Q&A: Lower Middle Market PE Associate -- Ask Me Anything
Figure I'd try to give back to the WSO community here. I'm wrapping up my 3rd year of PE at a LMM firm (think $500-750MM fund size) located outside of NYC. Technically still employed but headed to b school this fall and have rolled off a lot of my deals / portcos so have a ton of free time these days. For background, I went to a state school for undergrad and worked at a BB in NYC before moving here. Happy to answer any questions you guys have.
Thanks for doing this, couple quick q’s
What types of candidates did your LMM PE firm primarily recruit? Did you guys ever interview buy side analysts out of school, particularly those that did investments across the capital structure (senior, mezzanine, and equity)?
What was your recruiting process like? What was the extent of the modeling test and case study?
What were your hours like in LMM PE? What % of work was on new deals vs portfolio management work?
Vast majority of candidates are former bankers, both from BBs and MM firms. We've also hired a few folks from lending and mezz backgrounds but the bar is higher. The idea there is a BB / MM analyst program is a very known quantity and we can design the associate role and onboarding program around that while it's tougher to know where folks from off the beaten path are. Networking is super helpful here because we care quite a bit about internal referrals.
Recruiting process is fairly standard with a first round phone screen with a VP, followed by a weekend case study and a super day. We typically cut half at each stage (e.g 40 phone screens > 20 case studies > 10 super day invites) and hire 2-4 kids per class. The case study is pretty simple--you get a redacted CIM from an old deal and have the weekend to pull together a model and short deck outlining how you think about the investment and what your recommendation is. 99% of the weight is on the case study--we're looking for structured thinking and the ability to come up with good questions.
Varies, obviously, but overall pretty good. Maybe 9-7pm in the office with another hour or so at home at night when there isn't much going on (reviewing CIMs, slow burn portco projects, etc.) but ramping up significantly during the deal process (100+ hours for the weeks leading up to an IC meeting). I will say there's much less downtime than in banking as most of my day is booked up with calls and meetings where I'm actually expected to actively participate, so it's more draining than the time commitment would indicate. Weekends are typically free but I'll usually spend a few hours on Sundays getting ready for the week.