I love PE but I don't like making deals – help? | Non IP roles in PE
I need your advice.
I attended top-tier business school and have done a couple of internships at well-performing PE funds, both Large Cap and smaller/more family-owned focused investments, and recently started a full-time position at a firm. I have always been drawn to PE because of the active ownership, a nice mix of numbers and qualitative assessment, being a somewhat people-oriented industry.
Now to my issue. I started off my career in M&A / IB. I didn't enjoy it very much which I thought was due to lacking work/life balance (or very unpredictable nature of work) and that I missed the owner perspective. I simply didn't like pitching a company and believing in it and then just sell it to someone. Naturally I assumed once I get in to PE I will enjoy my work.
Now after working in PE for a while (less than a year), I love everything about portfolio company management, proactively looking for new platform investments, screening industries/companies, exposure to macroeconomics, etc etc. But, being at a smaller fund, we carry out add-on acquisitions ourselves (i.e. our portfolio companies typically do not have their own M&A teams). And... I hate it. I hate the uncertainty of a deal (working weekend and during vacations) and it makes me feel like I'm back in M&A IB.
So to my question – what is a role in PE where I do not do deals? Does it exist? Is it about the firm's add-on strategy? I have been thinking about capital raising / investor relations, but I have also looked into non-PE investment companies (e.g. hedgefunds, equity funds).
Bump
I think this is something you would've wanted to explore during business school... unsure why you would work in PE after doing internships and knowing you literally don't like one of the core aspects of PE which is doing deals. I will add though that at the junior levels (Asso/VP) yeah its a lot of deal work and it sucks but as you climb the ladder while the deal aspect doesn't go away the uncertainty aspect certainly changes as you (MD/partner) have say in the flow and intensity of the work.
Based on your interest (investments, screen industries/companies) I would say you should look into either I) VC/GE or II) Public Equities.
For VC/GE you will still be doing deals but deal processes are generally less structured/intense so you can focus a lot more on new platform investments, research, etc. While for VC/GE you probably won't have the portfolio company management exposure as much as PE you will still have the opportunity to work on your portcos.
For public equities, it eliminates the entire portfolio company management but keeps the research/sourcing theme that you enjoy. However, mind you as you are aware public investing is very different from private investing so that in itself may not be your cup of tea
Very unrelated idea... what about equity research or related industries (AM, HF)? Lots of digging into companies, idea generation, macro outlook, etc. Your hours are also very predictable - you might have bad ("bad" = 70 hours) weeks, but you know exactly when they are going to be on the calendar. Just seems to check a lot of your boxes.
IR is also an idea, but if you don't like the pitching and sales side of PE I don't think you would love fund IR either. It's a great gig at a MF where everyone is kneeling down to you, less fun at a MM firm where you are begging people to take your calls. I'd also consider corporate IR at a public firm (so doing earnings, etc) much smaller world given how few of these firms are public, but you get exposure to the firm, work with management, sellside, investors etc, but don't have to do deals.
Finally, this might be an obvious answer but any room in your fund to slot into a CFO or VP type role at a portco? If you like portco management maybe that's just a good seat for you.
You could consider LP role as a co-investor. You won’t get active ownership but with syndicated coinvest there is limited execution risk.
Yes, exactly what franco said.
I feel like being an LP isn't deemed as a favorable/popular choice by ppl on this forum? Is being a GP considered to be "superior"?
Operating Partner / Value Creation teams.
The role varies a lot across funds, but it can be a great fit for what you’re looking at. Working as an OP is all about acting like an owner and understanding how you can improve the base business you have. Some firms will have a very operation consultant-like approach, but other will have a more high-level approach based on strategy and planning, so I’m sure you can find something that will fit your objectives.
I’m new to it, but willing to talk more about it if you have questions.
Not sure these roles are open to more junior levels - the operating partners I have come across usually always have grey hair and are former C suite executives who did 30 years in an industry….
Some funds (probably not most of them, but at least a few) have some junior ressources supporting these very senior partners. The career path is less straightforward than for someone in investment, but it could be a good match for OP's interests.
I've seen several people in the 27-35 age range lateral from their PE fund to a portfolio company in a strategy/ops role. They got equity in the company, access to co-invests at their prior PE firm. Their play is to just become the drop in guy for the PE fund going forward and likely in the c-suite by age 40 of one of their portfolio companies. By doing this they get equity in the individual companies (enough to have multiple 7-8 figure liquidity events in their life).
Operating partner / value creation at LMM PE
Definitely operating teams within PE funds
One recurring suggestion you're getting is the portfolio operations path.
It's a good suggestion. You will continue to experience the active ownership aspect you highlighted as a something you enjoy. You will continue to interact with people, because your work will very much be about interfacing with portfolio executives. the teams that report to them (to an extent), your colleagues at the investment firm, and all the external resources relevant to whatever initiatives are in play at the portfolio companies.
Another idea is firm operations. This means the internal operations of the actual investment firm. Smaller firms are not going to have a robust function here due to the inherent scale of their own business. A great example is FRM, Firm Resource Management, at Goldman Sachs. The largest investment firms do have this function. You may see it titled as "Executive Office" or something similar.
Here you will get exposure to all aspects of how the firm itself is run. Raising capital .. deploying capital .. attracting, retaining, managing talent .. visibility on the highest-level needs or initiatives at portfolio companies .. and more.
The caveat here is that junior roles have nowhere near the same supply as investment roles, and on top of that, the more pure-play an investment firm is, the lower its needs for this function are to begin with. By that last point, I mean that BlackRock, Alliance Bernstein, Neuberger, and firms like that have a robust executive office function because of how much they have going on. New Mountain, Kelso, Berkshire, and 'classic' private equity shops are much narrower in focus and therefore have a narrower set of needs on this dimension, so it may simply be one or two senior people in each sub-function (operations, compliance, counsel, tax, talent, etc.) with perhaps one or two juniors to support.
The roles exist, but from what I have seen it's very much a make-your-own type of recruiting process. You have to go meet all the people yourself, explain your interest, take the internships or early role that presents itself, and navigate your own career trajectory that doesn't have the same well-worn path from the heavy volume of feet that trod it before you.
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