Q&A: Principal in UMM PE

Thought it would be fun to do a Q&A and contribute to the WSO community after years of reading the forums for advice, industry intel, and jokes. Not sure if anyone cares about a Q&A, but I figure I'd ask since I get hit up on linkedin/undergrad alumni network fairly frequently.

My background: semi-target undergrad, consulting, MF, UMM PE.

Happy to hit any topics like PE industry overall, recruiting, trends/outlook, lifestyle, etc. I will try to be helpful when I can and snarky when I can't

Comments (136)

  • Analyst 1 in IB - Cov
Mar 22, 2021 - 10:45am

Curious to hear your thoughts on recruiting for a pe role that's not what you covered in a banking role, personally covering power & utilities but want to move to more TMT/Consumer investing potentially?

Mar 22, 2021 - 12:08pm
fcf_yield, what's your opinion? Comment below:

It is obviously easiest to move from banking into PE in the same industry vertical. However, when we recruit associates we typically look for smart people who have stable stakes (financial modeling, personable, hard worker, etc.) and then ultimately hire those who can demonstrate they think like an investor, have a sense for value, and who genuinely seem interested in PE vs. just going through the motions

For you specifically, I'd tailor your resume to highlight deals that are are closest to traditional PE industries vs. power/utilities. Additionally, be sure you are rock solid on themes that are relevant for TMT/consumer, like breaking down unit economics, understanding where comps trade and leverage you can get, key trends in the sectors, etc. Additionally, try to get reps outside your industry group if you want to maximize your chance of success, though not necessary if you are recruiting at a generalist fund

Mar 22, 2021 - 12:11pm
fcf_yield, what's your opinion? Comment below:

Our firm is large enough to have deal sourcing/BD team, but tbh at our scale most platform deals are brought in by IPs through our banker relationships. All businesses with EBITDA over >$40 million is very well banked, and frankly most companies >$15-20 million these days.

I've found that our BD team is most productive with add on activity, as they can call on the small intermediaries and turf up deals with $1-10 million EBITDA

Mar 22, 2021 - 11:35am
WestCoastMonkeyMan, what's your opinion? Comment below:

With many of the banks shortening A2A time and increasing comp do you think it makes sense to recruit for PE? Are you worried (and should people that are still trying to make a decision about IB/PE) about things being crowded at the top of most PE firms and not having a path to promotion?

Mar 22, 2021 - 12:16pm
fcf_yield, what's your opinion? Comment below:

Choosing to go to PE vs. staying in banking is a personal decision based on what you like to do -- selling companies/client services or putting capital at risk to generate a return. I have a friend who went to PE and then went back to IB because he liked "the deal", winning mandates, and client services vs. investing in or owning companies. No wrong answer.

PE is definitely way more crowded today than it was 10 years ago when I joined, but there has been a major proliferation of funds as well. As long as LPs continue to allocate capital to PE and returns are attractive, there will be funds and therefore seats available. As an IP, the key is finding a growing firm with a good track record

  • Analyst 1 in IB - Cov
Mar 22, 2021 - 11:37am

Thank you so much for taking the time - really do appreciate it: 

1) How hard is it to move post principal / director in PE? It seems as if a lot of people get sort of stuck at this level

2) I am considering the merits of staying in IBD vs going to PE. As someone who is very familiar with the space, do you have any thoughts on what type of people / workstyles are likely to succeed / enjoy IBD vs PE? I have heard those who are interested in closing a higher volume of transactions

3) If I am aiming for a post-mba UMM Principal seat, do you think the best path is to try to get 2 years of MF experience pre-mba? 

Thank you once again for your time and help! 

Mar 22, 2021 - 12:23pm
fcf_yield, what's your opinion? Comment below:

1. It's hard to move up at every level. As with any industry, there are fewer seats the higher up you are and it gets increasingly more competitive. In order to move to MD you have to demonstrate: 1) clear ability to source good deals and 2) strong investment process and track record. If you have those and deliver results, you'll move up

2. IB vs. PE are two different jobs in the same ecosystem. Bankers are in sales/client service and PE professionals are investors. Both work hard and WLB is driven by firm culture and deal cycle. Bankers get paid to do any deal, PE gets paid when successful investments are made.

3. Most pre-MBA associate PE experience generally a requirement to get into post-MBA role. Very few seats and high competition. MF helps odds but a good LMM or MM fund are great options.

Mar 22, 2021 - 11:58am
ninjawarrior27, what's your opinion? Comment below:

What made you go from MF to UMM? And how did you make that switch (given you didn't pursue a MBA)?

Mar 22, 2021 - 12:29pm
fcf_yield, what's your opinion? Comment below:

Lifestyle and growth. I work less now and have more room to grow. Also I have more control over the deals I pursue and there is more room to grow/chart my own path.

I was a VP at prior MF and was promoted straight through after taking operating role at portco. Didn't need MBA and was able to lateral over to UMM afterward

Mar 22, 2021 - 12:31pm
fcf_yield, what's your opinion? Comment below:

Meaning of life and job is what you make of it, amigo. I like that I can provide capital and resources to help companies grow while satisfying my intellectual curiosity itch.

Money is a nice perk and a reward for the risk we are taking

  • Associate 1 in PE - Other
Mar 22, 2021 - 12:28pm

What are the typical backgrounds that your firm looks for in terms of lateral hires at the Senior Associate / VP level? Would you entertain someone with a private credit background (investing across cap stack including equity co-invest) or hire someone with a special situations background, opportunistically doing distressed buyouts?

Mar 22, 2021 - 12:37pm
fcf_yield, what's your opinion? Comment below:

At our fund for VP-level, you need to have at least 2-4 years of direct PE investing experience. We do traditional LBO investing, so private credit background less relevant as credit is focused on downside protection vs. underwriting upside. I would definitely look at special sit backgrounds given the asymmetry of their return target.

However, there are other funds/firms that invest across cap stack (i.e. equity, mezz, pref, etc.) structures that could be useful for someone with a private credit background than a traditional LBO fund strategy

Mar 22, 2021 - 12:57pm
gr8ski, what's your opinion? Comment below:

Do you find that most firms that invest in such type of credit (mezzanine, CLO, ...) hire right out of undergrad, or are such hires fairly rare? 

Mar 22, 2021 - 12:40pm
Bullar Bear, what's your opinion? Comment below:

Thanks for doing this fcf_yield. To follow-up on your comment on "very few seats and high competition", I am very fortunate enough that I didn't have to explore opportunities since I got to the buyside till now (as Junior VP, no MBA). How easy is to find another VP seat? And what is the best approach to do so? Thanks in advance. 

Mar 22, 2021 - 12:56pm
fcf_yield, what's your opinion? Comment below:

Many funds are hiring now as deal flow has been high and funds are raising larger vehicles. Generally need to find way to network into the fund you're targeting or go through recruiter

  • Intern in IB-M&A
Mar 22, 2021 - 12:49pm

Thanks for the Q&A! I have a few questions:

1) How is the lifestyle at the senior levels in PE ? I don't mind grinding a few years but I really want to have time for hobbies/family/friend when I reach senior ranks.
Is this possible in MM/UMM PE ?

2) Would you recommend starting in MF even if I want to do MM/UMM PE in the long-run for the better lifestyle ? 

3) How to position yourself for PE recruiting as a consultant ? Obviously doing some DD helps but any other things to focus on ? 

Thank you ! 

Mar 22, 2021 - 2:17pm
fcf_yield, what's your opinion? Comment below:

1. Very firm dependent. Do some diligence on the firm/fund because the range is wide. I prob work ~55 hrs a week on average with the typical peaks and valleys around deal flow

2. Don't think it matters

3. Recruiting as a consultant is challenging but not impossible. You have to convey a very strong case on why you want to be in PE and why you should be hired above bankers. You will be at a disadvantage on the modeling aspect and will need to prove your proficiency. Will need to talk up how you think like an investor and how your projects were M&A or value-creation oriented

  • Analyst 1 in IB - Cov
Mar 22, 2021 - 2:32pm

Was wondering if you could help interpret this report 

what does average carry across funds mean lol? According to this survey a VP at a 10Bn dollar fund would have a base of 200k, bonus of 323 K (~525k) all in and 3.9 mill of carry?! So assuming a 5 year holding period the annualized comp would come out to ~1.3mm including bonus, base and carry? Is my math correct? That's insane comp. 

Mar 22, 2021 - 2:20pm
fcf_yield, what's your opinion? Comment below:

Here to stay but returns likely to compress given competition for assets (LOs, SWFs, SPACs, MM/UMMs creeping up), increasing multiples, and more LP capital entering the space. GPs are incentivized to deploy capital at 15-20% IRR and raise a new fund with AUM 2x prior fund vs. shooting for 30%+ IRR with smaller funds, so they will keep doing it

  • Prospect in IB - Gen
Mar 22, 2021 - 1:26pm

What do you think of an analyst starting their career in a capital markets function at a PE firm? AKA Handling all the capital markets functions of portfolio companies in-house? 

  • Prospect in IB - Gen
Mar 22, 2021 - 2:24pm

I'm interviewing for a spot and it sounds like a great gig. The location is meh, so is it pretty transferrable to a DCM team at a bank or else a DL fund? 

Mar 22, 2021 - 2:42pm
fcf_yield, what's your opinion? Comment below:

For associates: work hard, add value to deal team/portcos, have good attitude, and think like an investor. Crush the process stuff and use your brain

Owning the legal portion of deals was probably the biggest challenging when transitioning from VP to Principal, as it is area I had fewest reps

  • Analyst 1 in IB - Cov
Mar 22, 2021 - 2:27pm

Thanks for these great responses! Super helpful.

As a principal, how are you going about beginning to source deals? Is it just building strong banker relationships? 

You mentioned you left the MF because of the hours. How much worse were the hours at the senior level at the MF vs UMM? 

Mar 22, 2021 - 2:48pm
fcf_yield, what's your opinion? Comment below:

Build banker, advisor, and industry relationships. It's a low conversion rate but interesting if you enjoy it (I do). Rare to find proprietary deals these days for large platforms, but success is extremely rewarding

Principal/MD hours are much worse at MF than my current firm. Principals at MF often work 7 days a week and some go into the office 6 days. A few guys I know were putting in 80+ hours/week consistently as Principal and maybe 70+ as MD. Sounded unbearable to me at my old age lol

Work life balance at MM/UMM firms vary significantly. Have to do your DD

  • Associate 1 in PE - LBOs
Mar 22, 2021 - 11:12pm

Current associate at a MF so can provide a datapoint - VP/Principals work 8:00 AM - midnight M-Th and 8:00 AM - 8:00 PM Fr with another ~5-10+ hours across the weekend on a regular basis. Only gets worse during live deals and the stress seems substantially worse than as an associate 

  • Analyst 1 in IB - Cov
Mar 22, 2021 - 2:27pm

Does your PE fund sponsor / take international students who are not US citizens at the associate or VP level? 

Mar 22, 2021 - 2:39pm
fcf_yield, what's your opinion? Comment below:

Only if you have green card or are already authorized to work in the US. We also have international offices and are more flexible in int'l locations

  • Analyst 1 in IB - Cov
Mar 22, 2021 - 2:57pm

got it, so you owuld be open to taking someone on if they have a H1-B work visa?

  • Intern in IB - Gen
Mar 22, 2021 - 2:56pm

1) Best resources you've found to prep for both PE recruiting / if you did any prep as an incoming associate?

2) Advice on developing an investor's mindset / what makes candidates differentiated during the interview

3) Any outside literature / books you've found helpful?

Appreciate the time and help.

Mar 22, 2021 - 3:56pm
fcf_yield, what's your opinion? Comment below:

1. I joined PE over 10 years ago so my feedback is dated, though principles probably hold. I networked alot, used recruiters as much as possible, used personal network on the buyside, and connections through clients. Also used sources like vault guides, WSO/blogs, undegrad alumni networks, and read a ton of PE/investing case studies.

2. Your work and answers should be focused on how to create/generate value, and not just going through the motions. Your job is to underwrite risk, not just "try to get a deal done"

3. The Outsiders is a great book. Also this for jokes

  • Intern in PE - LBOs
Mar 22, 2021 - 3:57pm

Hey, thanks for doing this. I'm at an UMM, too. But you seem like a nice guy so I know you don't work at my UMM.

My question is: have you ever considered alternative career paths in recent years (let's say, during or after your Associate stint), and if so:

  1. Which did you consider
  2. What were the pros and cons of each for you personally, and
  3. How did you come to the conclusion that you would enjoy PE more?

I am deciding whether or not to leave, because there are elements to the job that are deal breakers for me, but I have a hard time with the self-understanding to assess which exits I actually would enjoy doing for a jillion hours per week.

Thank you very much.

Mar 22, 2021 - 4:47pm
fcf_yield, what's your opinion? Comment below:

Lol at first comment. Culture matters a ton

Yes on alternative career paths:
- Started career as consultant. Loved it for 2 years but didn't want to be salesperson as senior consultant
- I was an operator at a portco for a few years. Liked it but didn't love it and it didn't play to my strengths long term
- I worked at a L/S equity HF for a bit. Liked the pace and looking at interesting businesses but missed being closer to companies and driving change

PE isn't perfect, but it is closest to what I like to do and am good at

I recommend you do the DD for your career as you would if you were investing in a company. Spend time self-reflecting on what you are good at, what you like to do, what you don't like to do, how you want to spend your time, and lifestyle. Talk to friends and contacts across industries and gather data points about the topics I mentioned above. You will learn more about yourself and what you want to do long term

  • Senior VP in HF - Other
Mar 22, 2021 - 4:13pm

Great, thread, thanks. 

Coming from the HF side where the vast majority of my time is on investment analysis and owning my own investments - which is fairly standard I'd say - what percent of your time is spent actually analyzing investment opportunities vs process mgmt and portfolio work. How does this change by title? I've always thought this was one of the biggest differences between HF and PE, especially at the jr and mid levels - its much more of a process mgmt job than an investing job. To be clear, this is not a knock at all, as these transactions are highly complex and that is a valuable skillset, as is working with portfolio companies. In the same vein, for the part of the job that is actual analyzing at investment opportunities, how much is top down driven vs. having an actual material say in the matter? Likewise, how much of the diligence and industry work is done in house, vs having more of a high level thesis and outsourcing the true diligence. 

Mar 23, 2021 - 12:26am
fcf_yield, what's your opinion? Comment below:

This is a great question and the answer is related to portfolio construction and concentration. In L/S HF you'll own anywhere from 10-30 long positions and 10-50 shorts at all times, but in PE you'll only invest in 1 new platform every 12-18 months. As such, HF will spend a higher % of time on security analysis vs. typical MM/UMM PE as you can change your position sizing consistently

I prob spend 30-40% of my time on my portfolio companies, 40-60% of time on new investments (incl. sourcing), and 10-20% on process, but this can vary significantly with deal/portco lifecycle. At junior level it's prob more time on investments, at likely 70%+

In general MDs/Principals drive investment decisions on deal team, but VP/Associate/analysts who differentiate themselves add value to the investment process and support thesis or kill deal because of DD findings

We do all core company and industry DD in house, but always use advisors before closing a deal. We'll use MBB for market study to confirm/refute thesis and help with nuance of industry dynamics

Mar 22, 2021 - 11:50pm
fcf_yield, what's your opinion? Comment below:

You are lending to PE and corporates, so it is kind of relevant. But ultimately you are likely focused on downside protection vs. equity investors focused on upside. Different framework but not an impossible transition 

Mar 22, 2021 - 4:39pm
Sil, what's your opinion? Comment below:

Thanks for doing this! Somewhat of a different question...how does your firm recruit for your PE ops team? I lead FP&A for one of a PEG's portfolio companies, but would be interested in switching to PE ops down the line. Seems like the process is similar to actual PE recruiting (i.e. through recruiters).

Mar 22, 2021 - 11:52pm
fcf_yield, what's your opinion? Comment below:

Deal team/portcos have lots of autonomy on how they hire at their portcos. Generally hire using industry recruiters or firms like KF, SS, H&S, etc. for C-suite

We have very few operating partners, and tbh I have no idea how they got their jobs. Prob a combination of recruiters and networking

  • Associate 2 in PE - LBOs
Mar 22, 2021 - 4:50pm

Thanks for doing this. Have been at a MF as an associate for a few years, and interested in moving downstream for similar reasons to the ones you've expressed. How did you approach this transition, and what are some of the most compelling UMM funds in your mind, from a WLB and trajectory perspective? Not too specific on industry, fairly agnostic between basically anything but energy, FIG, and heavy industrial type places. 

Mar 22, 2021 - 11:55pm
fcf_yield, what's your opinion? Comment below:

Transition is pretty straightforward, assuming you got good deal reps at MF. You may have to do another 1-2 years as an associate before getting direct promote to VP (assuming no MBA), as the new firm will want to test you out before moving to VP. If you go to MBA, you will recruit directly for VP role.

Some interesting MM/UMM firms are American Securities, New Mountain, AEA, GTCR, CD&R, LGP, Roark, Genstar, Olympus, Harvest, Berkshire Partners, Kelso, Kohlberg, some HIG funds, OMERS, ONEX, ONCAP, Jordan, Golden gate. All generally good investors that I respect. I'm sure I missed a bunch

WLB is very fund and sometimes team-specific, so you'll have to more diligence on that. Tbh at the associate level at most of those firms will be tough. Just the nature of the job

Edited: posted reply under wrong question

Mar 22, 2021 - 4:52pm
scorder011, what's your opinion? Comment below:

Thanks for doing this! Curious to hear how the recruiting and interview process looks like at the VP or Principal level? I have a few interviews lined up for VP roles at other firms but am a little unsure what to expect for the process. The Associate process is well documented but there are not many resources out there for lateraling a the VP level.  

Mar 22, 2021 - 11:55pm
fcf_yield, what's your opinion? Comment below:

VP recruiting is less structured than associate. Prob not going to have model test and will focus alot on fit/culture, confirming you think like an investor, see how you added value or can add value to portcos, and walking through your investments. Maybe a paper LBO to make sure you understand the important parts of a model

  • Associate 1 in PE - Growth
Mar 22, 2021 - 6:11pm

What are today actual median and top quartile CoC and IRR for LBO funds (gross)? I know you can find net from CALPers etc. but that's kind of useless

Mar 22, 2021 - 11:44pm
fcf_yield, what's your opinion? Comment below:

Firm has top quartile returns. We typically underwrite returns at 20-25%, but will go higher or lower depending on risk profile of business. Generally try to have value creation levers to get higher return as well

  • Intern in IB-M&A
Mar 22, 2021 - 7:13pm

Any tips on recruiting from a non-BB/EB bank? Got on the recruiting train a bit late and ended up at a not super prestigious bank (Wells Fargo type), and am worried about my recruiting prospects. Any tips on proving myself to potential PE firms and getting passed HH screens? 

Mar 23, 2021 - 12:12am
fcf_yield, what's your opinion? Comment below:

Honestly it isn't an issue. Some of our best associates have come from non BB/EBs or consulting, so don't sweat it. Need to network hard, be proactive with recruiters (be nice and responsive), crush your model tests, and have your story down cold

  • Associate 1 in PE - LBOs
Mar 22, 2021 - 11:26pm

Thanks a lot for doing this. I am at a MF right now where I likely won't have an opportunity to stay and have been reflecting on what I want long term as I think through next steps. A few questions for you:

  1. Do you actually enjoy this job? If it weren't for the money, I would have no question about moving into a different career path because I don't enjoy the work (~90% of it being monotonous process / financial analysis work), but it continues to seem like the most attractive risk/reward option (and I'd like to be able to afford to live in NYC long term) so curious if you think you truly need to enjoy it to make it to a senior level
  2. Did you consider business school at all? While I recognize times have changed and it likely doesn't make sense from a career perspective today, for personal reasons (i.e., break from the grind, make new friends likely to be in similar life situations post-MBA, last opportunity to have time to do a lot of travel before eventually settling down) I am seriously considering it and was curious if you noticed any substantial differences in success among peers who did the MBA v. those who did not
  3. Have you seen many PE associates move to cover a different industry vertical as a VP or is this a pretty hard move to accomplish? Part of my feeling from #1 is likely driven by covering an industry now that doesn't interest me

Appreciate the time!

Mar 23, 2021 - 12:42am
fcf_yield, what's your opinion? Comment below:

1. Yes, I truly enjoy what I do. I get paid to learn about new companies/industries, help improve companies via improved ops processes/capital allocation/M&A, and put $$ behind my ideas. Super satisfying. Being an associate sucks but the training is invaluable, so keep your head up. Move to a firm with better WLB that invests in a similar way that you want to. That's the goal

2. I did, and went through the whole process. Ultimately used my b-school acceptances as hedge/ultimatum to force my firm to promote me or I would leave. I think the biggest value of MBA is the network and the 2 year vacation

3. Yeah all the time. Many funds are generalist below MD/Principal (like mine) and don't care what you did as associate, although may be different for infra/utilities, etc. I like generalist model for analyst to VP (and even 20-50% time for Principals) to develop as a well-rounded investor

  • Analyst 1 in IB - Cov
Mar 23, 2021 - 2:25am

What skill sets would you recommend building as an IBD analyst to become a good PE associate? You mention good associates differentiate themselves through good due diligence findings so was curious what I can be doing now to develop that skill set. 

Mar 23, 2021 - 10:20am
fcf_yield, what's your opinion? Comment below:

Good associates spread all of the info in a data room

Great associates spread all of the info and distill the most important 3-5 points and clearly articulates in a handful of slides/charts

  • Analyst 2 in IB - Cov
Mar 23, 2021 - 2:36am

How to weigh starting career in IB vs consulting if end goal is PE?

Mar 23, 2021 - 9:47am
fcf_yield, what's your opinion? Comment below:

If end goal is PE, IB is easiest path as more PE associate seats are available to bankers vs. consulting

Mar 23, 2021 - 7:50am
OwwMyFeelings, what's your opinion? Comment below:

Do you think that your firm and other comparable firms have real edges in creating excess returns on your invested capital? You mentioned that almost everything is banked at the MM+ level today, so it seems like you just have to be smarter than others and figure out ways to create synergies and whatnot, but that's not easy.

Mar 23, 2021 - 9:53am
fcf_yield, what's your opinion? Comment below:

PE will see returns continue to compress over the next 10 years as more capital chases fewer deals

PE investing is similar to the public markets, where investors with a solid process and differentiated view are able to drive excess returns. Additionally, firms that can systematically add value through operational improvements, accelerating organic growth, and executing add on M&A will continue to generate solid returns

  • Analyst 1 in IB - Gen
Mar 23, 2021 - 9:10am

Is it harder to make it up the ranks in PE now if you are not an URM? With all the disclosure requirements, how difficult would it be if one does not check the DEI box?

Mar 23, 2021 - 9:55am
fcf_yield, what's your opinion? Comment below:

Is this a joke? Look at any PE firm and most senior ranks are still white males. Those with best track records will do best over time -- now it is just more diverse vs. 5, 10, 20, 30+ years ago

  • Business School in IB - Gen
Mar 23, 2021 - 10:36am

What are your views on secondaries? Thinking that instead of more sponsor-to-sponsor transactions (and return compression because of it), hold periods could increase longer than the life of a fund and allow for more runway.

Mar 23, 2021 - 11:22am
outofbananas, what's your opinion? Comment below:

Do you have advice for folks who want to lateral into senior associate or VP roles in growth stage investing? I came from consulting and an UMM PE background (one of the firms that you mentioned in a reply above) and have since gone to an operating role. I liked investing (but not really the process work), and while I'm enjoying my operating work, I'd really rather be deploying capital.

Mar 24, 2021 - 1:19pm
fcf_yield, what's your opinion? Comment below:

I don't have a great perspective on the recruiting process for growth investing, but your background of consulting, UMM PE, and operations should be attractive to almost any buyside firm. I recommend you tap your personal/professional/university network and try to get in front of relevant recruiters and firms

If you like investing but not the process work, have you thought about VC or a HF? Less "process" and more rapid pace of deploying capital

Mar 23, 2021 - 11:30am
onebagger, what's your opinion? Comment below:

Thanks for doing this. Got some ugly questions flavored by a cynical view of my ~3 years of PE experience. Feel free to answer (or not) any of the below with as much detail as you'd like.

1. How often do you have IC kill a deal you think would have otherwise been a good one?

2. What's the biggest blow-up you've been a part of and what was the primary failure?

3. How much does internal firm "bureaucracy" and/or politics affect getting deals done?

4. Biggest regret/mistake/etc. in your PE career so far? 

5. How big is your core deal team? Whats the weak link in your view?

Mar 23, 2021 - 7:12pm
fcf_yield, what's your opinion? Comment below:

1. Depends on the deal team, i.e. how aggressive or how good they are at underwriting. I have never had a deal killed outright by IC, but I have had purchase price lowered which ultimately didn't make it to next round. This is because I think I generally present a fair and balanced investment case and possess pricing discipline. There are times I have been too aggressive and other times I have been too conservative.

2. Great question. Thankfully, I've never had a big blow up *knocks on wood*. When I have seen others do it, it is usually because of investing in an idea without great DD, buying into banker bullshit, or letting emotions take over in the "heat of the deal". It's amazing how much shitty DD I have seen in MM PE

3. One reason I like my firm is that good deals will get done -- bureaucracy and politics never get in the way. However, there is real pricing discipline, so unfortunately we have passed on too many deals at [12x] because we wanted to buy it at [11x]

4. Forgetting to be humble at times

5. Deal team generally 4 people: MD, Principal, VP, Associate, but P-VP-ASC drive most of the work. With a lean team can't afford to have weak link

Mar 23, 2021 - 11:45am
Alt-Ctr-Left, what's your opinion? Comment below:

As an ex-banker who spent a decade of my life aligning logos in Powerpoint for 100 page pitchbooks, does the pitchbook ever decide which sell side bank gets the mandate? Or did you already know who you were going to hire headed into the bake off?

"I don't know how to explain to you that you should care about other people."

Mar 23, 2021 - 7:16pm
fcf_yield, what's your opinion? Comment below:

The pitch matters, but less from formatting or length and more from substance of insights. I need to be convinced a banker knows my company, sector, buyers, and how to sell the story to get max value

100 pages for a pitchbook is overkill. If a banker can't sell themselves effectively in 15-20 pages, why would I hire them to sell something on my behalf?

Mar 25, 2021 - 8:55pm
Pan European Monkey, what's your opinion? Comment below:

keen to now understand how you think about buyside advisors - in my view it's a much more complex task and to actually add value (other than just being an outsourced provider) is extremely complex. How do you think about these advisors, do you hire any and what do you lookout for? 

Mar 23, 2021 - 12:32pm
biltmore, what's your opinion? Comment below:

Hey there I have a few questions. Backround; High school junior interested in business. White male,rural NC with 4.0 uw, 1510 sat(770m). Good ec's including Econ research paper which may be published by time of applying this fall.

This year is unprecedented with vol increase in applications so my thought I'd ED2 BC which is a good fit for me,and ED1 Vanderbilt Econ( definite reach but in the running)

So,first question is what's your thought on these schools. I know BC is semi target as well and like direct admit. But it's definitely far from family so Vandy for reputation and location but unsure of Econ. Vs BC business.

My second question is,if doing finance at BC if I'm from NC how difficult is it to find a Job,any job, that's 70k to start. I'd be looking at loans and realize many have high goals on wall St. etc,I'm really interested in knowing I'll find something that allows me to pay back 40k in loans. I appreciate the reply and thanks again.

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Mar 24, 2021 - 3:34pm
CompBanker, what's your opinion? Comment below:

Not to hijack this comment, but just explanation for why this set of questions elicited this response:

Fcf_yield is investing his time in responding to questions from the WSO community. As someone with 10+ years of PE experience, he (she?) brings a perspective that is not super common here on WSO. A lot of the early career folks here (bankers and junior PE) can get answers to questions that most people on this forum are not in a position to answer. When someone asks him generic questions that could truly be answered by even the students on this forum, it is akin to asking your MD how to run a VLookup in excel. He probably knows the answer (although a bit dated), but it really isn't a good use of his time - the question is best left from a fellow analyst or associate.

As someone who has done AMA's on WSO over the years, it can be frustrating getting asked questions that are best answered by those earlier in their careers.

My apologies for the tangent, thank you for doing this fcf_yield.

Professional Career Guidance and Mentorship: www.RossettiAdvisors.com

  • 9
Mar 23, 2021 - 2:15pm
Big_Whale7, what's your opinion? Comment below:

Thanks for doing this.

1) I work as an investment analyst in asset management and I am curious as to what you think the chances are for me to move from AM to PE associate. Is the biggest hurdle going to be the modeling or finding a way to differentiate myself in the interview process?

2) What are your thoughts on knowing a more technical language like Python? Is it useful, or is there a better place to be spending my time?

Mar 24, 2021 - 1:26pm
fcf_yield, what's your opinion? Comment below:

1. Depends on your role at AM. If you are doing middle/back office work, it will be very challenging. If you are in a direct investing role (public, private, co-invest, credit, direct lending, etc.) then your odds are higher. The biggest hurdle will be convincing someone through your resume that you can do the job (modeling, fundamental business and security analysis, preparing IC memos, etc.). Most likely, networking will be a big part of your path to PE. Alternatively, you could do 1-2 years of banking to check the box and make the transition easier... although that path has its obvious cons

2. I think coding fosters creative problem solving using large datasets, which is a net positive for investing in the 21st century. But it won't help you as much as getting traditional deal reps if your goal is PE

  • Associate 1 in PE - LBOs
Mar 23, 2021 - 2:16pm

Do you see the compression in PE returns impacting adjacent asset classes such as mezz?

Mar 24, 2021 - 1:27pm
fcf_yield, what's your opinion? Comment below:

Yes, and this is already happening. More capital is flowing into direct lending credit, including mezz/pref investors which pushes yields down. Means you have to hunt more or stretch your cases to get same yield, negatively skewing risk/reward. Still a good place to be though

  • Intern in Non-profit
Mar 23, 2021 - 5:49pm

Thanks for doing this, all of your responses so far have been very insightful.

I'm a Senior Associate at a lower MM PE firm (over $1B AUM, current fund around ~$500M). Do you think I could get lateral looks at regular MM PE firms (say ~$1-3B current fund)? Did your firm ever look at lower MM lateral candidates? I understand I'd have to do an extra year or so at same level before consideration for VP.  

Mar 24, 2021 - 1:30pm
fcf_yield, what's your opinion? Comment below:

Yes. We have hired an associate with 2 years PE experience from a LMM fund. He did 2 more years as an associate and got promoted to VP without an MBA. Need to have great deal reps, think like an investor, and explain how you added value to your firm and its portcos. Doable but have to find the right fund/group. Use your network and recruiters and have a solid story. Practice modeling too just in case

Mar 23, 2021 - 7:12pm
StrategyJunkie, what's your opinion? Comment below:

Thanks for doing this. 

1. Any specifics on how to stand out at LMM fund at the senior ass. / VP level?

2. Thoughts on b school for current PE associates?

3. Any advice on negotiating comp with partners as you climb the ranks (whether it's bonus, carry, etc.)? I currently feel like I'm paid below market. 

  • Analyst 1 in IB-M&A
Mar 23, 2021 - 7:30pm

Thanks a lot for doing this, lots of helpful responses here. I'm working at an MM bank and will be trying to recruit for MM PE. I've seen what PE professionals do and think I'd enjoy the work and could be good at it and I love the idea of working with and improving MM companies. However, I think my weak spot is that I haven't really done much investing in public markets - how crucial is it to present yourself as an investor when first moving to PE and how would you recommend doing that? My original strat was to focus on my other strengths and interests in PE but curious to hear your perspective on it and if there are any resources you would recommend to getting more in the investor mindset

Mar 24, 2021 - 1:37pm
fcf_yield, what's your opinion? Comment below:

What does the "P" in PE stand for?

Lack of public market experience at your level doesn't matter. Need to show that you are interested in investing in PRIVATE businesses and have a view on how to improve them

Mar 24, 2021 - 1:39pm
fcf_yield, what's your opinion? Comment below:

Definitely. The issue is walking away from carry checks, taking a huge personal and professional risk, and investing/operating at a much smaller scale where I have less credibility (i.e. today I buy business with $50-150M of EBITDA, but if I started a fund I'd be buying businesses with EBITDA of $1-10M)

Best path is prob to launch with someone with a longer track record so we can get to $500M+ AUM in first fund

Mar 24, 2021 - 12:03am
GandalfIbanking, what's your opinion? Comment below:

If you could go back in time, would you have rather done banking instead of consulting? Or do you believe that the experience from consulting was worth the added difficulty in recruiting to PE? I'm debating between consulting and IB rn. I'm sure I'd enjoy consulting more, but I want to be open to the PE path.

Mar 24, 2021 - 1:46pm
fcf_yield, what's your opinion? Comment below:

I enjoyed consulting alot, but I also know that my projects were way better than many of my peers at my firm and others. I got really lucky with some early staffings which put me in some of the cooler industries/deals that allowed me to make the jump to PE. Many of my friends in consulting struggled or never made it.

If you only goal is to get into PE, IB is prob easier path. However, make sure you like how you spend your time. If you go into a top consulting firm, like what you do, and learn how to model/analyze business, you'll make it to PE. Don't forget the journey

  • Intern in IB - Gen
Mar 24, 2021 - 12:48am

Thanks a ton for doing this! Any opinion on joining an UMM/MF out of undergrad as an analyst versus going to banking first? 

Mar 24, 2021 - 1:47pm
fcf_yield, what's your opinion? Comment below:

If you want to be an investor, why take a separate step (IB) if you don't have to?

Mar 24, 2021 - 6:50am
daddylaurier, what's your opinion? Comment below:

Hey man – Thanks for doing this. If you could start again as a junior investment professional, what would you change? What would you do more of?

  • Analyst 2 in PE - Other
Mar 24, 2021 - 4:05pm

Thanks for doing the AMA. Hoping to get your perspective on: 

- Prospects of working in an execution role only i.e. no portco work (other than refis or bolt-ons) so just evaluating investment opps day in day out 

- Working at a shop that leverages advisors to a good extent with the aim of going 'wider' and being able to evaluate more opp. This would be similar to what some pensions/institutional managers with direct investing arms do 

  • Analyst 1 in IB - Gen
Mar 24, 2021 - 10:43pm

When evaluating IB analysts do you find that group matters, be it in the screening or interview process? Will coming from a LevFin group (albeit a stronger one like JPM/CS/BAML) impact recruiting in that headhunters / interviewers will instantly view me as a credit guy/gal? Haven't gone through recruiting yet, but want to avoid / mitigate falling into that stereotype.

Mar 24, 2021 - 11:08pm
bananawhore, what's your opinion? Comment below:

Thanks for doing this. I recently started at an UMM/MF after bschool and your perspectives have been incredibly valuable.

Any advice you have for 1st year VPs? How to be more effective on these job, with management teams, juniors, or MDs? Also advice on path to Principal and promotion?

  • VP in PE - LBOs
Mar 25, 2021 - 12:20pm

Thank you for doing this.

Currently a VP at a MM firm, where we invest across industries but deal teams are silo'd (i.e., I'm a VP for X industry working with a partner who focuses on this industry).

I like the firm but somewhat concerned about the long-term trajectory of this specific industry team (both internally and externally with LPs, etc.). We have a deal (completed before I joined but I'm now managing) that has been a disaster and frankly an embarrassment for the firm (big equity check for us + co-investors). I'm worried this calls into question our ability to invest in this sector and could undermine my future at the firm by association.

Based on your experience, how concerned do you think I should be by this dynamic? Is it better to hold-on and do our best to try to fix this, or should I consider making a move before my reputation is tied up in this mess.

  • Analyst 2 in IB - Cov
Mar 25, 2021 - 12:20pm

Thank you for doing this.

As an analyst looking to move in the UMM, would you suggest to target more structured, institutionalised funds (the likes of CD&R) or newer funds that invest in companies around the same size, maybe a bit smaller, but with the chance to grow with the fund?

As a second question, I see many funds now be more open to LP co-investing with them compared to the past. Do you experience this trend as well? What's your view about this more "active" role of some LPs?


Mar 25, 2021 - 5:02pm
paramediclamar, what's your opinion? Comment below:

any good resources to read in order to gain relevant skills/knowledge for PE? I've tried searching but can't find something that good.

Mar 25, 2021 - 8:08pm
brewei778, what's your opinion? Comment below:

I was told on one of my posts to read International Private Equity by Talmor and Vasvari. If you're still in undergrad, there's a shot your school will have it. Only downside is that it's a bit older, but still gives a great overview along with cases. 

  • 1
Mar 25, 2021 - 8:04pm
brewei778, what's your opinion? Comment below:

I'm still in undergrad and currently have an internship at a regional M&A boutique. This summer, I'll be interning with one of the lower/not so great BBs in their IB department, but will be in a lending role (more risky than Corporate Banking, but less risky than LevFin). If my end goal is to end up at a MM PE fund, do you think it would be more wise for me to try to network my way into getting an offer in LevFin or M&A at the bank? (Obviously contingent on me not blowing it and getting no offers whatsoever)

  • 1
  • Analyst 1 in IB - Cov
Mar 26, 2021 - 10:59pm

Thanks so much for taking the time. 

There are a lot of posts about the day to day about PE associates / analysts. Can you please go through what your general day to day looks like or if easier bucket it into the main buckets of work you are involved with and time spent on each e.g. legal, portco work, deal execution, relationship building etc.

thanks so much.

  • Associate 1 in PE - LBOs
Mar 31, 2021 - 12:41am

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  • Incoming Analyst in IB-M&A
Mar 31, 2021 - 5:37pm

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  • Associate 2 in PE - LBOs
Mar 31, 2021 - 5:44pm

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  • VP in PE - LBOs
Mar 31, 2021 - 11:43pm

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  • VP in PE - LBOs
Apr 1, 2021 - 12:05am

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