Q&A: London MF / UMM PE Associate
Hi all,
Decided to do this Q&A for all topics private equity, specifically within UK and APAC. Saw a lot of questions on the PE forum for both of these regions and realised that there is a dearth of information. I believe I could be helpful given my unique background (more on this below) and had some time during the summers.
My background below:
- Currently work at a MF / UMM fund (one of CVC, H&F, Permira, Cinven) in London.
- Previously spent 2 years working at a MF (one of Apollo, Blackstone, KKR, TPG, Bain Cap) in one of their APAC offices.
- Started my career in investing banking (working with a top EB) in a coverage team.
- Went to a non-target, and therefore had to develop an extensive network and push harder without access to great alumni connects.
- Can speak extensively about breaking into IB from a non-target background, going from EB to a MF, and lastly, transitioning from one MF to another MF (across geographies).
Thoughts on European waterfall for carry and how many years it will take to get a first carry payout, however small? Assuming you get carry starting as associate
Unfortunately, my fund does not pay carry as an associate. It seems rare to get carry as an associate within UK (at least all places I interviewed at did not have any). I can comment on what I have heard from my friends: it is not uncommon to expect 6-7 years period for carry to fully vest and fund DPI to cross the hurdle before you get your first carry cheque. It is usually hard to take a view on your future 6-7 years (as an associate) into the firm assuming the culture, fund-returns, comp and other expectations align in the long-term.
As for numbers, I have heard anything from 7.5-10 bps to higher, inversely correlated to fund size (within MM and LMM).
All pretty correct (work in MM London)
This question has probably been asked to death, but how essential is European languages for London PE?
Let's assume I am at a top coverage group at MS/JPM/GS, target uni + diversity, but I only speak English
In full disclosure, I did not speak any European languages either. In my experience interviewing and speaking with 25-30 funds here, this is the bottom line: MF / UMM usually do not care about languages as much as MM / LMM funds do. The MF / UMM philosophy is (a) large part of the associate work is churning excel analyses and related outputs, (b) the scale at which they operate, almost all management teams speak in English, and therefore, they are not as fussy about languages. However, I did face scenarios where headhunters were given very specific instructions regarding language capabilities, and they were unwilling to include me in the process. The obvious way to bypass this is to network with your target funds ahead of their process and request for them to push the headhunter to include you in the process.
I don’t fully agree with this. Perhaps you benefited from having the MF brand name when making the move from APAC to the UK, but in recent years, it’s been an extreme uphill battle for non-EU and non-diversity candidates (e.g. Asian/Indian males) to transition from IB to buyout PE in the UK. There are too many qualified native Europeans from GS/JPM/MS + EBs. Even without a strict language requirement, funds tend to opt for candidates who possess the right language skills (assuming all else is equal). Yes, outliers exist and I’ve come across quite a few IPs from APAC at infra PE / REPE funds, but rarely at traditional PEs.
Sector or regional coverage in IB?
I worked across 2 rotations in IB: (a) tech services first, and (b) industrials. From a PE hiring perspective, sector coverage has little relevance - especially at the Associate level (the only exception being infra and FS to some extent). Most associate roles (specifically across APAC and MF / UMM in UK) would either (a) place you in a general pool where you are exposed to a variety of sectors, or (b) accommodate you in sectoral teams which are different vs your prior experience (e.g., I started off doing consumer at my first MF despite no consumer background in IB). The obvious exception to this rule is recruitment for roles in MM and GE where the firm is specifically looking to fill a sectoral associate position (since they place immense value on your network).
Can you provide some compensation data point from associate to senior associate to VPs? Appreciate if you also have any insights for mid-market funds you might have interviewed with
I would divide entry level Associate compensation among 3 buckets (in increasing order):
(a) MM Funds: ~GBP 160-180k all in
(b) European MF / UMM (with the exception of CVC, EQT): ~GBP 200k all in
(c) US MF / UMM (with the exception of HIG): ~GBP 230k to GBP 350k+ (Apollo). Increments in this category are roughly GBP 25-50k per year, with a standard 3-4 year path to promotion (can title it Principal / VP / Post-MBA Sr Asoc). Have heard that VP comp is ~GBP 400-500k all in (excluding carry).
US MF / UMM tend to pay higher than the above segments because their comp is almost always in line with what they pay their associates globally (and therefore quote compensation in USD).
Where would you place CVC / EQT? Heard CVC is very unstandardised actually, which is strange
EQT is 100k base and 0-150% bonus first year, with bonus pool essentially a zero sum game between ASOs so much more in line with European funds in practice. The only true European outlier is CVC.
Could you speak briefly on your IB->MF jump? For example, what do you think your edge was and what’s your best advice for first year analysts that are eager to make the jump but must wait because its too early (eg did you start to network pretty early as AN1 with the firms so that you were their first choice for interviews when the recruitment started later on?) Also curious because it seems like you did London->APAC?
My journey was EB in APAC > MF in APAC > UMM / MF in UK. However, the recruiting process from IB to MF in APAC was very similar to the recruiting process here in UMM / MF. In hindsight, what worked out well was: (a) networking with the target firm ahead of the process, and (b) being sharp with technical skills. I can also corroborate this from being part of the recruitment process as part of the MF. Good / great technical and commercial skills are table stakes (because of how competitive the market is), and fit really helps tie-break among multiple candidates. Fit can be in the form of (a) you came across as super curious / serious about the process because you networked ahead of the process, (b) display qualities that are really valued by the firm culture (e.g., higher focus on attention to detail vs getting the answer directionally correct in the shortest time), or (c) speaking the right languages / having a network the firm desires.
1)Did your non-target background not hold you back anymore after you secured that EB role? or did you do a masters to combat that?
2)If you started out at BB's like Citi/BofA/UBS and such, do you still think you could've ended up at a MF in London ?
Thanks and congrats on your achievements!
(1) No - I did not have to do a masters. Once I secured the EB role, it boiled down to (a) technical skills, and (b) networking. Initially, I did face challenges in not having an alumni network within PE. However, once I spent considerable time within my EB, I saw the analyst classes above me "graduate" and go to various PE firms. I maintained good relations with them, and this helped me secure more interviews with their firms since they had previously hired from my bank
(2) While I was networking with PE funds in UK, a lot of hiring mangers / VPs told me that their largest Associate-level feeder pools are (a) BBs, (b) EBs, and (c) MBBs. I know people (both London and Western Europe based) at one of the banks you mentioned above, who were interviewing alongside me for MFs / UMMs, and see no reason why they deserve the spots less than anybody else!
Was your EB stint in London before you crossed to MF? Or was it that your EB was outside of UK – and APAC EBs recruit from non-targets?
My EB stint was in APAC, and APAC EBs recruit from two pools: (a) students who completed their undergraduate in the west with ties to the region (e.g., grew up in Singapore and went to NYU), and (b) students from local targets, semi and non targets. The 2nd pool is important since (a) they represent a larger share of overall applicants APAC EBs get, and (b) local languages are very important to win mandates in APAC (because large number of businesses are still family owned). Obviously, if you are from the 1st pool and speak the local language, you have a leg up
In your experience, have you ever seen any MFs or UMMs in London hire an associate from JPM/MS/BofA/Citi who does not have a target or semi target background (non-target)? Is non-target background pre-screened away / eliminated from the processes in London despite coming from a top BB? Am I right to count your case as an outlier because you already had previous MF experience prior to doing London PE—therefore making your educational background less relevant—unlike an applicant coming directly from a bank?
How important are languages in London PE? If I only speak english am I fucked for PE recruiting?
This is a hotly debated topic and I have tried answering this question above, but in substance, I did not speak any European languages either. There are scenarios where you will asked to sit out of a process because the fund has mandated the headhunter to only find "[insert Euro language]" speaking candidates, but with solid networking and sharp technical skills, you can stand out in the process (and get an offer without knowing a language).
For the UMM / MF firms that you have knowledge on, what tends to be the split of ex-bankers vs consultants? Are the "consultant-friendly" shops generally the same as those in the US
In my experience, the split in MFs / UMMs is skewed in favor of bankers over consultants; I'd go on a limb and say perhaps 65-35 as a reasonable split (could purely be a function of size of applicant pool). To your second question, to some extent, the consultant friendly shops are the same as those in the US, but have fewer seats compared to the US (e.g., H&F, Bain Cap). However, some of the other traditionally consultant friendly shops (Advent, WP) seem to have a banker bias while recruiting for their associate
More off-topic question - what is your view on the state of London today? A lot of peers are actively jumping to other regions when the opportunity presents, if not already moved. The city as a whole feels worse vs 3-4 years ago but interested to know your take as someone in the 0.1% of earners.
This feels like the notion everywhere. Have lived in US and Canada, and every major city in North America feels worse than 3-4 years ago.
Do you mind sharing you networking process? What would be your advise to someone who wants to move from infra UMM to generalist UMM / MF?
My networking process revolved a lot around (a) speaking with professionals within the industry who had made a similar move, or (b) targeting funds that hired juniors with prior PE experience. If you come from a background that is not a traditional applicant pool for the role you are looking for, it is likely that HR / headhunters running those roles will only entertain you if someone from the hiring team (at your target fund) nudges them to do so. My advice to you would be two fold: (a) use LinkedIn to network with people who have pulled off a similar move (from infra to corporate buyouts), and (b) network with VP level or above across your target funds and highlight the similarities between your experience and what PE associates would do. It is a much easier conversation to be had when you are pushing to join as an Associate (vs the fund valuing your prior experience), because hiring someone who has already worked in PE (with demonstrable technical knowledge) is always an easier pick vs a fresh banking analyst
are the kinds of "commercial awareness skills" you talk about for PE interviews any different from the general commercial awareness required for banking & equity research interviews?
DDDDD
Have you seen a post-MBA IB Associate make the switch to PE in London? Any advice for someone looking to make this move?
Will one have to start over as Associate when making the switch to PE?
Edit: Ignore Title
+1 Interested in this too
What is your view/outlook on APAC markets for PE/PC? Would you advise relocating from London to Singapore/HK for a few years?
A few funds in EMEA have PE analyst roles for fresh grads. How does associate recruiting typically work for such individuals if they are looking to lateral after their analyst stint? (Advantages / Disadvantages compared to Banking analysts and information on whether the process is different would help)
Are there opportunities in PE in APAC (e.g. in Hong Kong) for Europeans (with no Asian languages knowledge)? Thanks
First of all - thanks a lot for doing this!
How has the recruiting been in London overall and for candidates from MBB specifically in the past couple of months? Hoping to start the process this fall, but heard that it’s been particularly slow for consultants
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