Pivoting from PE
Hi all,
I'm increasingly thinking through pivoting from private equity for all the reasons that have been discussed on this forum (no need to rehash), and would like to start a thread where folks who are in a similar boat can add their thinking on different alternatives, covering their merits, considerations, and potential approach.
About me: Junior principal in an upper mid-market private equity fund. 11 years of total experience (incl. 2 in investment banking). Undergrad at good ivy. Never did business school.
Currently leaning in the direction of pivoting into a CFO role. Main attraction: Can focus on adding value as my core job as opposed to fishing for deals in a highly commoditized market. Main issue: I'm limited to NYC or SF areas due to family dynamics. Right now, starting to connect with folks in my network who have made that transition for their feedback.
In similar boat and experience level but in LMM PE. One question - don't you feel like if you left now, you would be walking away from all the hard work you did to get to that level (Principal at UMM PE)? Basically heavier golden handcuffs now as it was easier to walk away at the Associate / Sr. Associate and even VP level.
I also have interest in CFO roles, but feel like I don't have the accounting skillset required. Especially if it's a smaller growth company where CFO has to wear a lot of hats. If you are looking at large company CFO roles, guess you'd have a full accounting team below you.
I'm also considering corp dev at PE-backed roll-ups. Feels like this leverages our PE / M&A skillset to add value and also get to work closely with the CFO. May position you better to become a CFO in your next jump.
Thoughts on AI start-ups?
Becoming a modern day Diogenes the Cynic could also be in the cards, Guy seemed pretty happy
Realistically though, OP if you have that many years of experience (and commensurate savings) why not just find some low cost of living area and build your own business / partner with a local business owner who would be wowed by your experience. Could be a CFO there and have a pretty nice life (or a grindy one if you want to build up the business, all up to you)
Just bring this up having a childhood friend taking over his dads business, pretty good living.
Why pivot: Promotion into partner seats has been extremely difficult at my current shop (in line with flat fund size not letting even great performers through the line), and I’m not counting on it. Also the lateral market in UMM PE appears to be extremely slow (like nothing) based on chats with friends who are tapping it
AI startup: Could be really interesting but it’s hard to figure out which startup absolutely lights up and which will die because there’s so much uncertainty in that space
Currently an ASO1 in NYC but long term plan on moving back to my hometown (T2/3 city) where there are only a handful of MM/LMM PE shops, much less those with openings. Because of this, I’m considering a pivot back to IB or corp dev, as there are more IB seats in the city than PE, and while there are less corp dev, I would be extremely competitive.
Beginning to realize that group culture matters more for me than what I’m actually doing - came from an IB group with super chill MDs to a very sweaty PE group, and the difference has been stark. At this point I’m starting to care less about the potential of carry especially given my hometown is medium to low COL. Might still recruit for one of the PE firms there opportunistically but would rather move back sooner and go to banking than be in NYC till my mid thirties. Would be interested to hear other thoughts.
Older than you (experienced VP in PE) and have seen and heard of increasing cases of PE associates going back to IB. In hindsight, I would have made more cash comp staying in IB plus my carry is underwater. I don't regret trying PE - it would have always bugged me on a "what if" basis if I didn't experience the PE seat for ~2 years. I now believe the average IB outcome / career earnings is higher than the average PE outcome / career earnings for anyone entering the PE industry in the last 5 years -> foreseeable future
Somewhat similar boat and level of experience. Only things keeping me around are (i) generally chill hours + culture and (ii) carry is starting to payout (though much much lower than the DAW figures i had in mind). Also have a kid on the way which really wrecks my appetite for risk.
Dream role would be joining as #10 employee at a startup i really believed in and swinging for the fences. Feels like a harder sell given the PE skillset is much less valuable in that environment and not really in the cards for me at the moment.
Curious as to why a PE skillset wouldn't be helpful at a startup. You must have a pretty good operator and financial skillset which is integral for a startup?
lots of ppl can execute microsoft office tasks, and there's only so much excel work to do in a startup; the core function is the product. Just my two cents as someone who has not been that useful in startup environments despite trying to join.
If you’re set on moving from PE to corporate, focus on which company you want to join. Industry, size, people, location shape your career and life outcomes just as heavily as title/comp.
Network and apply for jobs that fit your company preferences.
Ignore title, left PE to do M&A and corp dev at PE-backed roll up in human capital industry.
When I left PE, I was very focused on role - deservedly so - but not as focused on industry. I’m actually pleasantly surprised by the quality and opportunity set in this industry, and would likely stay in this industry in a different role rather than move industries in the same role.
To translate it to your situation, it may be worthwhile to think about whether you want to be (for example) a “hired CFO gun” or to build credibility in an industry that may lead to a CEO or operating executive role in the long term.
Could you give more details about what exactly you mean by human capital industry? Like HR recruiting and management agencies/companies or something else?
Do you have meaningful carry? Would your fund let you keep your unvested carry if you go work for a portco?
All great thoughts here. More folks leaning in the direction of IB than I would have expected (and less volume for CFO route).
Carry for me also hasn't materialized. Last fund vintage totally under water and the previous one is treading water with the pref hurdle. Just not as much breakage cost, especially following SaaS-pocalypse.
Tier 2/3 city not an option for me specifically given family situation, but if it weren't, I'd likely move as well.
I did this: IB -> PE -> Corp Dev -> CFO of a division of a public company.
What you need is to find any foot in the door you can into corporate - Corp dev / corp strategy being the easiest route. After you’re there, you need to eventually pivot into an FP&A role to get reps of the standard cycle of reporting and operational finance analysis (capital allocation, underwriting new deals / business models, prioritization of efforts, analyzing the business model, etc.)
The problem a lot of ex- IB / PE people have is that they think they should just rise up within corp dev or corp strat, but in reality they need that rep of true FP&A at some point to round them out and then make them a viable candidate for a CFO or CFO-lite role. Corporate rewards generalists who know enough to be dangerous across a variety of domains than deep subject matter experts. Once you get a foot in the door it’s easy to move around, so just find any entry point you can.
The other thing I would heavily encourage you to do is learn how to work cross functionally and build your relationships / reputation. Everything in corporate requires multiple teams to buy in, so from day one you need to be setting up intro calls, 1:1s, and generally getting your name out there. If you don’t it will be hard for you to get anything done (and score points towards roles with more seniority) and you will get lost in the organization. You can view this cynically as politics but I prefer to think of it as senior leaders only create opportunities for people they trust, they only trust people they know, they only know people who make a point to introduce themselves and develop productive and easy working relationships with. If you aren’t visible, no one will know what you’re capable of and no one will go out of their way to give you opportunity.
Finally, I would highly encourage everyone to avoid chief of staff roles. They’re glorified executive assistant / power point monkey / project manager jobs and they’re so shallow and broad that they qualify you to do nothing. If you are interviewing for one, make sure there is a clear expectation within 6-12 months you will pivot into a real substantive operational role with actual ownership and responsibility. Only take these jobs as an entry point into corporate. Do not become a career chief of staff.
Happy to answer any questions if it would be helpful.
Thanks, very helpful.
2. Did corp dev for 5 years post pe. I was working in an industry area I broadly had exposure to in PE, but honestly that didn’t really matter all that much. What matters the most is literally applying your PE skillset to corporate to be able to produce deliverables that tell stories in a really compelling way and to be able to rapidly understand business models and probe and ask questions about them. Industry experience grows over time but it is generally helpful to be aligned to one industry. I transitioned to this position because I had extremely strong relationships and reputation. I spent a lot of time getting to know people across the company and building mentors and advocates for me. My presentation skills were better than everyone else’s (not that hard coming from PE) and I was able to actually drive things from end to end. I also demonstrated a high amount of financial acumen and found leaders who recognized that in me so it wasn’t a massive bet they were taking. Your relationships are everything in corporate, you could be a genius but guess what you’re gonna be underutilized until someone sees that in you. Rather than sitting around and hoping and praying, create your own luck by networking internally extensively, showing off your ability to come up with your own projects and ideas, and generally being extremely polished professionally. If you leave PE and decide you’re not going to try anymore, you’re not going to get a good outcome. This doesn’t mean working more than 40 hours a week, it means actually being proactive, prepared, and being bought in.
3. Maybe one day - I wasn’t qualified to be a CFO until I got this experience. You need to have at least one really solid pump in FP&A to be qualified for a full service CFO role. And even then it’s tough to get, but once you get one you can get others more easily. Honestly, I wouldn’t even mind staying here. As a divisional CFO you have a lot of resources (ie: you can actually take vacation frequently because you have subordinates), are paid a lot, and you get equity that is actually liquid. If I left, I’d need to diligence the opportunity thoroughly. In general, I left PE to have a better life and this has given me a great one and with visibility into a long term career that is both high earning and where I can set boundaries to have a good personal life. If I wanted to optimize for money alone, I wouldn’t have left PE because that is probably the best risk adjusted way to get rich. Working at a sweatshop PE portco isn’t worth it to me, even if the equity is good.
Super helpful
Spent 1.5 years in a corp fin role at a Series C startup and this is incredibly accurate, great comment. Good storytelling goes a long way to achieve that buy-in from other business units. Have to remember that sometimes finance is "the client" but is sometimes the other way around - so need to be able to effectively convey the why you are making an ask (not in PE anymore where your portcos are beholden to you) and also demonstrating the value you can provide in return (how do your analyses drive value / make their lives easier).
Have you considered joining a first-time LMM PE fund or an independent sponsor? Obviously still some similarities with your experience at UMM PE but (1) value of carry could be meaningfully higher but also higher risk and (2) you have a much clearer pathway to Partner. I'd imagine also better lifestyle (hopefully) if that is also a factor for you considering leaving UMM PE
Independent sponsor: No. Have a couple of friends who have gone down that route, and they're not happy with it. Tons of work with almost no resources/leverage. Can be very profitable if deal works, but you're generally buying very small companies with significant risk, and if those risks manifest, you're in a tough spot.
Interesting. My ex-colleague left our PE firm last year to do independent sponsor and still hasn't closed a deal so tracks with your experience.
Are you thinking of corporate development as an option? Since you're a Principal, not sure if you'd be too senior for most corp dev roles.
Similar boat. Have you actually been getting looks for CFO seats? If so, how have you been finding these opportunities?
I've spent some time talking to mid / late stage tech companies for finance roles but typical path seems to be to come in as a Sr. Manager level
I want a real sense of ownership / building something so strongly considering search fund
You won’t get a CFO role at any reputable company. Leaving PE as an associate / sr associate the right band of titles in corporate to look for is manager / senior manager / associate director, unless you’re at a PE portco where they give you inflated titles (VP level). Do not take a senior financial analyst role after working in PE, you’re extremely overqualified for that.
Corp Dev: Less interesting primarily because pay is way lower than CFO and you’re just a contributor, not really an executive overseeing the business.
CFO: Haven’t started so no traction yet. Really curious to hear from others’ experience. Sounds like this hasn’t been a very common path.
There are more ex-PE guys in CFO roles than you’d think. Look at Anthropic’s CFO.
Planning to give my notice after this year's bonus. I've been thinking through this for the last ~2 years and have found it pretty hard to figure out what I want to do and interview / network while still doing the day job. At some point, need to just rip the bandaid off and get out of the one more bonus hamster wheel
I plan on leaving the industry so feel ok about not having anything lined up. I value having some time to decompress, explore a few different paths ranging from corporate to independent sponsor, catch up on AI, etc. I've mentally earmarked my bonus as cash to fund this next exploratory phase
Curious if anyone else has gone through this? Any thoughts / tips?
I'm in this exact position. Currently a VP and want to quit and take some time off. Thinking of quitting without having anything lined up as you said to get some time to decompress and really think about what I want to do next. I am scared of (1) AI and threat to white collar jobs and (2) harder to interview when you are "unemployed".
I don't think (2) is warranted but believe hiring managers will still mark that against you somewhat, especially if it's for a competitive position and the other candidates are not unemployed.
If you are for sure going to do you own thing (independent sponsor, start your own company, etc.) then being unemployed doesn't matter. I'm just not sure if I 100% know I want to do my own thing yet, which is why I'm having a hard time quitting without anything lined up.
Curious to hear more people's thoughts
For #2, yes I think this will be a big disadvantage if you end up trying to lateral to another PE / buy-side job. I think the risk is much lower if you want to do something different and can easily be explained
FWIW, I've also seen a few people claim to do the independent sponsor thing to explain the resume gap. Basically just pretend to look at a few deals while you figure out what you really want to do
Happy to DM to trade notes
Bump. Would love to here additional thoughts on what you did after PE - from both current PE mid-levels thinking about leaving as well as those that left at mid-level recently.
It's a tough job market overall in general (not just finance) and not sure it will get better anytime soon
Great thread. Dumb question but for someone around ~VP1, how would you even go about finding Corp Dev roles? Are the typical PE HHs useful at all? Or this is much more random like you have to identify specific companies/industries, look at linkedin / other job postings? I focus on basically one industry so I know that part already. Any super quick input appreciated.
I'm not actively looking, but more intrigued/curious...
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