of people go from careers to being successful entrepreneurs. But there's a lot of selection bias out there. People like to show off their successes and share how being an entrepreneur is freeing and flexible. But fewer people will share the impact on their career and financial situation, personal and relationship stress, long-term outlook, and what happens if your company fails. Ultimately it depends on your personal / family situation, risk tolerance, relationship with money, and long-term goals. But if you have doubts that maybe the sacrifices aren't for you, or that your values don't align with being an entrepreneur, that's worth listening to.
It’s never easy, but a conventional path will get you a conventional outcome. Very few of the PE billionaires worked their own way slowly up in an established megafund.
Mostly you either have to start your own firm or at least a new strategy/fund. It takes decades long cycles to establish yourself first as a cog in the machine and then again as your own wannabe machine. That won’t happen without a very differentiated strategy or approach and a supporting macro environment which isn’t there today.
If you enjoy the job, push hard to get to a portco exit. Make sure all of your bosses up to the board and shareholders know you made it your life’s mission and delivered it for them.
Your next role then isn’t an attempt to lateral back into some range bound VP role through some clueless recruiter that has a hammer and only looks for nails. It’s as CEO or COO. Mark you up immediately to a different level. The next PE deal you do is one that you lead as founder of a platform that is so compelling tou have your choice of PE firms to work with. That’s the shortcut if you execute well.
If you really want to go back into PE, another option - a growing firm also has need for a CoS. Shadow the Managing Partner and become management. Not every firm founder is an investor or a marketer. Someone has to run the business of PE itself and that’s usually deserving of a nice chunk of the GP.
In short, you frankly sound too intelligent to care what other people think. Let the Lemmings aspire to Lemming things
First off, congratulations on your success so far - based on your story, I have no doubt you’ll be successful whichever path you choose.
My path was similar, but slightly different - I pivoted from a Chief of Staff role into a PE Associate role early in my career. As you know, the work in a CoS role is fundamentally different from what you do in private equity. And if you ultimately want to pursue the entrepreneurial route, I can tell you firsthand (having been involved in a few ventures myself) that the skill set required there is different again. That said, I’ve found that both my PE and CoS experience meaningfully shaped, in different ways, my approach/mindset around building businesses.
On whether CoS is “looked down upon,” I think it largely depends on the firms you’re targeting. Megafunds tend to favor very traditional, linear career paths. I don’t necessarily agree with that mindset, but that's not my war to fight! At the LMM/MM level, though, I don’t think it’s nearly as big of an issue as people fear. In fact, as you progress in PE, which I'm sure you know, sourcing and relationship-building become core drivers of value. In my experience, my CoS background gave me a a bit of a unique edge there. Founders and CEOs tend to respect former operators because they’ve lived the challenges firsthand. There’s a level of nuance that can be quite difficult to replicate if you’ve only seen the business from a pure finance lens and haven’t actually been in the seat.
I’m not sure this fully answers your question, but hopefully it adds some perspective - and eases any concern that a CoS stint is universally viewed as a negative. Happy to chat through any follow-up questions!
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