Optimal Time to Exit MF PE?
Hi all, I’m an associate at a large buyout shop in NYC that doesn’t boot you out after two years. I am enjoying the job and learning a lot, but also fully aware that I do not want to do this job forever, especially at a large firm, given everything that comes with being large: lots of top down process, people playing it safe, and a very long path to senior levels. My firm also seems to be quite slow to deploy capital (maybe this is true across many places nowadays), and I think it may be another 12-18+ months until I put capital to work.
Ideally, I would like to leave to join a well-funded start-up in my preferred subsector or maybe, maybe go to a small, niche fund that I respect. However, I’m worried that I’m jumping off the fast-track too early. Maybe if I stay 2-3+ more years, I can enter these other opportunities at a more senior role.
This brings me to my question: when is the optimal time or level to exit large cap PE (especially if you don’t mind the job)? Initially the answer might seem like a time-based one or seniority one, but also curious if there are deal-related milestones anyone would perceive as something I really absolutely must achieve before exiting, or is it no issue to leave without deploying. Thanks all.
Based on the highest ranked content on WSO, here are some insights regarding the optimal time to exit from a large cap PE role:
Timing and Seniority:
Deal-Related Milestones:
Career Fit and Long-Term Goals:
Personal Considerations:
In summary, the optimal time to exit large cap PE depends on your career goals, the experience you want to gain, and personal considerations. If you aim to achieve significant deal-related milestones and gain more seniority, staying for an additional 2-3 years might be beneficial. However, if you are ready to explore new opportunities and feel confident in your current experience, exiting earlier could also be a viable option.
Sources: Would you leave in this situation?, Am I missing something about buyside exits?, Exit as a VP because lost interest, Q&A - Starting Post-MBA Megafund PE, Likely Getting Pushed Out at End of 2 Years (LMM Buyout)
I would try to get a deal done, and based on the deployment timeline you outlined that may take staying 3-3.5 years at the firm (Sr Associate level). That would let you get the most out of the job imo if you're planning to leave PE anyway.
Stay as long as possible. Cash comp + clear progression at MF is valuable and going to start up fund as even a VP leaves a lot of economics on the table
Curious what kind of roles & seniority level you are thinking about at a startup
I’m not sure to be honest, which is part of why I’m asking this. If I joined something around Series B to D, with 50-150 employees, I would want to be a direct report to CFO. I think I need a few more years of PE to be at that level, but not totally sure.
Seems possible – I anecdotally know someone who left IB as an associate to Series A and directly reporting to CFO. Are you thinking Corp dev / strat? Also interested in making a similar move in the coming years
Could potentially look to get an MBA if you're stagnating and then use that "brand" to get a c-suite role at a startup in ur sector of choice
What did you end up doing?
I ended up staying. I did two deals and got promoted early. The job is getting more interesting as I get more responsibility. I’m torn on how much longer to stay though.
Intern here, but would say stay until you lose your interest for the job (among other considerations). Keep doing it until you don’t like it, since i) probably a great buyout seat ii) if you want to work at a tech startup there’s plenty that’d take you and maybe 2 years ago was a great opportunity to go into tech / maybe it wasn’t
Don’t throw a good thing away, but if there’s an opportunity you can’t deny in front of you then it makes sense to re-evaluate
Tons of terrible advice here, likely from your peers that have at most, the same amount of experience you have and likely at lesser firms.
The only right answer is leave asap.
If you’re convinced this isn’t where you’ll be longer term, you should get out asap. If you’re going to leave anyway, the single biggest professional benefit you will get from your time at a well regarded PE fund is the branding you already got on your first day of work there.
If you want to work at a start-up, you should go asap. Nothing you learn at said PE firm will prepare you for the start-up job and will probably only teach you bad habits. Most likely (esp if you’re considering earlier stage), you will have a few flame outs before striking it big, and best to do that fast and early. Vs. slow and late.
DEL, I read this wrong.
Substance of my post was: risk-reward only favors joining a new fund as an associate if it's a large enough fund with a genuinely blue-chip founding team that has a strong track record and real brand within their investment focus. Otherwise I'd join a start-up fund at the senior associate or VP level instead.
For an extreme example, if you somehow land an offer to join the spinout of an MF co-founder (Josh Harris and 26North as an example), then sure, I'd join as an associate and I'd guess most people would tell you the same. But that's almost never the offer actually in hand, since very few people that senior ever leave to start a first-time fund.
well he's talking about a start up (tech company) and you're talking about a first-time private equity fund...huge difference
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