Hi all, 1st year associate at a LMM shop. I originally joined the firm because I was hoping to be in a small and growing firm where career progression would be promising. As of now I plan on being in PE for the longterm. However, recently there have been a couple of mid-level hires as the firm builds out the team. I guess I shouldn't be surprised by this as I step back and think about it, but it makes me concerned that there won't be "enough seats at the table" by the time its all said and done. Any advice on how I should think about head count at partner, VP, etc. going forward to help determine whether or not there's room for me at this firm (or any LMM firm for that matter). Thanks in advance!
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You want a seat at the table? Generate revenue
Talk to the managing partners, understand where they want to be in terms of fund raising for next few funds and broader firm growth initiatives, extrapolate out. No way to understand the situation without you first understanding where the people that matter see the firm going.
Congrats on the role! It sounds like you are somewhere you think you'll be happy in the long-term. As to your question, I wouldn't worry about it at this stage of your career. While it's definitely wise and admirable for you to be thinking about your long-term career, there are so many variables that can result in their being "room" or not. Key drivers such as, i) fundraising ii) new investment strategies (credit, growth equity, go up market, etc) iii) doughnuts and homeruns (what if a bunch of investments blow up both to the upside and downside). When it's all said and done, you can approximate your firm's P&L. How much fees are coming in and the expenses going out. Usually there is always rooms for fee generators. If the firm hits a maturation point where they decide this is the steady-state size of the firm, you can easily calculate if there is an opportunity for you based on the number of people at the firm. However, it seems like your firm is growing and investing in its talent pool, which is a big positive. Again, it sounds like you are in a good spot. Focus on developing your skills as an investor and you'll have plenty of optionality if and when the time comes to evaluate if the partner track is right for you at your current firm.
Makes sense. Thank you!
How large was the firm when you joined and how large is it now? Also, what fund are they raising out of? I think your concern are valid but there are a lot of variables at play here that that can lead to there being room for you at the firm.
Just joined with fund II recently closing. Fund II’s first investment is near a close. Fund I raised ~$200M and fund II raised ~$400M.
Thinking about "seats" is a corporate mindset. Un-learn that. There isn't a set number of seats; seats will be added or deleted to match the number of people who can make money for the firm. Focus on how you can become a valuable senior in PE (ability to source helps) who ever firm wants to hire.
Only works when you have a few of the following ingredients: AUM growth, non-territorial partners, healthy culture. The seats thing does become an issue at many shops. As for culture and the others: the same person can be insanely powerful at one platform and be treated like shit at another.
Fair. And while I think it's fair to say I work in PE (at a family office where I do more LBO work than I want, while trying to focus on public investing) I haven't worked at the traditional PE shop.
I just think with most things, the odds are high that someone who acquires the right ingredients for the senior role is going to end up there. It could take some job moves, some changes to the industry, etc etc. But if I was forced to choose between (i) acquiring the right skills etc, but in a shop with an unfavorable promotion path vs. (ii) doing a lesser job of acquiring those ingredients while in a shop with a clean path, I'd choose the former. Granted every PE person I know is cynical AF and would call me a sucker for saying that.
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