Doing BD/sourcing work under the table for a firm I used to work for since my current job is slow, and absolutely love it I think its so fun and I get a commission. For now I don't want to spend money to get into paid events but figured if you're at a PE firm doing sourcing would they give you a budget to take prospects out for lunch and attend fancy events? Feel like that makes perfect sense given MD's spend a lot of money to source deals and capital.
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Based on the most helpful WSO content, yes, many Private Equity (PE) firms do allocate budgets for sourcing activities, especially for roles focused on business development (BD) and deal sourcing. The extent of the budget and its use can vary depending on the firm and its culture. Here's what you should know:
Sourcing Budgets for Events and Networking:
PE firms often provide budgets for attending conferences, networking events, and other industry gatherings. These events are seen as valuable opportunities to build relationships and source off-market deals. Some firms even cover travel and accommodation costs for prominent conferences, as these are considered strategic investments.
Taking Prospects Out:
It's common for PE professionals to have expense accounts or budgets to take prospects (e.g., business owners, intermediaries, or bankers) out for lunches, dinners, or other informal meetings. This is part of relationship-building, which is critical in sourcing deals.
MDs and Sourcing Costs:
As you mentioned, Managing Directors (MDs) often spend significant amounts on sourcing deals and capital. This includes entertaining prospects, attending high-profile events, and even hosting exclusive programming to attract potential partners or targets.
Flexibility in Smaller Firms:
In smaller or less structured firms, sourcing budgets might be less formalized, but professionals are often reimbursed for reasonable expenses related to deal sourcing. If you're doing BD work under the table, you might want to discuss a potential budget if you transition into a formal role.
If you're enjoying sourcing and considering a career in PE, this could be a great opportunity to explore further. Sourcing is a critical skill in PE, and as noted in WSO threads, the ability to source off-market deal flow is one of the key factors that can propel your career in the industry.
Sources: Why The Hate on Sourcing?, What separates the good from the great in Private Equity?, Is this a stupid idea? Leaving PE?, HF to PE post-MBA - my story and seeking advice (long-time poster)!, Private Equity Recruiting Walkthrough – My Experience
MM / LMM UK - get told to “get results” and “just get contacting”.
Like what incentive is there for any founder / owner / mgmt team.
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