PE VP - Q&A
Greetings fellow monkeys,
This forum has helped me massively with my career so wanted to give back to the community. A little about me:
Came from a semi-target university and started off in BB S&T. Realized that the heyday of prop trading was over, and that market-making would eventually become automated so lateralled internally into a SSG type desk at the same bank (similar to Goldman SSG, but at a different bank... very difficult lateral and had to network hard and multiple interviews internally). Got pretty good looks at large special situations hedge funds and PE firms but ended working in M&A at a roll-up owned by a mega fund. Eventually made the move into traditional MM LBO PE and eventually made VP. Magically, after getting carry, we had a good exit so got paid out a small, but sizable amount (it is real!). Happy to answer any questions the community has about journey, or their careers.
What is the key to making vp/principal from the associate level?
Main three things that come into my mind immediately is baseline intellect, maturity, and consistency. This job isn't rocket science but definitely need to be bright, thoughtful and able to get to defendable answers / models as an associate. I might be messing this quote up but Buffett said something along the lines of being smart is better than being dumb, but being super smart is worse than being smart in the investment field. I agree with this 100% - don't need to overcomplicate the analysis as long as you put in the work, and it fits with with reality. Maturity is one that I didn't quite have an issue with but one where I've seen folks get burned. Being too casual could cause poor first impressions with some MDs that translate into a reputation with the firm. Often times, we want Associates to be self sufficient as fast as possible running banker calls, lender meetings, or market calls. If an Associate is too transparent on how he/she doesn't pay attention to certain calls, or doesn't have interest in certain sectors, that could translate into a negative perception of the Associate where I wouldn't trust his/her work as much. This leads to a last one... consistency. Being able to execute consistently is highly important because in order to trust and Associate to become a VP (i.e. quarter backing deal), need to know that he/she is dependable ALL the time, not just some of the time. If an Associate is always executing and never misses a beat, I can give her a task and forget about it, giving me true leverage of time. Then I could trust her with more and more and she naturally gets enough experience to manage other work streams. If an Associate is sometimes A+, sometimes B-, I naturally have to check in with him all the time "just in case". This Associate would less likely be viewed as VP material as they are just not as dependable. Obviously there are others such as presentation skills and fit within the organization (i.e. don't skip all the happy hours and hang outs at the MD's house!), but the three I mentioned are table stakes.
What are some ways you’ve been able to manage the stress and responsibility of the job at the Associate level? What are the best ways to start learning the VP role as the Associate?
Great question! Thinking back, hardest part of the Associate gig was just to grind away for 2-3 years in order to make it to the next level. Often times, it felt like a "don't mess up" type role where it's all about accuracy and execution. To be honest, my strengths are more towards strategy, relationships, idea generation, and management. The Associate role of execution and attention to detail were my weaker areas (not saying that I made mistakes, but that I would review models / memos multiple multiple times in order to compensate). Tying everything I did back into the big picture of how it fit into the overall investment process made it more fulfilling to me vs just pushing buttons on a keyboard. Additionally, having ambitions to run or start my own PE firm one day, I looked at my Associate stint as a fundamental building block for my career and where I could ask dumb questions and experiment and tried to see it more as an opportunity to learn and try things with low risk vs. day to day butt in seat grind. Hope this helps... one of my gifts was probably a little bit of self delusion as well... but I used it for its benefits :)
Based on the most helpful WSO content, here's a detailed breakdown of the PE VP's journey and insights:
Background:
Career Progression:
Achievements:
Offer to the Community:
Feel free to ask any specific questions about his experiences or seek advice on your own career path!
Sources: Q&A: Career start and progression across IBD // Restructuring // PE special sits, Q&A: Retired After a Career in Private Equity, Ask me anything - quant/quantamental Hedge fund manager/Consultant - Everything on liquid hedge fund strategies, Q&A: My journey, from the lab to MMPE, Career Guidance and Mentorship
How has the overall difficulty of the job changed since becoming an associate to now? Which areas become more and less demanding as you become senior.
Job is definitely higher stakes. When I was an Associate, the bulk of the work was creating materials, models, and question lists. After that, my job was 80% done and it was up to the VP / MD to talk through while I backed them up with data. Now, my job is to answer the tough questions, navigate board room politics, and drive direction of new deals and business. My mentality is that despite being staffed with an MD on a deal, the buck stops with me. Thus, I'm spending a lot more of my time understanding how the numbers tie together to the realities of the business, how to influence decisions within the firm, and creating relationships. My hours have decreased as I leverage my awesome Associates but the stresses of Sunday evening for a big meeting on Monday definitely increase. However, I think I got used to it after a while and also need to remember and remind myself that this job is important but don't need to stake everything into it. Overall, I think the job is easier though due to the hours (see my earlier comment on my baseline strengths), but just need to put more brain power / thought into it.
How much is S&T comp for juniors at BBs
I'm old... not sure how much it is anymore but I assume about par with bankers or a little less from the bonus side... personally I think sellside trading is pretty dead... but could be wrong.
More details on how did you move to the ssg desk, is it still feasible in today’s date assuming you did this about 6-7 years ago
Not including too many details at risk of making it too obvious but I had a quant background (I'm somewhere in between a jock and a nerd) but started in a non-quant trading desk. Was more jocks on the desks talking about building relationships with the buyside folks and partying with brokers. Best P&L made was "riskless" P&L which was basically obtaining an order from a seller or a buyer, and then buying or selling it on the other side for a spread without risk. There was no positions taken from a prop side so it was not that interesting to me (I wanted to be a PM at a hedge fund). There was an adjacent kickass SSG desk (would only hire investment bankers after 2 years; folks from that desk went on to awesome special sits funds after) on the floor that basically had a carve out from the prop trading regulations because the investments they made were so illiquid. Networked hard with the guys there and they liked my drive / background. Eventually split my time between trading / that desk by offering free help to the folks there on building models in my free time after hours. Eventually they let me do a case study interview and ultimately welcomed me into the desk. Personally, I think it was a really tough switch but I was able to get a mentor / a few champions in the group to help push me through. I think building great relationships, showing interest / relentless effort, and helping them a ton gave me the shot to interview. I'm sure you could do something similar today if you really tried.
Will getting a CPA be useful to transfer from IB to PE?
Personally don't think it's a good use of time. If you're already in IB and you're getting looks, would just go from there. If you're not getting looks, consider lateralling, and continue to network. Coffee chats work!
would you say it's worth working in M&A at a roll-up MM platform? have an offer but it feels like i'd be boxed into a very niche industry with fairly poor exit ops. was the move to PE easy? would you say it's worth it for someone just starting out? I've been told I'll get RSUs and a clear path to vp of M&A in 4 years if my performance is good. (the firm does 500k-10million ebitda acquisitions in IT services)
Move to PE wasn't easy... my role at the portco was very PE-esque... we did much more detailed diligence and though a lot of about financing structure. Effectively the platform I was on was only M&A driven (almost no emphasis on organic growth... we bought it, then operating team took over while we found more acquisitions) so very similar to a PE firm within the "shell" that we integrated into. I definitely pitched myself as someone that had some PE experience because of that but I didn't necessarily get credit for it (had to do my full 2-3 associate years at the new firm). If you're looking to go into PE, I'd try to go straight from banking if you could. Looking back, I don't regret my experience but it definitely complicated my story, making it harder to get in. A move from the SS group to a SS hedge fund or SSG PE firm would have been much more of straight forward path.
Do you see VP+ roles in PE being more sustainable than An/As when weighing up stress and hours, or is it just a case of self-selection?
I think VP / Principal is a bit of a safeharbor. I see the business as a bit of a barbell... left side is hours, right side is stress. You'll generally have heavy hours as an Associate and don't think that would be sustainable forever. As an MD, you have all of the stress of things you can and often, can't control on the deals, so definitely more mentally intense. Mid levels are in the middle of both of these... Mid levels have the stress and while I have the mentality of "the buck stops with me", I know in the back of my mind, I have a backstop of the MD . Additionally, my reputation isn't necessarily tied to the results of the company yet because I wasn't the one who made the initial transaction. Personally, I think stress as an MD would be exponential vs what I have now so using it as a time to practice reps and take notes on how some of the MDs solve issues (and what pitfalls to avoid).
Overall, think being at the higher levels is more sustainable as long as you can mitigate the stress. I think a lot of the stress mitigation is from staying healthy and doing good "sleep at night" deals where you don't push something super cyclical over and being conservative. Finally, I think making sure you don't tie your entire identity to your job is very important for mental health, especially as you get higher on the totem pole where stress really kicks in.
Any advice on achieving the last piece of advice during An/As years?
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