Title. What are the best roles one could be doing at a LMM fund? I’ve heard of guys in their late 20’s/early 30’s doing Portfolio Operations roles that entail making big decisions on how their portcos should run and so forth. Sounds like that would be a really intellectually stimulating role for such a young age. Sounds like such a badass job. Is it really that entrepreneurial?
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What a dumb question.
Principal / Partner is obviously the coolest thing. You do the deal from start to finish. You know it inside out (from strategic POV). You run the show. You collaborate with the founders / management. You make a ton of money if you do well.
Thank you for the insight. A shop with ~20 guys seems to me like most would be heavily involved.
It really varies. With some LMM companies the operating partner role really feels more like a babysitter than a true strategic partner because the companies are so shoddily built. The job really entails running around and putting out a series of mundane fires, making sure the management team doesn't go off the reservation, getting basic IT systems installed etc. Not my idea of the most fun job.
As I said, it varies quite a bit. Some CXO programs look like they could be pretty cool and being a repeat CEO or CFO is a lucrative and exciting path. The point is, do your diligence on the firm and the opportunity and don't forget to extend your scope beyond the hold period of any particular portfolio company.
Never heard of a CXO program until now, thank you for the color!
Agree with all the above. There is an adage in the LMM/Search fund world which is "are you running the business or is the business running you". If you're at such a subscale level that there isn't enough money to really run the business, the CEO/COO/Operating Partner is really just putting out fires all day long. Yes you're technically managing the business, but if entails making sure payroll goes out, IT, etc, then to me, it's not really worth doing unless you have a significant ownership stake. At that point, you might as well raise a search fund and run that business yourself, or honestly, raise some money from friends and family and buy your own business. At least in that case, if you're grinding on unsexy stuff, but making money, you can start to carve out a path to $500k+ a year. Most CXO roles pay around $250k at best, which isn't worth the cost.
Alpine has a well known CXO program and there and a handful of others that are decent. If I were interested in this type of role, I'd screen for size of company and talk to some of the current CXO/Operating Partner types of roles. Get a sense of what they're doing and what an exit potentially looks like. These PE operating exec roles are becoming all the rage in PE as it solves for the tricky problem of talent management within PE firms and they can get a crop of post MBA folks or PE hopefuls, pay them decently, but not nearly as much as they'd need to pay an actual exec, and hope for the best. Good firms have this more down to a science; however, I've seen some pretty small LMM/MM firms try this and I'd be skeptical if you were entering the inaugural class of operators at any of these types of firms.
Last thing to consider, these types of roles are somewhat luck based as well. Similar to PE in the sense that if you're the Associate on a deal that does great, by association, you're going to look good and can put that on your track record. I've seen some really high flying exits from peers at Alpine (Chief of Staff to COO to exit to MF PE staying on as COO, to taking company public all in the span of ~5 years) but have also seen people crash out after getting placed at something like a roofing company in Cleveland that ends up having a lot of hair on it and limited growth prospects.
Very great insight, thank you. May I ask what you mean by “having a lot of hair on it” means? Like does it mean that the business has a lot of debts and contingencies or?
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