PE Senior Assoc or Director at Port Co
Title. Throw away account but my background is Non-target —> BB IB —> UMM PE.
Currently in my second year as an Associate and have been offered a direct promo to senior associate w/o MBA. Over the last year, I also became close with one of our port cos that is a $B+ company in the tech sector and management asked if I’d be interested in joining their strategic finance team at a Director title. Strong management team with a history of successful outcomes.
Similar to other non-target backgrounds in this forum, the path to BB and a reputable PE firm was an uphill battle and I am now earning more than I could have imagined a few years ago starting out. Giving that up would be difficult but being an operator has always interested me more than the constant grind of model/memo generation and I’ve never been confident that I’m built for the long haul to the top of the high finance pyramid, particularly given I grew up with no connections or pedigree to my name - just willing to put in significant work to this point.
The trade off is taking a 60% cash pay cut to join a much riskier role at a port co, along with an equity package that isn‘t dissimilar to the carry I’d receive as a senior associate. Upside being jumping to the operator side in a very senior role for my age with potential to maximize earnings later down the road in a seat I enjoy significantly more.
Has anyone gone through a similar decision here and how did you consider the long term pros/cons of grinding out a few more years in a high income role vs resetting in a better fit longer term? I think it’s unique to get an opportunity to join a large company in a senior position without prior operating experience but it feels like a significant risk that I’d never get back to that comfort of secure high compensation that PE offers.
It’s worth noting from a WLB perspective - the operating role is on a lean ‘scrappy’ team and I wouldn’t expect hours to differ much from my associate stint where I average 60-80 hours a week depending on deal flow. Personally, I live in a HCOL city and am getting married next year to a lower earning partner. Neither of us have any significant family money or inheritance which puts an emphasis on the importance of my current income + future earnings.
Doesn't seem worth it to take a paycut to work same hours.
Fair - feedback appreciated.
Counter argument is whether side stepping into a PE operating role can also be a lucrative path in time. Similar to IB/PE path, you need to build exp before expecting big payouts. Part of my question is whether that is valid or just pipe dream thinking and I just don’t have a lot of data points to compare
I would take the Senior Associate promotion and work for a year or so given the context you've provided about your family background. If you are doing well, you can ask your team if you can do 6 months at a portco and see if you like the work.
Either way nothing is permanent at this stage if that's your worry - ie if you pull the ripcord and go to the portco now and work for a year and hate it, you can get back into PE with some hustle.
What's your comp at the portco? As a director, I would expect something in the range of ~$200k base + ~25% bonus + equity valued around 300-600k at exit. This seems like a solid exit given your YOE
Given the big decrease in cash comp, I would probably stay on as a senior associate, and look for another opportunity to join a portco as maybe a head of corp dev in 1-3 years. Something at a VP level title that gives you a good chance at a 7 figure payday if things go well. This ultimately is the safer bet and provides you with more optionality - can you go back to PE if things don't work out in 18 months, maybe? Depends on your situation, but nobody knows where things will be in 18 months
Portco's can be a fucking grind and really tough, your title may be "Strategic Finance", but chances are you'll be doing whatever it takes to make the company successful. IMO, if you're joining a portco, you really need to evaluate the risk / reward, because a lot of portcos are completely fucked right now and you could be on the chopping block if the management team gets cut
I currently am a VP at a portco (came from consulting, not PE), so feel free to DM me on any questions and happy to help if I can
Good luck
Portco. Operating businesses will be far more profitable going forward than owning them
I'd try and negotiate a path back to the fund so you can treat it as an externship. Market going to be tight on roles for next few years so I think the back to PE option value is worth more than usual currently.
Curious what you end up deciding.
I made this exact same switch a year and a half ago. Have not regretted it for a second.
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