How to Resign - Senior Level
Are there any best practices with respect to resigning from a fund at a senior level? This would be seen as going to a direct competitor.
Specifically -
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To what extent are you obligated / should you disclose name of the new firm?
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How likely would you get walked out in short order vs an orderly transition (noting that at this level, you are on Boards, etc)
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Any chance of preserving the relationship with folks at the current fund or is that just tough under these circumstances?
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any stories of smooth vs bad transitions out?
TYIA
Full disclosure, I'm just an intern.
I can't give advice to any of the points except for this; make sure that whatever course of action you decide to take you have your things squared away (whatever that might mean for you) for if they decide to escort you out that very moment.
Best of luck.
bro really just gave advice to an MD as a college student
Hey, at least he was upfront about it, rather than claiming to be someone he isn't like a solid 30% of posts here...
Keep it constructive and positive but I don't see any positive coming out of disclosing other fund name yet. Do you need your fund to play ball wrt any vested and/or other economics? For #3 say, would say do your best. I have definitely seen toxic people try to blow up offers etc. which is why I would come up with some soft reason not to disclose new shop
You don’t need to disclose new shop.
Don’t you have a non-compete that you have to comply with if you’re going to a competitor? If you do, then you should comply with that cuz things can get ugly.
Need to study governing state law as non-competes aren't enforceable everywhere. Assuming there will be some garden leave.
delete.
Make sure you have your track record as MD1 all printed even if you anonymize some of the info.
I resigned as a Principal from a MF to go to MM, the second I mentioned it my external email was shut off I lost access to S drive and every data room.
If going to a competitor would be prepared to lose all access the minute you tell them, including Board positions. Make sure you act accordingly. If you have a non-compete or garden leave, in NY it's only enforceable if it's a short period of time and you are being paid for it (in practice they may want to waive it anyway).
Under the current statute don't think you currently need to be paid for it in NY. It just can't cause an "undue hardship" and then time has to be "reasonable". Both very vague, but that is a very expensive lawsuit to get into if you are trying to go against it.
Courts often side with the low-wage employees where a few months of no income would be catastrophic, but for a very highly paid senior finance professional, non-competes have held up in court. That may change as both the FTC and NY dislike noncompetes, but even the NY legislation will likely cap the noncompete ban at $250k so still not relevant for your average finance senior.
Done this myself as well as coached other people through it. Some things:
1 - Expected it to be a negotiated exit. They’ll want you to sign a separation agreement which will supersede any of the existing obligations under your employee handbook, GP Agreement, etc. They’ll want you to agree to a number of things (such as non disparagement, what you can/cannot say for your personal track record, etc.) and you’ll want to leverage this in order to get better terms, including potentially incremental vesting on your carry.
2 - Impossible to say if they will walk you out immediately, but I think it is far less likely. Depending on the size of the firm, they will probably want to work with you on a communication strategy, both internal and to LPs, especially if you are going to a competitor.
3 - Absolutely possible to preserve relationships.
4 - The smooth stories you’ll probably never hear about … not because they don’t happen, but because it was managed well so it isn’t noteworthy. I definitely have blow up stories and smooth stories though.
I’m curious how often 1) has worked in terms of negotiation. So you would bargain for more carry vesting in exchange for signing the separation agreement? Could this backfire if the firm react more negatively to being “held hostage” to the separation agreement being signed? I’m guessing the separation agreement / waiver is more of a CYA for the firm and there’s limited risk to the firm even if you don’t sign?
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