Promotions / Negotiation

I lateraled to an UMM PE firm on the west coast last year after spending two years at a MM PE firm in the same area. When I signed my offer, the firm gave me a 2-year track to Principal (post-MBA role) and said I would get full credit for my time at the MM PE firm. After I got to the firm, I realized Associates that came straight to the firm after banking became Principals after 3 years. I've been working hard for the past year and have developed good relationships with my team. I'm just a little disappointed in the situation as I'm effectively losing a year and getting shafted from a promotion just because I lateraled to the firm. The lateral market is extremely hot and firms are having difficulty retaining / hiring good candidates. The firm clearly needs more Principal level employees so I'm wondering how I can effectively ask for a promotion that's in-line with my peers. I would just get promoted on track without it being delayed. Do you guys have any recommendations on how to approach conversations internally? 

Comments (12)

Jan 22, 2022 - 11:13pm

Getting an offer from another firm may help, especially if that firm is a competitor. 

Had the firm not promoted associates directly to principal before you got there?  If not, that's quite a bummer.  That being said, it's not that uncommon to see people get docked by a year or so after they lateral to larger funds.

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  • Associate 1 in PE - LBOs
Jan 22, 2022 - 11:22pm

Yes, this is a firm where Associates typically get promoted straight through. The problem is that the firm told a soft lie to get me to sign the offer. They did not clarify I would be taking a step back from a promotion standpoint which really sucks. It feels like I have some leverage now that I've performed well and the lateral market is super hot. I'm just trying to figure out a way to navigate this without coming off super aggressive and ruining relationships. Obviously awkward conversations, but I would really don't want to fall back. I know 1 year is not going to make or break a career in private equity, but obviously an important factor. 

Jan 22, 2022 - 11:46pm

Sorry to hear that.  Do you have a mentor within the firm that you trust and can ideally back you?  I would probably go to a principal / director level employee that you are really close with first and outline what you said above (e.g., people getting promoted quicker internally, you've been a strong performer, there is a hot lateral market, etc. but you really like the firm and opportunity and want to stay) and see if they think getting promoted this year would be feasible.  If they say yes, great.  Schedule some time with someone more senior to talk about it.  Perhaps there have been some conversations about this internally.  If they say no, but you still want to stay, consider recruiting and leveraging a potential offer to see if that changes their mind.  If you use the latter strategy and they're not willing to promote you early, you may run the risk of jeopardizing the promotion next year (not sure if you're dead set on leaving if they won't promote you now), so I'd want to make sure the offer you're leveraging is one you'd be actually willing to take.  But that's just what I would do.

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  • Investment Manager in HF - Other
Jan 22, 2022 - 11:55pm

I would take a different approach than the other poster. 

Rather than focusing on the fact that others get promoted on a different timeframe, I would focus on what you have done, what you bring to the table, and how you think you are ready to take the next step in your career. If you do any comparison, do it to the people a level ahead of you and show how you are operating at that level, if you can get the seniors to see you as similar to the other principals then you have a much higher chance of having this succeed. 

Also, I wouldn't mention the "hot" lateral market or leaving, etc. Everyone knows this, make this about how you have earned this promotion, are excited to continue your career with them, and want to continue adding value. The biggest advice I can give is that focusing on the value you bring and how that is at X level is what I've normally seen work. People don't normally respond well to comparisons purely on timing (I.e. X got promoted in 2 years so I should too). 

  • Principal in PE - LBOs
Jan 23, 2022 - 12:45am

#1- should have done your due diligence before joining the firm. That's entirely on you. Take it from someone who made the same mistake at a similar point in my career.

#2- turnover is very costly in the PE world. It's heavily frowned upon by LPs. So the culture in the industry is loyalty and tenure above all else. Keep that in mind. Wh may be hot, the culture/mentality is much longer duration.

  • Associate 3 in PE - Other
Jan 23, 2022 - 1:23pm

Do you think you can lateral into a position that will give you carry? Will that impact your promotion track at the next firm (ie harder to make next step).
 

Sounds like you are mainly unhappy because you see others moving faster and would have been OK with it if they hadn't. I get that, it's hard.
 

While you feel screwed most of the PE laterals I know from smaller shops had to take a minimum of a one year haircut at the junior level which kind of makes sense, as some of the skill set at the post associate level is process management inside your current firm. 

  • Associate 2 in PE - Other
Jan 23, 2022 - 1:40pm

Sounds like a bummer situation but you are effectively complaining about a one year difference in expected vs. actual results, and leaving because of that seems short sighted because (a) aside from their white lie it doesn't sound like this firm has actually harmed you or is unimpressed with your performance, (b) unless you are able to lateral into a VP / principal position elsewhere you likely will also need to wait a year before being promoted, at which time you would've been promoted at this place anyway, and (c) assuming you did banking you would be going onto your fourth job total and third in PE which is going to be an intangible issue for you as others will start to get the impression you're a job hopper. 

  • Associate 1 in PE - LBOs
Jan 23, 2022 - 2:19pm

I agree with the above. I think another wrinkle with this situation is that I basically gave up a route to business school or post-mba track at my prior firm. If there is even a chance that I don't get the promotion next year, I would be pretty screwed given how late they let you know about the promotion. I definitely don't want to be a job hopper but the positive aspects of moving into my current firm has degraded over time. 

Jan 23, 2022 - 1:59pm

There was another thread on this website about someone being in this situation, and I think they were too aggressive and transparent in these discussions and were let go. Look it up on the PE section on WSO.

Be very civil and non-threatening in these discussions. You should preface the conversation by saying you wanted to talk about progression. You can bring up what you've worked on, how you're contributing etc. Then talk about your experience at your previous firm and remind them of the discussion you had. Again be very delicate about this. Make it seem like you're very grateful to be there no matter what. If your manager denies/gaslights you and denies your observation, say that I understand and don't push it more. You now know his position, that they're lying cunts and apply everywhere without telling anyone about your plans. Once you give in your notice, feel free to tell them why.

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Jan 23, 2022 - 2:02pm

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