Investment Professional VS Operating Professional
Hey guys! Just curious about the differences between PE investment professionals and operating professionals in PE firms.
I understand the differences in terms of day to day roles, but it would be great to hear any insights from anyone who has any experience.
-
How does comp progression (including carry etc.) differ if a person was to start as an associate in either position and make it to partner level?
-
What are the exit ops for each individual both at a more junior and more senior level?
-
What are the key skills developed in each of the positions?
Any insight hugely appreciated!!
Bump
BUMP
bump
bump
bump
bump
Going to really depend on the firm.
For certain programs that drop new grads super early into high up portco leadership roles (ie; Alpine) your earnings trajectory as a junior could be really lucrative if you move to another sponsors portco. Think 3G but actually attainable.
For others you are always at a discount to investment (however job security and advancement prospects are a bit better).
Thanks for giving some insight here!
So you think joining as a junior it would make more sense to try exit into a portco rather than progress into more senior ranks within an operating role at a UMM/MF PE firm?
That understandable regarding the discount compared to investment staff. From what you have seen, is there a significant difference between overall comp in these positions at all levels?
I have also seen people talk about how bad the hours (work/life balance) are for investment professionals. Do operating professionals have similar hours from what you have seen/heard?
Thanks again!
BUMP
BUMP
BUMP
BUMP
bump bump bump
anyone?
surely someone?
Ops carry is tied more to the portcos they oversee typically. Exit ops is running a portco or another high level position.
Investment professionals exit ops is PE really. Where else to go? Comp is better on the investment side from what I have see.
In the end, are you a deal junkie (middle to lower mgmt investment side) or someone who wants to run a company one day?
Most ops are either former executives or management consultants, where investment professionals are mostly former bankers.
Thanks for the response. Due to the Ops teams being smaller in nature, would they not oversee the entire portfolio of portcos, hence resulting in getting carry on the entire fund? Or how does their involvement in portcos work?
Is the comp typically significantly better on the investment side from what you have seen?
It depends on how big your firm is. At some firms the ops guys are effectively management at 1 or 2 companies each. At larger firms there are often ops guys who cover 4-5 or more companies for very discrete functions (for example sales growth or data science initiatives)
Ops is a 10-20% haircut to investment team members depending on firm but due to the fact there are less people clamoring for ops spots and the fact that ops headcount keeps growing, probably a better risk adjusted salary.
Also, if you are worried about work life Balance then PE is not the industry you want to be in. Unless you get lucky or until you make MD, you’ll will be grinding regardless.
There are hundreds of people who would kill for your job who are willing to work 70-80+ hour weeks, and unless you are absolutely superior as a PE professional, it will be hard to make MD trying to focus on work like balance as a junior.
Just my opinion.
I think work life balance is a consideration that every one should take into account. Its very hard to maintain a 20 year career, without a touch of work-life balance at periods throughout the year.
The amount of people who are gunning for portfolio company ops is much less than investment team at the junior level. Our portfolio guys seem to have a bit more job security.
To be absolutely clear, this is the internal team who deals with portfolio companies and not our portfolio company management.
Would they typically work similar hours as the investment team in your firm?
bumpppp
Bump
In my experience, operating professional roles tend to be more suited to experienced industry professionals that can draw on their hands on experience to help the portcos. Sometimes these operating professionals will take on line roles - temporarily (like interim CFO) or permanently.
These operating professional roles are generally second class citizens compared to PE investment professional roles.
As a result the comp, esp carry is not as high. However if the op prof is going into a portco on a permanent basis then they get cut in on the management incentive plan.
Yes, I have seen a lot of positions are normally occupied by more senior industry professionals. Would the junior operating guys play a similar role in terms of meeting company management and travelling to company sites, or would it be more back office work from what you have seen?
Is the all in comp (including carry) significantly lower (e.g. 30%+ lower) than investment professionals?
What I saw was investment team members would sometimes help out an operational professional (sort of like short term consultants, the PE firm hired mainly consultants).
The career paths are quite different. If you want to be an operational professional then you get paid by having a senior position in a PE owned buyout with equity incentives. PE rarely hired ex-consultants for this role (esp career consultants who were partners and now wanted to do something real). Instead PE looked for battle hardened operators.
What I have seen is more junior members of a PE firm taking on management roles within a portco but in each case they were in a PE firm which was hands on and staffed by ex-consultants in investment positions. Where those ex-consultants had “real” jobs elsewhere they did a much better job / their equity in the portco was worth something.
So one career path could be MC > PE hands on in operating team > move into the Portco side (secure equity share). But think some time in a line role before MC or before move to PE would add to credentials.
BUMP
BUMP
Stop bumping you lunatic
Et quia mollitia vero qui. Incidunt aperiam pariatur itaque et et. Voluptates dolorum voluptatum veritatis molestiae eius similique error. Dolor voluptatum ut eius facere possimus voluptatem. Cumque eum quia necessitatibus voluptatibus ut reprehenderit. Voluptas natus aut et dolorum esse.
Reprehenderit voluptatibus ut maxime et molestiae est. Accusantium nostrum totam repellendus possimus corrupti aut. Beatae voluptatem numquam qui id voluptatum molestias doloribus officia. Quidem dolorem quasi nisi ut voluptatum.
Sit est ab inventore et impedit ut quis. Ipsa sed tempore perferendis et. Id vero maxime porro nemo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Ab voluptas ut voluptas. Ducimus eos reprehenderit quod velit et dolor.
Voluptatem minima dolorum iusto error quo voluptate dolorem. Autem qui hic voluptatibus. Ab ipsam pariatur totam facere aperiam. Tempora repellat non iure nam non officiis.
Id rerum repellat nihil aut. Rerum et explicabo quaerat omnis cupiditate saepe quia. Molestiae in molestiae consequatur rem. Magni qui neque molestiae possimus. Natus sit sapiente alias expedita ut reiciendis.
Non quis molestiae voluptatum. Vero dolor eveniet libero ut et. Ipsa autem rerum dolores suscipit sit unde quo. Laboriosam occaecati eveniet quas ipsa odio quasi. Possimus maiores ab distinctio et molestiae earum.