PortCo Corp Dev Roles
Are these worth it at the junior levels?
Have a few inbounds for ASO roles at Port Cos looking to do 6-10 acquisitions a year. All platforms are in a similar rev size 125M +/- 20M and scaling quickly. Potential liquidity event in ~2 years.
I'm not looking to go the PE buy-out route but would like to stay in M&A. HHs have been timid around saying what comp is but one noted that it would likely be 115k base with 15-20% target bonus based on EBITDA. No equity.
Probably wouldn't be a terrible experience. I'd see more deals than I would at my current bank. But how would WLB be? Can't imagine it would be significantly better.
If there's no equity is it really worth the squeeze?
Based on the most helpful WSO content, here are some insights regarding junior-level Corporate Development (Corp Dev) roles at portfolio companies (PortCos):
Compensation and Experience
Work-Life Balance (WLB)
Long-Term Considerations
Conclusion
For more detailed discussions and personal experiences, you might want to check out similar threads on WSO.
Sources: Is this associate compensation competitive?, What is the point of doing private equity if you will be pushed out after two years to get an MBA?, Handling Stress / Burnout in Private Equity, Private Equity shops with the best work/life balance, Is work life balance really worth it when you are young?
I would personally only join at a more senior level (post pe associate program) - you will get worked pretty hard and you will get reps but you won’t be compensated (cash and equity) appropriately. If you’re gonna work PE hours, just go to PE.
why would you join at senior levels?
Much more of a project manager type role and you likely get some form of equity or PIU.
I would gladly join at the senior level.
what are your thoughts on someone who works their way up to a senior role after joining as an analyst? also would you do this at a roll up with say 1-10million ebitda range? or is there an acquisition size cutoff you would recommend
I'm OP haha — that's precisely my question. Is it worth it at the junior levels given no equity or incentive?
Not sure how quickly an ASO would make it to Director at a PortCo.
I wouldn't take a jr. corp dev role at a portfolio company. In addition to what others have mentioned, branding is a big consideration. 5 years from now you'll have more optionality and better career progression if you did PE / F500 corp dev / stayed in banking until sr. associate or VP level than jump now
Once you join a PortCo, you'll experience a lot of the frustrations of going corporate (slow progression, less motivated / talented coworkers, etc.) but with added challenges from rapid acquisition growth and potentially being pigeonholed into small rollups
IMO better to build experience at a stronger brand to leverage into a senior role / fall back on in case things don't work out at a PortCo
I've taken a look at some of these roles and my sense is that they are ~80% of PE hours / stress for ~50% of PE comp (generalization of course). Not a tradeoff I am willing to make but it's different for everyone
My $0.02 as I have been around the PE PortCo space on both sides. More times than not, it is not a great spot for a junior. You might end up just grinding away at god knows what and not being appreciated by a) mgmt and b) sponsor. The only way it works if you really find a great spot in which mgmt really values you, advocates for you, promotes you, etc, then the guys and gals at the sponsor will kind of follow suit. I would say this is the exception not the norm.
Exception -- you get in there, grind away, do an awesome job, they love you, sponsor loves you, promoted, promoted, etc, portco ultimately does great and rips off a really good MOIC when sold; you leverage this experience into a great role with maybe the same mgmt with a new pe committment, or something similar with a different group, or even into a CFO type role at a different small portco, or a "next in line to CFO" type role at a larger portco
Norm -- portco flounders a bit, you do a shit ton of work and it all ends up being kind of useless, there is some random bloke or maybe two that are in between you and mgmt, and mgmt doesn't really care for the quality of work you're doing, just sees you as a young inexperienced person, etc, you're looking for a new gig in 1-2 years (but to be honest that's not actually the worst thing if you can frame your experience the right way and leverage into something a lot more positive).
Ditto on this. Know someone whose worked at 2 portco roles. Seemed like at the MF portco ($XB) valuation was a huge headache but a great learning experience. Now they're at an 'Exception' type of role after transitioning back to a regular corporate for ~3-4 years in between both portco roles (portco investors are LMM).
I can think of two examples where the deal was a huge success, and the head of corporate development got a meaningful exit on their equity. You need to diligence the situation and make a judgement on how successful their strategy will be. If you think you can execute, ask to be included in the equity pool.
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