PE Business Development vs. PE Associate
What exactly is the difference? I have a decent understanding (BD is sourcing/scanning from high level vs Associate executing), but a more in depth description would be helpful.
MORE IMPORTANTLY, how are exit options for each? Can you make partner from both? Are you still doing some modeling in BD position?
I ask because I’m decent at technical stuff but think I’m much better in sales. I think I’ll do great when comes time to raising capital for the fund as partner but don’t wanna do BD if it will be harder to move into a partner position.
This entirely depends on what type of firm you're joining. For example, in growth equity or VC, a business development associate would be sourcing deals for the team, which is basically doing a lot of cold emails/cold calls. It could also mean identifying new investment theses for your firm (aka specializing in a certain sub-industry or something). Basically you would be learning a lot about a specific technology or space that your team/firm would want you to later source deals in. It's also why you commonly see specific "industry focuses" under the profiles of various growth equity/VC investors on their websites.
In terms of traditional PE (example: buyout), business development will most commonly refer to investor relations/fundraising/product management, where you're essentially raising money for your firm via LPs. Here, you're not sourcing investment deals but rather capital for your firm's next fund. Meanwhile, a PE associate would be on the investment team where they run the due diligence processes, transactions, and investments as well as work on managing portfolio companies. Additionally, most PE associates have an IB background so they're familiar with how deals work/operate (occasionally you'll see people from consulting like MBB transition to PE or GE).
Yes, you can make partner in both business development and PE investing roles, however, your roles would be entirely different with little to no overlap. Unless it's a GE/VC firm where most of the associates do a combination of both sourcing/investing then you'll be able to work on deals; however, if its at a traditional PE firm then very unlikely you'd be able to.
Also very unlikely you would be doing any modelling work in a business development role but again, it depends on the firm and its strategy. Also becoming a partner at a PE firm regardless of whatever team is extremely hard and literally takes many many years. Some firms require their investment associates to do an MBA and then return in order to receive a promotion. So definitely would recommend you think about what you enjoy doing more and go from there. Hope this helps.
BD is unique from firm to firm, but essentially you're filling the top of the deal funnel with new opportunities. Sometimes you're covering the relevant banker universe (basically, the opposite side of the coin to what a sponsors banker does), sometimes like noted above, you're mapping markets and directly reaching out to targets, sometimes you might be doing both. You're also keeping bankers informed about the portfolio, connecting industry bankers with your firm's deal professionals where it makes sense to discuss [asset / industry trend / investment thesis, etc.], going to conferences/events, basically overall representing the firm in many outward facing aspects of the deal process. Sometimes you'll stick around with the deal team to IOI, sometimes you'll hand it off as soon as the CIM comes in, it all depends. Plenty of firms have Partner-level BD professionals. Moving over from banking, the investment team, or sales roles (usually within PE services, think like GLG) are the most common backgrounds.
Fundraising/LP relations usually falls under IR, which is often (but not always) grouped with BD (e.g., MiddleGround). BD is also often paired (again, not always), with capital markets (e.g., Altamont).
It's a pretty dope job if you can get in with a firm that really values it and doesn't just look at it as an afterthought.
Is it common for PE BD partners to get carry?
It's market for carry to start at VP these days.
Having spent a career in PE on both the transaction and BD side, I can say unequivocally BD is awesome. That said, you need to have the right skill set. If you are analytical, like being in excel and more introverted it's not for you. If you like sales, speaking with people and networking, it's great. All the perks of being in PE without living in excel and honestly BD hours are better (won't get blown up on a Sunday over a model that is screwed up).From my experience, anyone who views transaction side as "better" isn't work working for. It's a different skill set but trust me when I say: I can train a non-target kid with a 2.9 GPA to model. I can't train anyone to be good at sourcing and bringing deals in. Both are equally important but you need to be at a shop that values BD if that's the route you choose
Wow you can teach a non-target kid with a 2.9 GPA how to model? Wow, that is truly incredible. Who would have thought someone with a relatively lower GPA than the arbitrary 3.5 GPA commonly used cutoff, could pull off some actual, real life, super brainy, excel modelling. That is remarkable. Astonishing. You are so freaking smart, let me give you a massive pat on the back for the ability to pull of such a mighty feat. Excel modelling is so freaking difficult, you deserve a medal. Doing gods work.
You seem like a pleasure to work with. Also you’re in AM… not sure why you’re in this forum
Hilarious comment bro well done, I'm literally wheezing. You owned the shit out of this guy lmaooooooooooooooo
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