Exiting at more senior levels
Any advice from more experienced members for those of us with noncompetes but looking to lateral at the VP+ level? Tough spot to be in as I worry if I ask to negotiate exit, I’m basically getting kicked out on the spot with nothing lined up, which can be tough sledding recruiting. On the other hand if I just go recruit and line something up, I could be successful but lose all my vested carry.
I would think your peace of mind is more important than your foregone vested carry here. You can always make that money back. But much harder process to regain all lost sanity.
Yes, but the lost sanity is a sunk cost, unfortunately. I’m hoping there is a way to keep both the carry and find a better fit.
I’ve really only seen this work where the firm that hires you “makes you whole” (with one exception). The incentive here is not on your current firm (why would they cash out your carry?) but on the firm that wants to hire you. Obviously, the more carry you have, the harder hire you’ll be, but at the senior levels this is expected. Firms are willing to put up big $$ for senior hires, but they’ll structure it in a way that pays over time so you don’t just leave after a year. This is something you should be upfront about as you get further along in an interview process so no one is surprised (and you don’t get an offer way below what you’d accept). The one time I’ve seen the current firm help cover some of it is when they asked the employee to stay longer (6 months+) when they were talking about wanting to move on to something else.
Seen a couple of versions in MM.
For partners who leave, there is often a negotiation as the PE fund has to consider the negative impact to LPs of senior people leaving. This will usually involve extended time on the side lines as the concern is beyond deal flow, it’s poaching people and investors.
For VP level, people sit on the side line as the vested carry is worth more than 6-12 months of forgone income.
Do firms always cancel or buyback your vested carry (at cost) when you leave for another PE fund? Do some firms let you keep the vested portion?
Usually comes down to good leaver / bad leaver provisions. If you are a good leaver then you get paid out your vested carry when everyone else gets their carry.
How much vested carry? How much DAW? Ballpark. Also MF or MM?
Talk to headhunters on this one - preferably ones that reach out with VP level positions at decent shops. They have seen it all and also know how to deal with communication on this issue.
The headhunters that rep top shops during on-cycle aren't always the ones that are the best for mid-level recruiting, at least on the special sits / distressed side.
Other question - what do people at more senior levels do when they leave if not lateral? Embarrassed to admit I followed the preset path, have been at it for a while, and still have no idea what I actually want to do with my life other than “not this”…
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