Former PE Fund Accountant & Currently a Fractional CFO for Family Offices. What is barring me from becoming a competent GP of a PE Fund?
I've observed so much work that's done in finance that is just seems to be a big illusion of complexity, exception being the stuff that some Quant HFs work on. Most stuff I see in PE is ratio analysis and deal terms and structures as being the most "technical components" of PE, of which the 80th percentile of accounting student graduates nationally are more than capable of understanding.
I don't see anything in PE that a reasonably intelligent person with a high-achieving accounting education and professional background with an interest in PE can't learn or understand. Help me understand, in the most clear terms possible, which pieces of the PE puzzle I'm missing here.
Charisma and emotional intelligence. Getting people to trust you is an enormous part of the game
That's interesting. Nothing else? I was hoping to get an answer like unfamiliarity with Cap tables or some mysterious series of concepts that a nontraditional GP would be tripped up by?
Additionally, in PE management circles are we accountants really considered to be severely lacking in the charisma department?
Clearest terms possible - Accountants do not understand business “operationally”. I worked in B4 and there was 0, and I mean 0, industry/operationally driven workflows/learning opportunities outside of a strictly regulatory accounting lens. I would take a coverage An1 at any MM over my old firms senior managers when it comes to industry knowledge.
That does not address the “ability to learn” comment. I chose to study accounting (mistake). Looking at my accounting cohort and the cohort that ended up in IB, they are not comparable, looking at average intelligence, grind and personality. Sure accountants could learn everything, but they 1. chose not too (myself at 1 point in time) and 2. Won’t get to during normal course of business unless it is diligently made a point to do so. Coming from an accounting background, making it to IB then PE, i would 1000x chose the average IB candidate over a rockstar B4 candidate.
This is just my opinion / experiences, I’m sure this isn’t totally consensus but feel like my own experience is pretty potent for this debate
Side note - it is way more technical and complicated then you are making it out to be. Whoever’s diligence is “ratio analysis” is a bottom quartile GP
Interesting perspective. How long were you a) in B4 and b) accounting in total ?
The fact that you think knowing the “technical components” is all you need to be good GP in PE is a perfect example of why an accountant like you definitely should not be an investor. That is like saying “I know how to draw straight lines super well why doesn’t that make me well equipped to be an architect”.
Not saying PE is rocket science or that someone can’t pick it up but this is a laughable take.
Learning Opportunity: It's always in your best interests to lead with inquiry when things seem ridiculous or "laughable". You only get further entertainment or enlightened...to a new perspective.
1. Soft skills are a requisite for leadership in every field, even in accounting, hence not the focus of my post. To say that I'm implying that hard/technical skills are the primary component necessary to GP success would be a fair but wrong assumption, but to say I'm implying it's the only necessary component (which you did), is malicious or intellectually negligent on your part.
2. You don't become or succeed as a fractional CFO for HNWIs without having the requisite soft skills mentioned in #1
3. As a mild caveat to #1, there can be unique conventions as it relates to "Soft skills" in PE, which is why I left some room for this possibility in the body of my post (see "pieces of the PE Puzzle")
4. You're clearly young, insecure and confused with little experiences to share because you're clearly lacking there (otherwise you would have offered them); all you have is raw and unrefined ambition. You should shut up unless you have something useful to offer.
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