How easy is it to make a lateral move to larger funds?
If I'm currently at a $500MM - $1Bn buyout fund with a total $2Bn AUM, how easy is it to move to a $1Bn+ fund? For more context, I'm planning to stay until I get promoted to senior associate at my current fund, then lateral to a bigger fund. I didn't go to any target or semi-target and did my IB analyst stint at a MM firm (STRH/PS/RJ). My current fund is performing well and employs a operational intensive strategy. We're heavily focused on value creation through operational improvement and will typically get into very operational-intensive deals. Mainly focus on industrial companies that have an operational improvement angle to it. Think of it as a smaller version of KPS. Comp is around $280k all-in with great culture and WLB. I have a good chance of promoting to senior associate and beyond, but I always want to be at a larger firm and see how things get done at that level. How easy is the move, and what should I expect as all in comp at a $1Bn - $5Bn pure buyout fund at the senior associate level?
I made a similar move (very operationally intensive LMM fund to $10Bn+ UMM fund). It’s a difficult move — there are a ton of associates at MF/UMM funds gunning for those same seats, so it’s tough to even get an interview. I was also formerly at a BB which made the story a little easier (as I’d previously worked on deals of that size). Here are some general thoughts:
- Your story is KEY. The first step is convincing recruiters to even include your resume in the process (or push your name when they’re reviewing the list) and then convincing the fund you’re serious. You need to be very thoughtful and specific about why being at a larger fund is right for you and worth leaving what looks to be a good seat already
- Work your network early. You should hopefully have at least a handful of alumni you can reach out to at your target funds from your undergrad and/or bank. Reach out to them before speaking with recruiters. This will both help you with your story and give you a warm contact if/when their fund recruits to ensure you at least get a first round. Former MDs can also be really helpful if you have a strong relationship with them and they know xyz fund particularly well
- Be sure you want to make the move. Having transitioned over myself, I can say I’m happier for the most part but it is a very different experience. It’s nice not to have to deal with the messiness of LMM companies and the comp is great, but I also miss really tinkering with small businesses and getting to know management teams (no matter how rough around the edges they are). The work feels distinctly more financial and in ways feels closer to what I was doing at a BB than in LMM PE.
Out of curiosity what was the comp package at your LMM and now at the UMM?
If I'm at a Falfarrus/ Middleground / Sole Source type fund right now with top returns think ~30% IRR, does it make sense to move up? And how hard is that? Unfortunately, I have pure MM experience but could easily make move to EB/BB if I want to. Is it just easier join a EB/BB and recruit from there as associate?
Don't think a move makes sense unless you are undercompensated and cant see yourself getting promoted
There's definitely path for promotion but I thought moving to UMM would give me more credential and better pay. For reference, I'm expecting around $280k all in right now.
I would stay put honestly. Why go somewhere with worse hours and worse returns?
Saying this as a MF associate.
much higher comp ceiling in the future when you rise the ranks? can't imagine the LMM fund can compete in that regard.
Sounds like you're at a great spot, how would you characterize your good WLB? At a similar sized fund / AUM with total comp ~260k and working +/- 65 hours/week excluding non-deal sprints, feels a bit more on the grindy side still.
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