Hey folks. I’m an associate at a reputable PE firm and I’ve been given the opportunity to stay another year. The firm pays below market cash but offers some carry even at the junior level. I’m pretty bearish on the industry as a whole and my firm is no exception. The path to partner (if I even make it that far) is looking like a 12+ year grind given how stretched out promotions have become. There’s also a ton of bloat at the top and mid level that I don’t see leaving. Even if I did somehow moved through the ranks, I’m not confident the carry will pay out even close to what is being sold to me + it will take roughly a decade to see those checks (we haven’t even hit hurdle on one of our funds from early 2010s).
I’m thinking of recruiting and wonder how much of this I can explain in an interview. The honest truth is our portfolio is not doing well but I worry I’ll burn bridges if I start mentioning externally. It’s also the main reason I want to exit the industry so I’m wondering how others have played this.
*TLDR: how much of current PE firm performance, compensation and career trajectory can you mention in interviews?*
Edit: I’ve decided it’s not worth mentioning given the little upside of being truly honest vs the downside risk of sounding only motivated by money.
If your firm hasn't hit hurdles for funds since early 2010s, people who are plugged in and can do basic googling on fund performance will know your situation. Tons of firms in similar situations. There are more PE firms than McDonalds in the US. All of this to say, I don't think you need to mention it. Good rule of thumb is to always focus on the positives of your previous employers in interviews as you are ultimately you are trying to sell yourself / your experiences when you are ultimately interviewing. There is also perception of negative attitude off the bat if you complain about fund performance in an interview even if it is easily backed-up by data.
What you can talk about will depend greatly on what you’ve signed with the firm. In general, if the performance numbers stink addressing the reasons why would be better than ‘bottom quartile IRR’ in an interview or networking.
As a heads up, the path upward at most firms has changed greatly over the years. Reality is job hunting makes a ton of sense to help move up. Firms do not have any incentive to promote you. I am different than a lot of people, much of the water cooler chats are outside of my interests. I perform well so I’ve never felt at risk of losing a job and get solid pay raises. But, I’m not one who likes to drink the corporate kool-aid. That being said, 12 years to partner isn’t that bad when you think about it if it’s a near guaranteed outcome vs ending up as an excel junky with the gift of cpi and maybe the occasional rsu dump. The competency curse is very real, particularly if you can handle ‘complicated’ items.
As someone recruiting to lateral to another PE firm, when I get asked why I'm looking to leave my current PE firm my talking points have been along the lines of "Our performance unfortunately isn't great, we made some investments that have deteriorated and we've therefore have had difficulty fundraising. I've learned a lot, not just executing on new investments but also managing underperforming portco's which I think is a good/unique skill to have. I want to build a long-term career in PE (not 100% true lol I'm interviewing for corp dev too) and therefore am looking to join a stronger PE platform and I think your firm is well positioned due to [XYZ.. talk about what is unique about the PE firm interviewing you]"
Granted I haven't gotten an offer yet after ~6 months of looking / ~10 PE interviews (not a lot of VP job opps and I think very competitive) but I like my answer above. If anyone disagrees, would welcome feedback
Maybe I misunderstood, but do you mean recruiting for non-PE roles? If so, why would it even matter?
Because compensation is lower. If I’m paid below market on cash with the difference being carry that doesn’t materialize I’m essentially working for less. And for those wondering it’s almost a 6 figure difference vs competitors that widens as folks get more senior at the firm. This makes the return on effort worse (less pay for the same hours and lifestyle).
Not everything is about money but I think I justified doing this job with the mountains of cash I thought I’d be earning. This made me realize I just don’t like the job that much and looking at roles outside of PE to try something different.
I’ve decided not to mention any of this as I see more downside than upside in doing so.
You misunderstand. What I meant is if you are looking to leave PE as a whole, why would the reputational point matter? I agree with your point about effort adjusted return, by the way. I think in the same manner.
Inventore odio distinctio voluptatem iste laboriosam maxime. Fugiat natus magnam fugiat voluptas omnis. Tempora atque ut deserunt deleniti tempora non itaque.
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...