Hi, Long time lurker here. Thought I'd finally make an account and introduce myself. I work in NYC for a consulting firm (think Albourne / Aksia) that does operational due diligence on hedge funds and private equity funds. I went to a non-target school but had great grades, graduated summa cum laude. Background: As an ODD analyst, we perform due diligence on funds for LP's, making sure they are safe for investment from a business / strategic viewpoint (as opposed to an investment perspective). Its actually an interesting position - even as a 1st year analyst out of college, I was put in front of the CFO / CCO / COO of some of the most well known hedge funds / private equity firms in the world. In Year 2, I found myself sitting at a Blackstone conference room speaking to some of the most senior people who work there discussing the next vintage of their energy partners fund. Happy to answer any question on what this entails but I can't provide responses that might give away my identity. There's probably less than 200 people in NYC who does this kind of work and we all tend to know each other. Ask Away!
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I am currently at a non target in one of the boroughs and have realized my chances of starting out in FO are slim to none so I have been researching other options; consulting, operations, MO, and "other". And from this post, ODD seems pretty interesting and actually challenging as well. I had a few questions;
What are some of the things you do day to day and when looking into a company? What is the base pay out of undergrad? What are some companies that have this position? How many hours do you work a week?
Day to day, the job entails two things: (i) Conducting manager meetings: this is where we discuss with various individuals at the hedge fund / private equity firm on things happening within their firm and their take on the broader market. (ii) Writing reports: our final product is basically a 40 - 70 page word doc that outlines the main items discussed during the meeting. Things we look for during the process: this is quite varied and tailored to the specific fund under investigation. To generalise, some items we look for are the backgrounds of the individuals running money, other products offered by the manager, succession planning process, back office infrastructure, IT controls, regulation & compliance infrastructure, legal terms of the Fund, portfolio composition, trading and valuation policies etc ... Obviously, if it were a firm like BlackRock or Carlyle, there would be a discussion of their public company status.
Base pay out of undergrad: This varies quite a bit depending on where you work. Generally speaking, you are working at either a FoF, an ODD consulting firm and if you are lucky, in a group that makes private equity investments in hedge funds or other pe firms. My base pay was 65k. Due to a mix of being fairly good at my job, some turnover at my firm and a whole lot of luck, I currently make in the high 90's; which isn't too bad for a 24 year old 3 years out of college. However, bonuses are virtually non-existent.
Again, FoF's are the biggest employers of ODD professionals for obvious reasons. A quick google search will show you the main FoF's in NY. After that, there are consulting firms (big ones like Mercer, Aon, Towers Watson and smaller ones like Albourne, Aksia etc.). The golden ticket here is to work for a place that makes private investments in other hedge funds, pe firms. Some digging around should show you the three main places that makes such investments.
I think you are going to like this one. I work 40 hours a week. Crunch time could be 50 hours. Never in my three years of working have I done more than 50 hours. This is fairly standard at most consulting shops. From what I know, FoF means a little more hours but not by a big margin. You are definitely not doing anything close to IB/MC hours.
Is it possible to move to a client? Have you ever seen this happen?
One of the perks of this position is the opportunity to build relationships with very senior individuals in financial services. So, it is possible to move to a client but most people at consulting shops usually choose not to. There's not usually a big change in pay or hours, and the work tends to be more interesting at ODD consulting firms. Usual exit opps are either to FoF / asset allocation roles / MC roles.
Hi Neil!
good to meet you here! Could you please explain a little bit more more the exit opps about FoF / asset allocation roles, or management consulting roles? What exactly are these opps?
Thanks!
interesting role... what is the degree of diligence into individuals?
edit: to clarify, is it to the extent that we (as funds) would diligence individuals by hiring FTI and the like?
Compared to an LP, the degree of diligence we do into the individuals is fairly rudimentary. We want to see that the person running money has prior experience doing so. Same goes for the key back office guys. Most LP investors will then do a background check (by hiring BackCheck or HireRight) to verify education / employment records. My firm looked into starting this operation but the margins were too low.
I have an interview with Aksia coming up, any tips?
Hi Neil,
Thank you for your post. May I ask you - from your understanding, what is the biggest difference between a Operational DD and a Commercial DD?
Thanks
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