There are plenty of threads here on whether PE is in a downturn, and most of them end up as a career question: is PE still worth it compared to staying in IB? For those that think the answer is no, the reasons I see are fewer VP promotions, even fewer partner seats with seniors who have no reason to retire, longer holds and fewer exits making carry slower and harder to realize, IB comp that now competes with or is better than PE in some cases, and hours that aren’t meaningfully better.
I have found all these debates pretty interesting, but I wanted to ask a similar question about the impact of PE industry trends on Operating Partners and PortCo CFOs.
If you’re a PortCo CFO or an Operating Partner, a big chunk of the economic case is obviously the equity (MIP units, co-invest, or a share of carry). But that only pays when there’s an exit, and even then, hurdles and the waterfall mean your equity % doesn’t necessarily equal your share of the proceeds. So if the problems people point to in PE are as significant as reported (longer holds, fewer exits, more continuation vehicles, deals done at 2021 multiples that need a lot to go right to clear hurdles, etc), doesn’t the operating path take a similar hit as the PE deal side, maybe even worse, since cash comp is usually lower than the deal side and the equity is a bigger share of the total? And that’s on top of what I imagine are already high stress and long hours, probably not far off from the deal side.
I am currently in turnaround/restructuring consulting, with some interim CFO work on smaller companies. My plan has been to build more of that experience, potentially by moving to an OCFO group (mostly interim CFO roles at PE PortCos) or a PEPI/value creation group at another shop (A&M, Alix, Accordion, etc.). The end goal is a PortCo CFO seat where I can see a company through to an exit, and eventually a longer-term CFO role.
So my main question: is the Op Partner / PortCo CFO path still as attractive as it was 5 to 10 years ago, or has the risk/reward shifted along with the rest of the industry? It is probably the latter answer but I would welcome additional context or different viewpoints. I realize there may not be very many operating partners or PortCo CFOs on this forum, but I would also be curious to hear the perspective from those of you on the PE deal side.
