I am looking for advice towards the end of a 2 year associate program. The firm is a small LMM, but they are having difficulty raising a new fund which creates the most uncertainty. There is still hope for the new fund though after some exits hopefully create some fundraising momentum. They have offered to extend for a 3rd year at same title/comp but can’t really make any promises beyond that. They have indicated that if the fund is raised then would be able to buy into the management commitment to the fund and get a proportional allocation of the carry. Generally like the group and strategy and would like to stay in the sector they focus. About 4-5 months until the completion of 2 years. How should this situation be approached? Should stick it out for the hope of new fund or start looking around? If need to start looking around then when should kick that process off? Do you need to engage headhunters or what is the best way to do that?
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Take 3rd year….
Is it that obvious? Want to elaborate at all?
You can leave during or before the third year but you can’t stay on if you decline. Take the third year and start having conversations
Yes, agree on accepting the third year but should you start recruiting before it even starts or how long should you wait? Obviously would like to collect bonus for this year in the ideal case
I’d definitely take the third year. Regardless of what happens with the fund, you need time. Right now the recruiting market is pretty darn atrocious and the last thing you want is to be recruiting on a 4-5 month timeline only to find yourself unemployed in January. The optimal outcome would be to find a new fund but the risk/reward just isn’t there for you at the moment.
Alternatively, you can consider asking to extend to next summer and asked to be paid a ‘stub bonus’ at the end of June for Jan-Jun. They should be amenable to this because if they want to hire a replacement for you, most of the talent in the market becomes available in the summer. Will be much easier to seamlessly replace you next summer as opposed to the following January. Likewise, there should be more Senior Associate type opportunities available in the summer than January, although this is a tricky position to recruit for. A lot of people in your position these days have had to restart as either a brand new associate or step back one year when changing funds. It’s not a great outcome but if it preserves your position in the industry and enables you to ride out the bad market, you’ll be VERY happy you did it. The alternative of getting blown out of the industry due to bad market conditions is much, much worse.
Yes, I think it makes sense to obviously take the 3rd year because it’s just better to have a job vs not. What do you think the timing for planning around the fund should be though? It sounds like the cadence should be just to put head down until end of year/bonus hits and then immediately start trying to recruit for a new fund targeting summer.
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